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BUSINESS CHALLENGES: WHY IS THIS IMPORTANT?

Customers are demanding instant information gratifi­cation, and so are their customers. Current information flow velocity across the business community is often too

slow. Market change is not slowing down, and market differentiation requires innovative business processes. Applications to support these new business processes will always be required, and integration of the applica­tions will be a fact of life as long as change is. Failure to perform this integration can degrade even the best-of-breed systems.

BENEFITS OF INTEGRATED SYSTEMS

The objective of integrating is to perform as one orga­nization, across all links, in order to serve the end user or customer. This type of borderless business process becomes a win-win situation for all involved, as time and inventory are minimized through the supply chain, improving flexibility and profitability. An integrated supply chain is a business opportunity as it can provide the following benefits to an organization:

      Provide an enterprise view throughout the organization.

      Facilitate removal of functional barriers.

      Provide knowledge sharing and synchronized infor­
mation across the organization.

      Allow for customer-centric planning.

      Provide global supply chain optimization, by mini­
mizing uncertainty and cost.

      Lower total cost of ownership.

Integrated supply chains drive benefits that contrib­ute to the effectiveness and optimization of ERP sys­tems by providing information and efficiency through the following (see Figure 2):

      Common demand plan

      Time-phased supply plan

      Constrained production plan and schedules

      Enterprise shipment plan

      Knowledge sharing

      Focus on planning vs. expediting.

Some of the benchmark improvements that have been seen to date include the following:

      20 to 30 percent fill rate improvement

      10 to 30 percent fulfillment cycle time improvement

      20 to SO percent network-wide inventory reduction

      20 to 60 percent improved forecast accuracy

      5 to 15 percent supply chain cost reduction.

BUILDING AN INTEGRATED SYSTEM: EAI

Integrating various applications, both internal and ex­ternal to the foundational ERP system, is becoming the mechanism organizations are using as the means to develop a truly integrated supply chain. "It is estimated

:hat 40 percent of ERP implementation efforts consist of integrating these applications." (Dain Rauscher Wessels)

Supplier partnerships are extending beyond the walls of purchasing and customer service, and are permeat­ing the IT departments. The challenge arises in uniting disparate yet complementary applications. This is achieved through enterprise application integration (EAI).

 

EAI is the unrestricted sharing of data and business processes among any connected applications or data sources in the enterprise. The primary focus is integrat­ing diverse applications that have often been developed by different people at different times on different plat­forms and using different technology. For example, de­mands from customers are automatically integrated and translated into the manufacturer's ERP system, and then integrated and translated again into a communication of requirements for suppliers.

 

Much of this activity is occurring in organizations today. Legacy systems are being interfaced with other systems, both formally and informally, but these usu­ally result in high developtnent and maintenance costs, and because they are not designed for reuse, produce much pain when change is required.

 

According to the Gartner Group, "Thirty-five to 40 percent of all programming efforts are devoted to de­veloping and maintaining programs to transfer infor­mation between databases." Translated into a cost element, "building, maintaining and supporting appli­cation integration accounts for 30 percent of all IT spending.-.equating to a yearly cost of $82.5 billion" (Forrester Research).

 

Leveraging current technology and tools available, EAI now provides a formal structured approach, result­ing in agility and reusability when system changes do occur. EAI software automates many key integration functions, ranging from interfacing with mul­tiple applications, to translating data struc­tures, to intelligently routing messages, to creating vital business processes.

 

The EAI market is being driven by new tech­nology in a software category called middle­ware. Various types of middleware currently exist, all with the same objective: to sit between different applications and intelligently trans­late and route data between them. Figure 3 il­lustrates the difference between traditional integration points, and integration using EAI.

Why use EAI? Because application life cycles are shortening and IT organizations are being driven to reuse existing applications and ap­plication services, rather than creating the same business processes and data repositories repeatedly. This integration of applications saves development dollars and provides a com­petitive advantage to corporations who needto share application information either within the cor­poration or among other trading partners.

EAI adds value to the enterprise by bundling business processes into pre-built interfaces and easily linking non-compatible systems to provide for the accelerated imple­mentation of new technologies, compressing the effort into weeks instead of months.

EAI solutions create more dynamic IT infrastructures that are able to evolve with an organization, providing it with benefits such as

      Leveraged and enhanced application value

      Lower development costs

      Lower deployment costs

      Lower conversion costs

      Lower maintenance costs.

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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