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The explosion of Internet-based commerce has spawned a new breed of participant joining the supply chain partner mix—the e-intermediary (e-marketplaces, market makers, Internet trading exchanges). Several large SCM software vendors have even created their own; i2's TradeMatrix, mySAP.com and Oracle Exchange started the trend. Whether independent or vendor-owned, these intermediaries represent yet another large demand for IT services in that the systems of the indi­vidual manufacturers and distributors will need to be interfaced with those of the new intermediaries—and most companies will likely deal with multiple e-inter-mediary trading partners using disparate systems. Just as with order fulfillment, this trend will present a larger opportunity for SCM vendors and integration service providers than for the pure ERP players. In parallel with the growth of e-intermediary sellers, the reliance on pri­vate and public transportation exchanges is on the in­crease. Vertical industry exchanges will integrate with horizontal transportation exchanges to quote total landed cost and arrange for both domestic and interna­tional shipping at point of sale. Systems dealing with quoting, selling, and shipping products will have to ac­commodate these new business partners.

During the 1998-1999 Y2K-induced ERP market slump, when companies avoided the added risk of implementing new ERP systems, the SCM vendors were busy developing solutions to plug some of the gaps (such as rapid production scheduling, demand plan­ning, order fulfillment, etc.). This expansion in func­tionality scope coupled with the well-orchestrated Web-enablement of SCM packages positioned some SCM players (most notably i2 Technologies) to offer a viable alternative to much of what is offered with tra­ditional ERP solutions. Particularly attractive is the speed and agility of an advanced planning and sched­uling module when compared to traditional MRP-based systems. While SCM is not a replacement for ERP, and considering that many companies still view ERP among their highest priorities now that Y2K has passed, the ERP market will enjoy renewed growth in 2000 and beyond—but the SCM market appeal and growth rate should be significantly higher.

Another bright spot for the SCM marketplace is the urgency factor that has been created by the e-business explosion. As companies scramble for competitive ad­vantage or even survival in the new Internet frenzied business world, the need to get new support systems in place quickly is overriding the traditional approach of striving for the optimal overall system. A quick partial solution is often more appealing than a complete solu­tion and are even viewed as mission critical. Since SCM solutions tend to be smaller and more modular than integrated ERP solutions, many companies will see them as more viable in the near term. SCM implementation and integration projects are likely to be smaller in size but much larger in number in the 2000-2003 time frame. SCM-related process reengineering and e-business con­sulting projects should flourish simultaneously.

The collaborative planning, forecasting, and replenishment (CPFR) concept has labored under a less-than-stellar acceptance level in past years to a greater degree than SCM overall, but for the same reasons. With new Internet technology and then functionality extensions of the major SCM packages, CPFR is poised for strong growth in 2000 and beyond. Moving beyond the early adopters in the retail and consumer packaged goods (CPG) sectors, supply chain collaboration programs are already establishing momentum in the automotive and high-tech industries.

To Be Continued

For balance of this article, click on the below link:

Lean Manufacturing Articles and click on Series 12


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