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DOCUMENT HISTORY
4 August 2010 | ID:G00205204 Low High
During 2009 and into 2010, SCM focus remained on cost, but Hype Cycle for Supply Chain Management,
supporting competitive advantage and/or revenue growth is 2010
scaling up the executive SCM agenda. Hype is focused on Hype Cycle for Supply Chain Management,
capabilities that support an organization's journey toward the Analyst(s):
2009
higher stages of a demand-driven value network. Tim Payne
Hype Cycle for Supply Chain Management,
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Table of Contents Related Research

This research is part of a set of related


Analysis research pieces. See Gartner's Hype
What You Need to Know Cycle Special Report for 2010 for an
The Hype Cycle overview.
The Priority Matrix
On the Rise
"MDM Aware" Applications
Segmented Supply Chain Response
Integrated Business Planning
Product Portfolio Optimization
Supply-Chain-Centric, Carbon-Sensitive Planning and Optimization
Mobile Asset Optimization
Supply Chain Performance Management
Multienterprise Business Process Platform
Software-as-a-Service Supply Chain Planning
At the Peak
Demand Pattern Analysis
Demand Signal Management
Business Process Networks
B2B Integration Outsourcing
Process Templates for SCM Innovation
Battery-Powered RFID
Profitable to Promise
Sliding Into the Trough
TMS Multimodal/International
MDM of Product Data
Foreign/Global Trade Compliance
Inventory Strategy Optimization
Mobile (Wireless) Enhanced Supply Chain Management
Passive RFID-Based Inventory Management
Dock Scheduling and Carrier Appointment Management
Radio Frequency Identification for Logistics and Transportation
Distributed Order Management
Global Trade Compliance
Climbing the Slope
Software-as-a-Service Supply Chain Execution
Yard Management

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Capable-to-Promise Systems
Sales and Operations Planning
SCM in India
Supply Chain Collaboration
Integration as a Service
Real-Time Factory Scheduling
Business Process Hubs
Strategic Network Design
Supply Chain Analytics
Supply Chain Management C&SI Services
Voice-Directed Picking in Warehouse Management
Warehouse Labor Management Systems
TMS Shipper-Centric Multimodal Domestic
Service Parts Planning
Entering the Plateau
Supply Chain Planning for Process Automation
Appendices
Hype Cycle Phases, Benefit Ratings and Maturity Levels
Recommended Reading

List of Tables

Table 1. Hype Cycle Phases


Table 2. Benefit Ratings
Table 3. Maturity Levels

List of Figures

Figure 1. Hype Cycle for Supply Chain Management, 2010


Figure 2. Priority Matrix for Supply Chain Management, 2010
Figure 3. Hype Cycle for Supply Chain Management, 2009

Analysis

What You Need to Know


Supply chain leaders are further along on their journeys to achieving a demand-driven value network
(DDVN). Their supply chain strategies are CEO sponsored and business driven. They define and run
processes across their extended supply chains, employing an outside-in and value-oriented
performance management culture, multiple but well-defined hybrid supply chain response models and a
pattern-based information model.
Leaders have moved beyond traditional supply chain management (SCM) techniques, which support
finely tuned and well-engineered process models that describe how supply chains should operate and
respond under predictable conditions. These traditional approaches can generate value in predictable
and steady-state environments, but not under unpredictable and uncertain operating conditions.
From a technology perspective, supply chain leaders are investigating and/or adopting emerging
technologies (to the left of the peak on the Hype Cycle) to support their more advanced processes and
capabilities. Companies still practicing traditional SCM, which typically see supply chain as a cost rather
than a competitive contributor, are heavily focused on the mature SCM technologies coming out of the
trough and approaching the plateau.
With significant uncertainty and unpredictability dominating most supply chains, a continued focus on
reducing costs and/or improving productivity, and a need to maintain other supply chain performance
characteristics, companies are increasingly realizing that factors outside their direct control are having
a greater impact on their supply chain performance. They are also realizing that their steady-state,
traditional supply chain processes are not capable of closing this gap. Perfectly engineered processes
and response patterns are inconsistent with reality and how to survive in new and mature markets.
Supply chain leaders have recognized this, moving closer to a mature DDVN model. In doing so, they
have identified and, in some cases, successfully deployed relevant and supporting technologies for a
DDVN.
Overall, SCM technology innovation continues, despite the market being around for many years. Many
sectors of the SCM technology market are mature and approaching the plateau, but we see new and
exciting developments that have the potential to bring enhanced capabilities to supply chains. Vendors
dominant in mature technologies are challenged with staying current and relevant. In some areas, they
may be replaced by new, more innovative vendors.
End users are becoming more knowledgeable in the screening and selection of SCM technologies. They
are more conservative in how they consider emerging technologies, partly because they have been
burned in the past. The clarity of the potential business case as well as the associated business
processes and competencies required to fully leverage the technology are playing a more significant
part in helping companies understand if and when they should invest. However, supply chain leaders
are outpacing others. There is a widening gap between leaders and followers, with the leaders being
more risk tolerant and years ahead of followers in considering newer technologies.
Existing SCM technologies and emerging technologies continue to be hyped by vendors and the market.
Users need guidance and frameworks to identify the new technologies that support DDVN strategies
and help improve the effectiveness of decision making across the overall operating ecosystem.
Back to Table of Contents

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The Hype Cycle


The traditional focus of SCM has been on the portfolio of business processes that make up the supply
chain. Good SCM practitioners have had a laser-like focus on their SCM processes — for example,
demand management, inventory planning and warehouse execution processes. However, Gartner finds
that supply chain leaders are further along on their journeys toward what we call a demand-driven
value network. Research from AMR Research, which was acquired by Gartner in 2009, shows that
supply chain leaders hold 15% less inventory, have 17% stronger perfect order performance and 35%
shorter cash-to-cash cycle times. What these leaders have demonstrated is that the supply chain can
be a source of competitive advantage and a significant generator of value for the organization.
However, this can only be achieved if there is a corporatewide focus on becoming demand driven. In
"The AMR Supply Chain Top 25 for 2010," we highlight the companies that are furthest along the
demand-driven maturity curve, as well as the best practices they engaged in to get there.
In previous research, Gartner has written about chaos-tolerant supply chains, explaining how this
capability helps support a supply chain's superior performance in an unpredictable environment (see
"Hype Cycle for Supply Chain Management, 2009"). We also review how companies must adopt a
Pattern-Based Strategy in order to provide a framework to proactively seek, model and adapt to
patterns that may have a positive or negative impact on performance across many sources of current
and evolving information (see "Introducing Pattern-Based Strategy"). Both models align well with the
AMR DDVN model (see "Supply Chain Strategy for Leaders: The Handbook for Becoming Demand-
Driven") for the specific context of superior supply chain performance (see "Aligning DDVN and Chaos-
Tolerant Supply Chains and DDVN and Pattern-Based Strategy Are Complementary and Disruptive").
The higher levels of DDVN maturity incorporate chaos-tolerant capabilities and technologies to help
manage uncertainty, and the performance management culture required for mature DDVN
implementations reflects a fairly advanced level of Pattern-Based Strategy deployment.
SCM leaders in 2010 and beyond will have a mature DDVN strategy — and, by doing so, a range of
chaos-tolerant and pattern-based capabilities — at the heart of their supply chains. The stage of DDVN
maturity will dictate, in large part, the technologies that an organization brings to bear in its supply
chain. The technologies Gartner researched for the "Hype Cycle for Supply Chain Management, 2010"
address supply chain capabilities spanning from Stage 1 to Stage 4 on the DDVN maturity model.
The following technologies are mature and provide sound foundations to support Stage 1 and Stage 2
DDVN maturity. They are typically found on the righthand side of the Hype Cycle (on the Slope of
Enlightenment and the Plateau of Productivity):
 Supply Chain Planning for Process Automation
 Sales and Operations Planning
 Supply Chain Analytics
 Supply Chain Collaboration
 Capable-to-Promise Systems
 Integration as a Service
For organizations further along on their DDVN journeys — for example, at Stage 3 and looking to move
to Stage 4 — the technologies on the Slope of Disillusionment and/or approaching the Peak of Inflated
Expectations will be of particular interest, since they are able to support key aspects of the defining
characteristics of Stage 4 DDVN capabilities:
 Process Templates for SCM Innovation
 Inventory Strategy Optimization
 MDM of Product Data
 Demand Signal Management
 Supply Chain Performance Management
 Mobile Asset Optimization
 Multienterprise Business Process Platform
 Integrated Business Planning
 Segmented Supply Chain Response
 Profitable to Promise
 Demand Pattern Analysis
Review each technology to determine how it applies to your position and journey toward a fully
implemented DDVN strategy, and continuously evaluate how it can meet your evolving business
strategies and needs.
Major Changes to the "Hype Cycle for Supply Chain Management, 2010"
The following technologies were deleted, renamed or merged on the Hype Cycle:
 Multienterprise Supply Chain Collaboration was renamed Supply Chain Collaboration to better
distinguish it from the Multienterprise Business Process Platform profile.
 Supply Chain Management (SaaS) was split into two profiles, Software-as-a-Service Supply Chain
Planning and Software-as-a-Service Supply Chain Execution, to acknowledge the differences
between the development and uptake of software as a service between planning and execution
technologies.
 RFID and Sensory-Based Inventory Management was renamed Passive RFID-Based Inventory
Management to better reflect the main use of this technology.
 Chaos-Tolerant SCM was dropped with the adoption of AMR's DDVN model and terminology.
 Direct-POS Analytics Applications has been dropped and merged into Demand Pattern Analysis.
The following technologies are new on the Hype Cycle:
 Demand Signal Management
 Software-as-a-Service Supply Chain Planning
 Software-as-a-Service Supply Chain Execution
 Profitable to Promise
 Demand Pattern Analysis

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 Real-Time Factory Scheduling


 Strategic Network Design
 Distributed Order Management
Notable Position Changes
Many of the SCM technologies represented in this Hype Cycle have changed position since 2009, most
of them incrementally. Several, however, have changed more substantially:
 Integrated Business Planning — This is moving up the trigger curve. Organizations with mature
and capable sales and operations planning (S&OP) processes are increasingly looking for the next
step up in capability, especially in how operations is linked with strategy.
 Battery-Powered RFID — This is moving quickly beyond the Peak of Inflated Expectations, on the
backs of combined passive and active RFID tag characteristics and better understood use cases.
Technologies Unchanged
The following technologies have made slow progress since last year and remain in a similar position this
year:
 Supply Chain Planning for Process Automation
 Sales and Operations Planning
 Warehouse Labor Management Systems
 Voice-Directed Picking in Warehouse Management
 Business Process Hubs
 Capable-to-Promise Systems
 Mobile (Wireless) Enhanced Supply Chain Management

Figure 1. Hype Cycle for Supply Chain Management, 2010

Source: Gartner (August 2010)

Back to List of Figures


Back to Table of Contents

The Priority Matrix


When prioritizing SCM investments, companies should relate these investments to their supply chain
strategy and the accompanying road map for how they will progress toward deploying a DDVN. The
degree to which the business is "bought in" to the supply chain, seeing it either as a "necessary evil" or
a key part of its competitive strategy, mostly dictates where a company will be on the DDVN maturity
curve. Typically, companies start their journeys toward DDVN by passing through less-mature stages
first. This means building up SCM capabilities, with an eye on eventually becoming fully DDVN enabled.
Therefore, mature SCM technologies will likely be of interest to companies starting out, but not to
companies further down the path (they usually have them deployed already).
Emerging technologies will be of interest to companies looking to move to more advanced DDVN
deployments, whereas companies at lower levels of DDVN maturity will not have the right foundations
in place to leverage these potential investments. To exploit the full value of SCM technologies, it is
necessary to carefully relate them to supply chain strategy, since this will dictate the maturity of the
associated business processes, performance management environment and necessary supply chain
talent — all of which go hand in hand with SCM technology to create value in the supply chain.
Mature SCM technologies that are yielding benefits for users and focused on supporting lower levels of
DDVN maturity, within the two- to five-year window, include the following:
 Supply Chain Planning for Process Automation
 Warehouse Labor Management Systems

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 Sales and Operations Planning


 Supply Chain Analytics
 Voice-Directed Picking in Warehouse Management
 Supply Chain Collaboration
 Service Parts Planning
These technologies continue to mature, with a range of large installed bases that have broad and deep
experiences. Vendors are bringing competitive offerings to market, and the business processes
supported by these SCM technologies are approaching commodity status as the wider market adopts
them.
Several newer SCM technologies promise significant benefits on the two- to five-year window and
beyond:
 Product Portfolio Optimization
 Supply Chain Performance Management
 Integrated Business Planning
 Business Process Networks
 Integration as a Service
 Inventory Strategy Optimization
 MDM of Product Data
 TMS Shipper-Centric Multimodal Domestic
 B2B Integration Outsourcing
 Capable-to-Promise Systems
 Yard Management
More established technologies supporting Levels 1 and 2 of the Gartner DDVN maturity model are
maturing quickly and seeing deeper adoption in the market. Technologies supporting Levels 3 and 4 of
the DDVN maturity model are typically less mature and will take longer to reach mainstream adoption
(five to 10 years).

Figure 2. Priority Matrix for Supply Chain Management, 2010

Source: Gartner (August 2010)

Back to List of Figures


Back to Table of Contents

On the Rise
"MDM Aware" Applications
Analysis By: Andrew White

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Definition: Master data management (MDM)-aware business applications have been designed (or
adapted) to work better with MDM hubs and solutions. The improved designs simplify interactions
between master data hubs and business applications at several levels, by adopting:
 Externalized metrics and analytics related to master data across all data stores (to support the
governance of master data)
 A publish/subscribe mechanism to facilitate access to data via MDM hubs
 Exposed metadata describing master data stored in the business application (for consumption by
MDM hubs)
Most business applications are not MDM-aware, in that they have no interest or capability to work with
MDM hubs and solutions without IT assisting with added functionality to achieve integration.
MDM-aware applications externalize their master data and/or data models to the point where: (1) the
data model design is visible and adjustable in terms of design authority coming from outside the
purview of the applications (i.e., from the MDM system), and (2) the actual data can be accessible from
external systems (i.e., from an MDM system or a service bus carrying messages to/from the
MDM/application). As more master data is externalized from application sources — packaged
applications, applications developed in-house, business intelligence (BI) data warehouses, etc. — the
implementation style of MDM will have to change, to take into account the growing number of data
sources and subscribers. Finally, MDM-aware applications integrate using a publish-and-subscribe
model to facilitate visibility to the master data steward of the application-oriented metadata describing
the master data stored in it.
Position and Adoption Speed Justification: The need for business applications to "play well with
others" has long been known, but most packaged applications, and even many custom-made
applications, do not. To make MDM work effectively, legacy data stores that keep a copy of master data
for use in applications, and the emerging MDM systems, need to evolve, so that interaction between
the two is radically simpler, faster and more easily managed. This evolution in business applications is
emerging from a view held by visionary business application vendors that see this market
opportunistically.
A small number of business application vendors claim that their applications are MDM-aware. These
applications have externalized some or all of their master data and/or application data model, so that a
more usable publish-and-subscribe infrastructure can be implemented with an MDM infrastructure. As
the adoption of MDM continues, we expect the hype around MDM-aware applications to increase
quickly, although actual penetration will be slow, because of the amount of work that vendors and
application development teams will have to undertake to rewrite or modify business applications. Being
new, and highly dependent on how MDM evolves and matures, they will require more application
interaction with MDM systems.
Since 2009, Gartner has observed the emergence of "MDM-powered applications," which add the value
of an established MDM service to business applications. This development initially slows the likelihood
that MDM aware applications will emerge; however, in the long term, this is likely to increase pressure
for this adaptation in business applications.
User Advice: For users of packaged applications: Understand that there are few MDM-aware
offerings. As you continue to select and adopt packaged applications, vet the vendors for MDM
awareness, and ensure that new packaged applications have a road map whereby their master data will
be exposed more easily and made visible for integration to your emerging MDM infrastructure.
For developers of business applications (transactional, BI and analytic): Ensure that your
application architecture supports an externalized logical master data model that can support a uniform
master data metadata model for the enterprise. Ensure that your service-oriented architecture (SOA)
strategy supports a publish-and-subscribe framework of services among the externalized (and legacy)
data stores with your MDM application.
Business Impact: Applications that become MDM-aware will help IT to significantly simplify its
information infrastructure, and delivery enterprisewide master data governance, at a cost that IT and
the business can afford. Organizations that adopt an MDM strategy will have to determine which
systems (CRM, supply chain management, ERP, procurement, product life cycle management, custom
and best of breed) must be enabled for the external data governance performed by MDM. We are
seeing initial work in supply chain packaged applications (complex B2B environments where multiple
firms have to share product master data), as well as in retail and distribution (where there are a large
number of heterogeneous applications, and a low density of large, dominant, single data-model-based
application vendors). Given the primary focus of MDM in the customer and product data domain, we
expect application vendors and developers in these areas to adopt MDM-aware strategies.
Advantages focus on:
 IT benefits, in terms of simpler and more-manageable integration environments across
heterogeneous systems, leading to lower costs
 Business benefits, including rapid implementation of new business applications; more-accurate
data (in that they "plug into" the established MDM infrastructure), thus improving the efficacy of
user decision making taking place in the relevant business applications
Benefits will vary, but will be focused on the departments and domains that adopt MDM-aware
applications.
Benefit Rating: High
Market Penetration: Less than 1% of target audience
Maturity: Embryonic
Sample Vendors: Aldata; JDA (i2); Soft Solutions
Back to Table of Contents

Segmented Supply Chain Response


Analysis By: Tim Payne
Definition: Segmented supply chain response is a set of competencies, processes and technologies
that enables an enterprise to identify, analyze, model, deploy and execute on a portfolio of supply
chain responses that helps align supply chain performance profiles with the characteristics of specific
product/customer segments.
Position and Adoption Speed Justification: Supply chain segmentation, also known as

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classification, has been around for many years (for example, consider ABC classification). Customer
segmentation has also existed in the CRM arena. As supply chains cope with increasing levels of
external chaos driven by factors such as globalization, virtualization, economic uncertainty, complexity
and business strategy diversity, leading companies are pushing toward the orchestration stage of
Gartner's demand-driven value network (DDVN) model, which calls for a value-driven supply chain
response.
Enterprises looking to expand the scope of their segmentation strategies must bring together
capabilities from different technology areas, such as supply chain analytics, supply chain planning
(SCP), supply chain execution (SCE), ERP, business intelligence (BI), sales and operations planning
(S&OP), network design, simulation and inventory strategy optimization (ISO). These applications will
continue to merge and progressively form more coherent capabilities that support aspects of
segmented supply chain response. For example, ISO and network design are already converging,
adding design proficiency to the analysis and modeling capabilities of ISO technology, all of which are
important aspects of segmented supply chain response.
SCP and supply chain performance management are combining so that BI-derived insight can have an
impact on business processes. These two islands must converge in order for strategic plans to align
with operational plans, but some pieces are still missing. The necessary convergence of planning and
execution — that is, the ability to execute across a parallel set of supply chain configurations — is
missing from most vendor road maps, although capabilities at the network level exist in both domains.
The initial identification and analysis of product and customer clusters, as they are relevant to supply
chain performance, are only available through data mining and offline, ad hoc analysis. They're also
fragmented across different organizational domains, such as CRM and SCM.
User Advice: Because segmented supply chain response is a set of competencies that requires a
portfolio of solutions, it can't be purchased in its entirety from one vendor just yet. Pieces to the puzzle
are available, though, with the most obvious being network design and new analytic solutions like ISO,
which are used to leverage investments in SCP applications, as well as supply chain performance
management solutions, which use BI capabilities. Users interested in segmented supply chain response
should start with these technologies. Eventually, this point application sourcing approach will be
replaced by the integration of planning and execution, perhaps by the ERP vendors as they develop
their functional depth and breadth and provide suitable segmentation frameworks.
Business Impact: A segmentation approach has demonstrated significant benefits in terms of
customer service and total delivered cost by addressing one of the primary reasons supply chains
underperform: a mismatch between product and customer characteristics and the supply chain
performance profile.
Benefit Rating: High
Market Penetration: Less than 1% of target audience
Maturity: Emerging
Sample Vendors: IBM; JDA; LLamasoft; Manhattan Associates
Recommended Reading: "Segment Your Supply Chain Response to Drive Enhanced Performance"
"Development of Chaos-Tolerant Processes Is Key to Supply Chain Optimization"
"Who's Who in Inventory Strategy Optimization"
Back to Table of Contents

Integrated Business Planning


Analysis By: Tim Payne
Definition: Integrated business planning (IBP) is a set of systems, processes and competencies that
provides a performance management environment to support the strategic alignment and modeling
capability missing from the traditional, operationally focused sales and operations planning (S&OP)
processes for the supply chain. IBP links corporate performance management (CPM) to operational
S&OP with the capability for strategic and financial modeling and analytics enabled by approaches such
as supply chain performance management. IBP is an example of an analytical application: By
embedding analytics closely to the business process, performance management is more readily
realized.
Position and Adoption Speed Justification: Integrated business planning is developing as a
separate and distinct capability layer that sits over an operational S&OP process and links to a CPM
solution as part of a wider performance management initiative. S&OP has been available for many
years, and it's particularly well-known in manufacturing organizations. It was intended to reconcile
business strategies and operational plans, but the strategic dimension is missing from most S&OP
processes. As a result, they're mainly operational. Therefore, the concept of IBP is continuing to
develop and embrace strategic and deep financial modeling capabilities that use operational planning
and S&OP processes and link into the organization's CPM initiatives.
Gartner has recently seen evidence of companies looking for the next step once they've reached a level
of S&OP process maturity. Although this step isn't often called IBP by these companies, its
characteristics align well with our definition. Technology support for IBP, however, is currently lagging
market interest.
User Advice: Since IBP requires a range of capabilities, it can't be sourced as a complete solution from
one vendor just yet. However, CPM, supply chain planning (SCP), ERP and best-of-breed supply chain
modeling vendors are progressively developing capabilities that are moving toward IBP.
If you need to develop IBP capabilities, establish a best-of-breed strategy for the next few years before
more integrated and performance-management-enabled solutions emerge. Consult with your S&OP
vendors to see which IBP areas they either can or plan to support, and also work with specialized
strategic modeling vendors. Expect to see business suite vendors such as Oracle and SAP, which have
functionality in many different areas, integrate these pieces into more holistic solutions, although early
releases will most likely be functionally light and poorly positioned.
Business Impact: These capabilities will enable companies to model and align business strategies to
operational strategies, ensuring significantly improved supply chain and business performance.
Benefit Rating: Transformational
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: Jonova; Oracle; River Logic

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Recommended Reading: "Integrated Business Planning Fills the Gap Between Strategic Planning and
S&OP"
"MarketScope for Sales and Operations Planning"
Back to Table of Contents

Product Portfolio Optimization


Analysis By: Andrew White
Definition: Product portfolio optimization is an analytics application focused on a business process and
discipline that has, to date, not been addressed effectively with technology. Product portfolio
optimization focuses on how senior executives in sales/marketing/service, finance, operations, supply
chain management, engineering/development and procurement, together with the COO, determine
what market (which products, product categories, channels, and mix and price of each) to address.
This is a strategic task that takes place periodically and is a key aspect of product performance
management (PPM). Product portfolio optimization is a new analytics application that supports the
business goal of enhancing PPM.
Position and Adoption Speed Justification: The problem of determining what markets to address
and with what products and/or services, and the evaluation of market and product profitability at the
strategic level, has been central to how firms operate. Despite the importance of this problem, IT
support has been, to date, very poor. Most firms use reports and manual procedures to make such
strategic decisions; the output of such decisions is often disconnected from tactical and operational
business activities. Thus far, business intelligence has been used as a platform to help provide some of
the data needed, but without formal, structured business processes. A sector of the market, mainly
manufacturers with a strong product life cycle management (PLM) discipline, has formalized this
process. The technology, referred to as product portfolio management, typically has not evolved to
support non-PLM environments, or to support cross-departmental and executive requirements.
Product portfolio optimization will likely mature relatively quickly as a technology, because it represents
the use of a known technology capability to solve a different business problem (modeling, optimization,
simulation, analysis, costing/ABC). The technology will likely evolve to include business process
modeling technology for more-complex process impact analysis. Vendors have emerged that are not
tied to any one business domain or application stack; this bodes well for users, because it leads to a
stronger integration solution. Some industries use different terms to refer to this area. In retail, for
example, product portfolio optimization is included in the broader focus of merchandise and category
optimization. The terms are different, but the business goal is the same to determine strategic plans
over which products, categories and business segments to address.
User Advice: Despite the newness of this technology, it warrants being evaluated by early adopters.
Product portfolio optimization is a proven technology that is being applied to a new problem. With the
right data, right processes and right organization, this technology can provide immediate benefits to
the business.
Users with immature business intelligence and/or business application architectures also can take
advantage of such solutions, although the execution will be difficult. Companies with more-effective
and/or mature business intelligence or business application architectures can take advantage of such
technologies that are, by definition, noninvasive and more quickly deployed. Users that struggle with
making effective decisions at the strategic level, and determining how to re-evaluate such strategic
decisions on a timely base, should look into this emerging technology.
Business Impact: Benefits, short term, will accrue on product portfolios: what is to be developed and
sold, and what should not be sold. Longer-term benefits will focus on new market and channel
development that is founded on a better understanding of what product portfolios exist and what is
needed.
Benefit Rating: High
Market Penetration: Less than 1% of target audience
Maturity: Emerging
Sample Vendors: Jonova; Lawson; Planview; River Logic
Recommended Reading: "Single View of Product Data Can Improve Supply Chain and Drive Product
Performance Management"
Back to Table of Contents

Supply-Chain-Centric, Carbon-Sensitive Planning and Optimization


Analysis By: Dwight Klappich; Stephen Stokes
Definition: Carbon-sensitive planning and optimization refers to a range of technologies and
applications that enable enterprises to identify, model and, ultimately, optimize their carbon effects
across entire supply chains. Initial solutions will be narrowly focused on specific supply chain processes
and activities, such as transportation planning, network design and carbon footprint dashboards. In the
near term, they will model and optimize a limited set of resource constraints, such as minimizing
carbon footprints. In the future, yet-to-emerge solutions will extend across other resource constraints,
such as emissions, as well as across the extended supply chain and product life cycles for all
environmental conditions.
Although carbon footprint is the primary focus today, in the future, users will need to consider other
factors that affect their environmental sustainability impacts, such as direct operational emissions of
other pollutants, energy consumption and waste generation.
Position and Adoption Speed Justification: Tools exist that minimize or optimize variables that
could affect the carbon footprint, such as transportation planning to minimize wasted miles or
transportation mode, which could, in turn, reduce carbon emissions. However, tools that explicitly use
carbon footprint as an optimization goal and have content databases that provide carbon-footprint
variables, such as transportation mode data, where a diesel truck of a certain size emits a certain
amount of carbon dioxide per mile driven, are just now emerging, with quality uneven.
Narrowly focused tools will first emerge on top of existing applications, such as transportation
management systems (TMSs) or network design. These will simply add carbon considerations as
variables or data elements that can be optimization goals (e.g., they will minimize the carbon footprint
of a specific body or a specific kind of work). However, it will be several years before more holistic
solutions emerge that span multiple functional and application domains as well as optimize and provide
a more complete picture of an organization's carbon footprint.

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With the poor state of the global economy over the last 18 months, Gartner found that supply chain
management (SCM) user intention to invest specifically in green and carbon footprint reduction has
waned. Consequently, SCM vendor focus and investment in adding more capabilities in this area
declined, with few new capabilities emerging. In Gartner's annual SCM user study, we found, for the
third year in a row, that "green" was just shy of being at the bottom of the list of priorities over the
next three years.
User Advice:
 Identify the largest contributions to your company's supply chain carbon footprint.
 Complement your carbon-footprint reporting, and move toward resource optimization.
 Adopt SCM technologies, such as new attributes, data and models, that identify, track and reduce
your supply chain's carbon output.
Business Impact: At a minimum, these solutions will enable enterprises to comply with emerging
government mandates and regulations as well as use their adoption of green initiatives as good
publicity. In many cases, however, optimizing green considerations offers complementary business
justification because reducing emissions can reduce other costs. For example, reducing wasted miles
driven for a green initiative translates into significant savings on fuel and overall transportation costs.
Benefit Rating: Moderate
Market Penetration: Less than 1% of target audience
Maturity: Embryonic
Sample Vendors: Barloworld Supply Chain Software; i2 Technologies (JDA); Infor; Lawson; SAS;
Supply Chain Consulting
Back to Table of Contents

Mobile Asset Optimization


Analysis By: Tim Payne; Kristian Steenstrup
Definition: Mobile asset optimization refers to the use of a combination of business process software,
sensory technologies, operational research skills (such as demand forecasting and optimization) and
business intelligence (BI) to optimize the use of an enterprise's mobile assets. This combines many
principles of supply chain management (SCM), which has focused on inventory optimization, with asset
management to use sensory technologies to track, monitor and note the state of mobile assets.
Although not all SCM principles apply to asset optimization, many do, including demand forecasting,
scheduling, transportation optimization, visibility and analytics.
Historically, asset management technologies like enterprise asset management (EAM) have been the
primary systems focused on assets. These solutions were concerned with managing their maintenance
to ensure the costs of downtime were optimized against the needs of the business.
A new category of asset management solutions focuses on optimizing the positioning and use of assets
without a related maintenance schedule. This is a step beyond a real-time location systems (RTLS),
where not only the location of the asset is known, but so is information about its variable condition.
Since most of these assets are mobile, the emerging systems focus on several phases of mobile asset
optimization: consumption forecasting of asset inventory and capacity, planning for the repositioning of
assets for optimal use, locating assets, positioning assets according to plan, tracking the use of assets,
tracking the state of assets and analyzing data to infer improvements to business processes.
In addition to these operational phases of mobile asset optimization, there are key administrative
functions: dynamically keeping a catalog of assets and their statuses, maintaining an on-demand view
of where the assets are and should be, assigning responsibility for the ownership and pricing of asset
use and monitoring the performance and condition of the assets.
These solutions aren't specifically tied to a maintenance schedule either because they aren't maintained
or the primary concern isn't maintenance — that is, the assets involved are mobile and may cycle
through the internal and external supply chain many times (e.g., roll cages used in distribution). This
doesn't mean these assets have short useful lives, but that the primary concern of the business is
optimizing the use and positioning of the assets rather than their maintenance. In addition, Gartner
draws a distinction between assets and inventory: assets are reused, whereas inventory is consumed
by a customer or a value-added process.
This definition of mobile asset optimization incorporates the use of sensory technologies, such as active
RFID, GPS, satellite technology, and Wi-Fi-based and ultrawideband tracking systems. However, its use
and the associated decisions when using the collected information is what separates this solution from
independent sensory components.
Position and Adoption Speed Justification: This technology is emerging for the following reasons:
Sensory technologies such as RFID and GPS enable mobile asset tracking and positions to be more
accurately tracked.
Enterprises increasingly want to manage the utilization of mobile assets, such as shipping containers in
warehouses and wheelchairs in hospitals, to optimize their contribution to the value chain.
This technology is at an early stage. Few users have adopted it, the solutions are still in development
and many projects are system integration efforts, with users assembling their own solutions from
multiple pieces of technology. At this point, there's no technology leadership regarding the sensory
technologies that will be dominant. Users must proactively identify and manage solution components.
However, these projects will be easier to pursue than sensor-based inventory projects. Mobile asset
optimization technology doesn't usually compete with bar code technology.
There are numerous industry-specific examples of this technology, including knowing the status,
utilization and location of a kidney dialysis machine; shipping container management among logistics
service providers; and rolling cage tracking in the automotive industry. The commonality among these
business problems is that the assets comply with the five phases of asset optimization. Although some
industry-specific approaches will continue, the horizontal approaches to this discipline will accelerate
adoption across a broad range of industries.
User Advice: Start any project by establishing the discipline of a life cycle of mobile assets and
building business processes to optimize them. Many enterprises start off by just wanting to track
assets, but they later find they need a holistic view of mobile asset optimization to realize further
business value.
From a sensory perspective, establish use cases and general infrastructure components for mobile

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asset optimization projects to understand the information that's available and the additional
information needed to further optimize the process. Understand the infrastructure patterns for indoor
and/or campus-asset tracking, outdoor-asset tracking, shop-floor asset management and wide-area
asset management, as well as how additional information beyond RTLS can be beneficial.
Business Impact: Traditional asset management systems have focused on cataloging and
documenting asset location and maintenance. Sensor technologies can enable enterprises to determine
where the assets are and how they're being used in a process in real time, especially as more become
mobile across the supply chain. This information can be used to infer the status of a business process
or assign responsibility for assets to the individuals or entities that control them. It can also associate
different assets and inventory within or across specific business processes. Ultimately, this improves
the efficiency or accuracy of the business process and reduces the number of misplaced and stolen
assets.
Benefit Rating: Moderate
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: AeroScout; Cetaris; Check Point Software Technologies; Cisco; Ekahau; InSync
Software; Microlise; Texada Software; Zebra Enterprise Solutions (WhereNet)
Recommended Reading: "RFID in the 2009 Supply Chain: Overview and Best Practices for Maximum
Investment Value"
Back to Table of Contents

Supply Chain Performance Management


Analysis By: Tim Payne
Definition: Supply chain performance management (SCPM) is a technology-enabled discipline that
includes the performance-driven processes used to help manage "assets" (such as customer service,
orders, costs, inventory, physical assets, operational plans, tasks and activities) across an end-to-end
supply chain; the methodologies that drive some of the processes (such as the balanced scorecard or
value-based management); and the metrics used to measure performance against strategic,
operational and tactical performance objectives (for example, using the SCOR model). SCPM represents
the convergence of business and analytical applications that provides the functionality to support these
processes, methodologies and metrics, which are targeted at strategic users through to tactical, day-
to-day supply chain decision making in relation to products and services flowing through a supply
chain. Capabilities include portals, dashboards, metrics, industry templates, business activity
monitoring, predictive analysis, KPI maps and the ability to drill down from high-level metrics into
lower-level metrics, down into the underlying transactions in support of root-cause analysis.
Position and Adoption Speed Justification: This technology contains the tools required to support
more end-to-end supply chain performance management. By providing one point of performance
management, SCPM avoids the drawback of supply chain analytics, which monitors performance at a
departmental or functional level only, by providing a more complete and integrated view. For this
reason, SCPM is essential for improved performance.
SCPM continues to gain interest from companies that are currently using more departmentally focused
supply chain analytics solutions, which often are part of their SCM vendors' solutions or built out from
their business intelligence (BI) platforms. As the technology develops, it will eventually replace these
disparate applications, especially when users recognize the value of having an integrated performance
management capability across their supply chains. The integrated approach will facilitate the links
between strategic and operational planning and execution, whereas supply chain analytical solutions
tend to support the departmental operational level.
SCPM will be a key part of a company's broader performance management initiatives, such as
corporate performance management (CPM) and product performance management (PPM). It will also
support business processes such as sales and operations planning (S&OP) and integrated business
planning (IBP). As users become more focused on overall supply chain performance, they'll favor SCPM
solutions over functionally specific supply chain analytics solutions.
User Advice: The solutions now emerging in the market tend to be analytical applications focused on
aspects of SCPM, instead of platform-based SCPM solutions that address the whole supply chain. This
emergence is facilitated by business application and BI vendors that are converging and moving toward
these end-to-end, process-oriented performance management solutions. The acquisitions of BI vendors
by business application and technology vendors are starting to bear fruit; both Oracle and SAP have
initial offerings in the SCPM space. The convergence of BI with business applications proves that
enhanced process performance must come from deeper insight into supply chain business processes
across multiple domains, functions and departments. The elevation of BI to the business application
platform level will support a drive toward more SCPM capabilities.
Enterprises looking for departmental or functional SCPM support should focus first on the performance
management solutions that are seamlessly integrated with core supply chain management applications.
Enterprises that have extreme SCM application heterogeneity or are looking for a consolidated view of
all SCM metrics should consider SCPM offerings. However, these products are still immature and
incomplete. Depending on the historical focus of the vendor, they may not cover all areas of SCM.
The users most likely to be interested in SCPM are those that focus on maximizing supply chain
performance and understanding the need to comprehend end-to-end performance and the necessary
trade-offs involved in SCM. SCPM solutions will be more applicable to enterprises in the later stages of
the Gartner demand-driven value network (DDVN) maturity model.
Business Impact: User focus on the links between the performance of adjacent processes
(horizontally and vertically) will support the maximization of end-to-end supply chain performance.
SCPM supports the proactive and intelligent management of all aspects of a company's supply chain as
part of an enterprisewide performance management strategy.
Benefit Rating: High
Market Penetration: Less than 1% of target audience
Maturity: Emerging
Sample Vendors: IBM (Cognos); Oracle; SAP
Recommended Reading: "Supply Chain Analytics: Driving Toward Product Performance Management"
"Top Supply Chain Planning Processes"

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"Key Performance Indicators for Supply Chain Processes"


"Top Six Supply Chain Execution Processes, 2009 to 2014"
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Multienterprise Business Process Platform


Analysis By: Andrew White; Debbie Wilson; Benoit Lheureux
Definition: A multienterprise business process platform (ME-BPP) is Gartner's high-level conceptual
model of a multistakeholder environment, where multiple businesses' operational processes that model
multienterprise business processes are governed. The ME-BPP is a combined set of shared IT and
shared solutions and services that enables multienterprise process design, modeling, improvement,
composition, execution and management. The business services repository (BSR) portion of a ME-BPP
exposes automated business functionality as reusable software services to be used in complex
multienterprise process compositions. This differs from a BPP that focuses on governance of
information and application assets for enterprise-centric business processes.
When participating in an ME-BPP, the following technologies and assets will be governed in a shared
fashion: B2B data and application integration technologies and a range of packaged business
application solutions, coupled with technology services related to (supply chain) visibility, business
intelligence, analytics, and performance management, workflow, business process management
technology, multienterprise master data management, multienterprise security and governance,
supplier community management services and portals. A BSR will be used and implemented in a shared
environment, where reusable services are exposed to support composition and integration.
The last piece, which makes this more than just an aggregation of technology, is that an ME-BPP is
architected so that end-user enterprises can extend and adapt what starts out as a
packaged/standardized business application, using service-oriented architecture (SOA) and business
process modeling tools to modify processes and define custom, multienterprise composite applications
that use the same infrastructure (that is, common services) or highly configurable, template-driven
applications that can mimic a custom application for a specific client. The result is a centralized offering
of standardized applications that also supports the additional need for innovative business applications
that are sometimes modified versions of the existing applications and other times new applications.
Ultimately, the ME-BPP will evolve to [we need to use the word "include" so that it is clear to the reader
that this evolution is additive to current scope, not a replacement] support the more human-centric
social networks or "process of me" (informal, but critical) processes most often referred to as
"Facebook for the supply chain."
The relationship of your ME-BPP to your BPP: Enterprises will not share a (singular) BPP. Your BPP is
used to govern the assets inside your enterprise. We called this new pattern "ME-BPP" to be very
specific about the key characteristic that is unique to a BPP — that multiple enterprises can and will
share governance of some of those assets and technologies (that already do exist and enable their
BPPs) in a unique fashion that we is gradually emerging. Adopting an ME-BPP rationalizes all the B2B
interaction efforts, tools and governance through one framework — the ME-BPP. In this way,
enterprises can share some assets from their BPP, that part of the supply chain that gets value from
shared governance.
Position and Adoption Speed Justification: There are no completed ME-BPP offerings on the market
in 2010, though, since, 2009 numerous vendors have slowly been evolving across many fronts, toward
the same general direction of an ME-BPP, perhaps oriented around a transaction or process style,
industry, or set of similar services. There are some business process hubs (BPHs) and business process
networks (BPNs) with a combination of technology and methodology's in varying stages of evolution
(notably, Ariba, E2open, iTradeNetwork, Perfect Commerce, Quadrem and e-Builder that are
converging toward an ME-BPP). Some vendors might be more focused on multienterprise integration
(BPNs) and others on multienterprise business applications (BPHs). None has unified BPN and BPH
technology with a metadata-driven process modeling and SOA, and the sufficient community
management and performance management infrastructure needed to fully qualify as supporting the
needs of an ME-BPP.
Type A (early technology adopters) enterprises are asking their technology providers, "Why do I have
so many different vendors to support all my different interactions with my trading community?" These
users are looking to rationalize their investments into a few moving parts. This is a short-term driver,
and these same Type A users and their strategic IT partners are just realizing that something new is
emerging from this cost-based driver that will yield cost savings, as well as a competitive advantage.
Users will have to look opportunistically for ME-BPP-like offerings among the multitude of BPHs and
BPNs that are offered in the market. The barriers that are slowing the adoption and development of
ME-BPPs are gradually eroding, include lack of maturity in infrastructure, trading partners not at the
same stage of IT maturity or readiness, insufficient use of metadata-driven approaches to master data
and application modeling, lack of shared-governance models (although industry- and community-based
process and data standards will help) and inertia (current investment plans have a return-on-
investment target that still has to be met). ME-BPP is less hyped (so far) than the enterprise "version,"
BPP, which has matured as a discipline earlier, since it is older in concept and pertinent to every
enterprise. It is quite likely that the hype related to ME-BPP will always be less than its enterprise-
oriented version.
User Advice: To gain a good understanding of their multienterprise processes, clients should create a
multienterprise process architecture that identifies needs for differentiating multienterprise processes;
needs for standardized, enterprise oriented business processes would be governed internally with a
BPP, not via a shared ME-BPP. Business process analysts should focus on designing the differentiating
multienterprise processes for change, and on working with their own and partner IT organizations to
implement the first iteration of such processes, including a strategy and plan for ongoing changes to
keep them differentiating or to move them gradually into the core as competitors catch on and copy
their approach.
Leverage emerging ME-BPPs (BPHs and BPNs that are building toward an ME-BPP offering) to
implement configurable, extendable, shared multienterprise processes. Recognize that an ME-BPP is
part technology and part application infrastructure design concept, with methodologies to support a
multistakeholder-governed infrastructure. An ME-BPP supports a business strategy enabled by
technology that involves communities of interest (business relationships), communities of trust, shared
infrastructure (including integration as a service), and shared or multienterprise business applications.
Develop a multienterprise strategy involving a "portfolio approach" of B2B interactions that might, over
time, rationalize a move toward fewer methods. Seek to consolidate separate B2B projects on one

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infrastructure; incorporate your B2B integration strategy into your business application strategy, and
establish clear metrics for tracking the success of your multienterprise projects.
Business Impact: Initial impact is being seen in a number of areas, notably global trade, third-party
logistics, distributed order fulfillment, procure to pay and multienterprise collaboration. In the longer
term, we expect to see more adoption across widespread deployed business processes, such as those
found in application domains, such as CRM, ERP, procurement, product life cycle management and
supply chain management, as well as industry-specific applications.
Benefit Rating: High
Market Penetration: Less than 1% of target audience
Maturity: Emerging
Sample Vendors: Ariba; e-Builder; E2open; Perfect Commerce; Quadrem; Sterling Commerce
Recommended Reading: "Findings: Ownership of Processes Distinguishes Internal BPP From
Multienterprise BPP"
"The Emergence of the Multienterprise Business Process Platform"
"Best Practices: Checklist for Issues to Consider in Multienterprise Collaboration"
Back to Table of Contents

Software-as-a-Service Supply Chain Planning


Analysis By: Tim Payne
Definition: Software-as-a-service (SaaS) supply chain planning (SCP) refers to SCP software that's
owned, delivered and managed remotely by one or more providers. Companies have multiple options
for deploying SCP applications: on premises, hosted, SaaS or managed service. SaaS SCP requires that
the vendor provides remote access to the application as well as maintenance and upgrade services. The
infrastructure and IT operations supporting the application must also be outsourced, but unlike hosting,
the infrastructure is shared across multiple user organizations. Having a subscription pricing model
alone doesn't qualify an application as SaaS.
There has been much hype over SaaS for business applications, with supply chain management (SCM)
technology no exception. The adoption, however, isn't uniform across all the various applications. The
SCM technology market is broadly split into two large subsectors: supply chain execution (SCE) and
supply chain planning. SaaS uptake is much more prevalent in the SCE arena, most notably in
transportation management systems than in traditional SCP for capabilities, such as demand, inventory
and manufacturing planning.
For most organizations, SCP still signifies the key functionality required for planning an internal supply
chain, perhaps with some planning collaboration with key customers and suppliers to improve those
plans. When we talk about SaaS SCP, we're referring to this part of the market. For applications that
support multienterprise planning, such as vendor-managed inventory (VMI) and collaborative planning,
forecasting and replenishment (CPFR), see multienterprise collaboration, where SaaS-based planning
applications are making headway on the back of the community management characteristics of SaaS
applications.
Position and Adoption Speed Justification: On premises is still the dominant delivery vehicle for
SCP applications. Overall, SaaS represents less than 20% of the SCM application market. However, in
SCP, SaaS penetration is low and growing slowly, since most users still report a preference for planning
solutions that are on premises. The reasons cited for not deploying SaaS-based SCP solutions include
the loss of in-house planning skills, loss of control over a mission-critical business processes and
concerns with integrating the SaaS offering to on-premises, transaction-based applications, such as
ERP and warehouse management systems (WMS). In many cases, these concerns aren't valid, but
they're holding back the SaaS SCP market nonetheless.
Vendors offering SaaS-based SCP solutions are still seeing far more demand for the on-premises
versions. Some are offering managed services for planning, using their SaaS SCP solutions. The use of
managed services for SCP gives the end user the option of outsourcing the entire planning process to
the vendor. It's likely to appeal to companies that have already lost their in-house planning skills or no
longer see them as a core competency.
True multitenant SaaS SCP offerings are thin on the ground. Those that are multitenant are focused on
multienterprise planning processes, such as VMI. Single-tenant, on-demand SCP offerings tend to be
hosted, on-premises solutions.
User Advice: Carefully evaluate the criteria for deciding between on-premises and SaaS-based SCP
solutions. Some SaaS-based SCP products — typically the ones designed specifically as SaaS only —
can be lighter in terms of their planning capability (for example, lack of solver-based optimization, deep
manufacturing planning and/or scheduling). Solutions from traditional on-premises vendors moving
their offerings to SaaS can have deeper planning capability.
Assess the need for managed services to support the planning process. This is likely to be where the
larger value proposition for SaaS SCP is found. Companies with complex requirements or those that
want more than basic SCP capabilities should focus on market-leading products, which, at the time of
publication, are primarily on premises. Companies with less stringent requirements or ones that are
looking for an interim solution (for example, less than three to five years planned solution life) should
consider SaaS SCP. Model costs for on-premises and SaaS comparisons to at least five to seven years.
This will allow for a total cost of ownership comparison that looks at long-term subscription costs
against upfront license and annual maintenance costs, with possible annual maintenance increases
taken into consideration.
Business Impact: SaaS SCP applications in general deliver the same business advantages as their on-
premises cousins when targeted at the traditional, internal SCP duties. SaaS-based SCP can add
additional value in multienterprise collaborative planning, where the construction of and interaction
with a community is usually enhanced over on-premises products.
Benefit Rating: Moderate
Market Penetration: 1% to 5% of target audience
Maturity: Adolescent
Sample Vendors: JDA; JustEnough; Kinaxis; Orchestr8; Steelwedge Software; Syncron
Back to Table of Contents

At the Peak

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Demand Pattern Analysis


Analysis By: Noha Tohamy
Definition: Demand pattern analysis is an emerging area in supply chain management (SCM) that
leverages sales and distribution channel data to better predict demand across multiple time horizons in
a demand-driven value network (DDVN). For example, in the strategic time horizon (12 months to
three years), companies can analyze macrochanges in customer demand, macroeconomic indicators
and corporate strategic business goals, such as reaching a target market share for an established
product. Tactically (12 weeks to 12 months), companies can better analyze demand with increased
collaboration with customers on marketing plans, including more alignment for new product
introduction (NPI), seasonality or a promotional event. Operationally (one week to 12 weeks),
companies can leverage frameworks like collaborative planning, forecasting and replenishment (CPFR)
and causal forecasting, as opposed to relying on lagging historical demand data to determine
downstream needs and opportunities. In the short-term, execution time horizon, companies can
analyze demand data, including point-of-sale (POS) data, revised customer orders or weather-related
changes.
So far, demand pattern analysis has been dominated by the needs of consumer product (CP)
companies. It is mainly focused on sensing and analyzing downstream POS data or syndicated third-
party information. But industrial manufacturing, chemical and high-tech companies are now realizing
that demand pattern analysis needs are much broader and can be used as leading indicators to predict
their future demand.
Demand pattern analysis solutions have come in different forms. In CP, a few technologies have
emerged that focus on analyzing massive quantities of downstream data for the primary purpose of
refining short-term forecasts and inventory positions. But companies have also been relying on existing
business intelligence (BI) solutions to enhance the more traditional statistical forecasting with
predictive analysis and causal forecasting. Finally, some companies have used outsourced analytic
services to rely on quantitative skill sets to analyze any channel data and provide statistically valid
insights and recommendations for how to respond to a change in pattern.
Position and Adoption Speed Justification: The demand pattern analysis solution market is
burgeoning, but a few market drivers will continue to improve steady adoption. First, the availability of
low-latency distribution and sales channel data promises a more accurate, up-to-date demand
prediction. Also, the maturity collaborative frameworks and relationships are encouraging companies to
look to their channel partners for more strategic and tactical sharing of demand insights. Improvement
in the power of predictive analytics tools is also promising a wider adoption of demand pattern analysis.
And finally, the availability of low-cost, highly skilled analytical resources from software and service
providers that can analyze and translate these demand patterns into user recommendations for fast-
moving supply chains will also continue to expand the adoption of demand pattern analysis.
User Advice: Lagging indicators like historical information are no longer capable of predicting market
demand and opportunities. As market data, technology and services become more available to analyze
significant demand patterns, companies should investigate this category of solutions from best-of-
breed vendors and service providers in addition to the future capabilities from suite vendors.
Business Impact: Demand pattern analysis enables companies to become more demand driven by
utilizing any form of demand data to better understand current and future market conditions and to
plan a profitable supply response and demand-shaping activities.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: 09 Solutions; i2 Technologies (JDA); IBM Cognos; JDA; SAS; Terra Technology;
ToolsGroup; TrueDemand Software
Recommended Reading: "The 2010 Retail Handbook for Becoming Demand Driven"
"The Handbook for Becoming Demand Driven"
Back to Table of Contents

Demand Signal Management


Analysis By: Dale Hagemeyer
Definition: Demand signal management (DSM) is coordinated by a centralized information store where
all demand-related data can be managed, cleansed, normalized and leveraged. At the simplest level,
demand signals can be regularly updated through a variety of interfaces and can drive a set of
predetermined analytics and reports. At a more complex level, DSM can become the cornerstone of a
comprehensive information architecture, driving a wide array of demand- and supply-related
applications and processes. It combines point-of-sale (POS) data, syndicated information, radio
frequency identification (RFID) information, inventory and supply chain data, customer loyalty data and
other internal information sources into a single unified repository. Services have also developed to
ensure that the broad array of interfaces are kept up to date, as their structure and format often
evolve.
Position and Adoption Speed Justification: While DSM is not well-recognized as a term, the need
for sales, marketing, and supply chain teams to access a wide spectrum of retail and wholesale
account-related information is well proven. Recent enhancements to DSM solutions have enabled
productized solutions to be provided, rather than being dependent on extensive service engagements
to tailor the technology to address specific requirements. As a result, DSM is maturing rapidly, and
standardized solutions are being adopted.
User Advice: Sales and marketing departments within consumer goods manufacturers with a specific
interest in account-related information and market trends may want to ensure that the adoption of
DSM is focused on the specific retail and wholesale accounts that are important to the business, rather
than trying to address all corporatewide reporting and analytics requirements. Similarly, supply chain
organizations will want to ensure that their needs such as alerts about product availability and root-
cause analysis are covered in the solution with minimal to no customization. Given that there are many
potential solutions in this area, focus on those that provide insightful analytics that are pragmatic and
actionable and that fit with the business process that you are seeking to enable.
Business Impact: The analytic capabilities of DSM can provide a standardized fact base from which to
drive the operations of a consumer goods business and to drive a wide spectrum of planning and
information systems. DSM is more than just a single version of the truth. It can also be a critical tool to

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identify new sales opportunities, manage stock more effectively, drive agile responses, and provide a
basis for business forecasting and planning.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: AC Nielsen; G4 Analytics; Information Resources; JDA; Oracle; Relational Solutions;
Retail Solutions; Shiloh Technologies; Teradata; TrueDemand Software; Vendor Managed Technologies;
Vision Chain
Recommended Reading: "Predicts 2009: Consumer Goods Manufacturers Will Continue to Experience
Growth"
"Oracle's Demand Data Breakthrough"
"Using RSi's SaaS Approach to Address the Challenges of Consumer Goods Data Sharing"
Back to Table of Contents

Business Process Networks


Analysis By: Benoit Lheureux
Definition: A business process network (BPN) is a process-specific instance of multienterprise
integration between two or more companies. A BPN is not a category of IT vendor; it is a bundled IT
solution or a type of B2B IT project, something that a wide range of IT vendors offer and a wide range
of B2B communities implement.
BPN can be defined from a:
 Business process point of view — A BPN links the execution of a specific business process, such
as order-to-cash or claims adjudication, between the applications and IT infrastructure of two or
more companies. A BPN doesn't execute the business process logic per se, because such process
execution occurs within the participating applications and business process management (BPM)
logic (and, at times, partially within a multienterprise application that is included in the B2B
project). The multienterprise integration project can leverage B2B standards or proprietary
specifications. For example, to implement the order-to-cash process, a community might use
industry-standard B2B specifications (such as EDI X12, RosettaNet or UBL) or, alternatively, a
proprietary specification defined solely, for example, by a large manufacturer or retailer.
 Multienterprise community point of view — The scope of a BPN can be one-to-many or many-to-
many. BPNs that are implemented only between a company and its private external business
partners are one-to-many (for example, a high-tech manufacturer that implements the
integration tasks associated with a vendor-managed inventory process with its electronic
component suppliers). Many BPNs are implemented to support the interactions of a large number
of companies in a peer-to-peer fashion and are many-to-many (for example, Global Data
Synchronization or SWIFT).
 IT implementation point of view — A BPN can be implemented using B2B gateway software,
integration as a service (IaaS) or any form of B2B integration infrastructure (see "Taxonomy and
Definitions for the Multienterprise/B2B Infrastructure Market"). In addition to, or as an alternative
to, such process-integration technologies, some BPNs use BPM technologies (BPMTs; see
"Findings: Confusion Remains Regarding BPM Terminology"). BPNs use BPMTs particularly when
end-to-end business process visibility is important to network participants, and when network
participants want business stakeholders to make some changes to process flows, rules and user
interfaces, with minimal IT intervention. BPNs can be operated directly by companies or by a
wide range of IT service providers, including providers of application hosting, IT outsourcing,
cloud computing, software as a service (SaaS) and IaaS. Many offer extensive complementary
services for participant onboarding, participant training and participant help desk.
BPN examples:
 BPNs are often run out of the data center of a prominent host for a community of interest.
Examples are Dell, the U.S. Postal Service and Walmart, which operate their own BPNs to support
their supply chains.
 BPNs are operated by business process hubs (formerly called marketplaces), which combine
multienterprise integration and multienterprise applications for specific industries. Examples
include Elemica in petrochemicals, Exostar in aerospace and defense, Liaison Technologies in
paper and pulp, and Quadrem in mining.
 Procurement networks, a type of BPN tailored to indirect, catalog-based e-procurement, related
to e-commerce supplier and buyer value chains, are operated to exchange procure-to-pay
documents and data using a diverse set of B2B specifications, such as cXML, AS2 and flat-file
upload. They are operated by vendors such as Ariba, Ketera Network, Hubwoo, SciQuest and
Perfect Commerce (see "The Role of Procurement Networks in EIPP").
 Organizations such as the Society for Worldwide Interbank Financial Telecommunication (SWIFT),
GS1 and E4X have implemented financial BPNs to support the exchange of financial transactions,
product information and foreign currency exchange data, respectively (see "Business Process
Networks: How to Evaluate Options in the Investment Services Industry").
 Providers of IaaS, such as GXS, Inovis, Hubspan and Sterling Commerce, also operate private
BPNs (for example, to support the supply chains for specific retailers or manufacturers) and there
are public BPNs, such as GS1 Global Data Synchronization Network (GDSN), so that their
customers can publish product information to regional data pools (see "IBM and Hubspan Deploy
IaaS-Based Platform for B2B Project Outsourcing").
 Various e-commerce providers, such as E2open, e-Builder and Wesupply, which, in addition to
stand-alone SaaS and integration functionality and services, also offer process- or industry-
specific bundled solutions for multienterprise integration for specific business processes (see
"Oracle and E2open Deploy BPN to Simplify B2B for Global Transport Processes").
 IT service providers, such as Accenture, Atos Origin, EDS and IBM, typically implement private
BPNs to support multienterprise projects for their outsourcing customers, such as the
multienterprise integration component of a much larger overall procurement business process
outsourcing project.
Position and Adoption Speed Justification: Some BPNs, such as SWIFT, have been available for

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decades. However, most bundled IT solutions and B2B projects for specific multiparty business process
integration problems are still emerging or in the early adoption stage. IT end users' understanding of
B2B integration projects is evolving from the notion of "exchanging transaction data" to the notion of
"linking business processes," and the distinctions between these (such as the implementation of
process visibility tools and rule engines in BPNs to drive process improvement) is increasingly well
understand by IT end users.
As the IT industry continues to evolve and more IaaS, SaaS, application platform as a service and other
forms of cloud computing become available, awareness and adoption of BPNs will rapidly proliferate,
driving the hype around these to the Peak of Inflated Expectations in the next year or so. Next, we
expect there will be a mild slip into the Trough of Disillusionment as communities of interest discover
that, despite their utility, BPNs: (1) will not be flexible enough and cannot evolve fast enough to meet
more rapidly changing business requirements if not implemented using modern approaches, such as
service-oriented architecture and metadata-driven process definitions (e.g., via the use of BPMT); and
(2) do not easily solve diverse semantic business process differences and, thus, processes will not be
easily linked across industries. For example, most BPNs support substantially unique processes within
their communities of interest or industries.
User Advice: Enterprises and B2B communities of all sizes should look for opportunities to license,
operate or participate in BPNs when they offer a preconfigured method of implementing multienterprise
integration for a specific business process as an alternative to a custom multiparty business process
integration project.
When choosing a BPN, also carefully evaluate the degree to which your particular business partners are
(or are not) already on the BPN provider's network. BPN offerings where most of your community
members have already been provisioned on the network will substantially reduce B2B integration
project deployment time. BPNs with few of your community members on board will both increase
deployment time and may require additional business partner onboarding fees.
When available, consider industry standards, such as RosettaNet, SWIFT and UBL, as the basis for
BPNs, because these will accelerate time to production and are preferable to proprietary B2B
specifications when they can be leveraged.
When evaluating BPNs, look for evidence that the solution or project leverages a metadata-driven
definition of integration artifacts, including trading partner profiles, maps for translation, process
models, business rules, etc. BPNs that are more metadata-driven are more likely to be easier to modify
when changes are required in complex multiparty business processes.
Business Impact: Enterprises can implement multiparty business process integration projects with
external business partners faster and for less money when a BPN is available versus having to design
and implement a set of B2B standards and implement such projects from scratch. BPNs are available
for automating supply chains, making electronic payments, exchanging product information, sharing
foreign exchange calculations and linking a wide range of other multiparty business processes among
enterprises.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Adolescent
Sample Vendors: Ariba; cc-hubwoo; Descartes Systems Group; e-Builder; E2open; E4X; Elemica;
Financial Information eXchange; GXS; Inovis; Ketera Network; Liaison Technologies; OB10; Perfect
Commerce; Quadrem; Quick Connect Computer Services; Railinc; SciQuest; Society for Worldwide
Interbank Financial Telecommunication; Sterling Commerce; StrikeIron; SupplyOn; Wesupply; Xign
Recommended Reading: "Oracle and E2open Deploy BPN to Simplify B2B for Global Transport
Processes"
"Magic Quadrant for Integration Service Providers"
"IBM and Hubspan Deploy IaaS-Based Platform for B2B Project Outsourcing"
"The Four Styles of Process Execution in Multienterprise Scenarios"
"The Emergence of the Multienterprise Business Process Platform"
Back to Table of Contents

B2B Integration Outsourcing


Analysis By: Benoit Lheureux; Paolo Malinverno
Definition: B2B integration outsourcing is a specific category of discrete IT outsourcing usually applied
to any type of B2B integration project, and occasionally applied to internal integration projects. It
combines the outsourcing of technical B2B infrastructure, specifically integration as a service (IaaS),
with the outsourcing of people and processes to implement and manage B2B integration projects.
B2B integration and outsourcing generally includes the following high-level components:
 B2B infrastructure — traditionally, this was B2B software implemented either on-premises or via
application hosting, but, increasingly, this is implemented via IaaS
 One-time implementation of a B2B integration project — for example, definition of B2B
documents, maps for translation, and provisioning of connections to trading partners and
external service providers (ESPs)
 Ongoing B2B integration project management — including B2B infrastructure operations,
reporting, support and change management (i.e., everything necessary to manage a B2B project)
Companies use B2B integration and outsourcing in many ways; however, common multienterprise
projects include:
 E-commerce projects — these involve trading partners, such as for buy- or sell-side direct
procurement of materials in the manufacturing sector, and retail/consumer packaged goods
procurement relating to supply chain management and CRM projects
 ERP and service-oriented architecture (SOA) extension projects — when connecting internal
application functionality associated with internal ERP or SOA projects with external trading
partners (e.g., to receive purchase orders electronically from customers directly into your order
entry system)
 Cloud services integration projects — to integrate cloud services with on-premises applications
and data, and among cloud services across multiple providers
 B2B consolidation projects — IT projects that seek to support multiple B2B integration projects in

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one infrastructure
 Multinational e-invoicing projects — especially in Europe and South America
Position and Adoption Speed Justification: IT vendors have offered various forms of B2B
integration outsourcing for years; however, the recent growth of multienterprise projects (see "Q&A:
Hot Questions for Multienterprise (B2B) Integration") is prompting more companies to reconsider their
B2B strategies. This includes considering whether to implement multienterprise infrastructure
themselves or to outsource this task. Traditional e-commerce projects continue to drive increasing
adoption of B2B integration outsourcing, but the proliferation of cloud computing, particularly software
as a service (SaaS), is driving additional demand to address cloud-to-cloud and cloud-to-on-premises
integration projects.
Many companies successfully brought B2B projects in-house via B2B software during the decline of
electronic data interchange (EDI) value-added networks in the early 2000s. However, the need to scale
up these projects to cope with more B2B dealings, and to address often-diverse B2B protocols and data
formats, combined with increasing pressure on IT organizations to outsource noncritical competencies
(particularly in a down economy where capital is tight), is — according to many Gartner clients we have
spoken to — fueling a selective withdrawal from new investments in modernizing or scaling up in-house
B2B projects. It is also increasing interest in the outsourced approach. In addition, as companies make
a "leap of faith" by capitalizing on business functionality from cloud-computing and SaaS vendors, it is
natural for the same companies to outsource their cloud service integration requirements, because
many of the factors that go into the SaaS versus enterprise software sourcing decision — such as lack
of capital, propensity to outsource noncore competencies, the desire to reduce internal IT assets, etc.
— apply to implementing integration projects as well.
Vendors are doing a better job of creating bundled IT outsourcing offerings that more consistently and
clearly combine the right services (such as multienterprise communications, in-line translation,
community ramp-up and ongoing project management) into simpler pricing models. Some of these
include fixed-price components — for example, a single price to develop a map for translation or to
"onboard" a new external business partner or to connect to a cloud-based service. The vendors in the
B2B integration and outsourcing market are remarkably diverse, reflecting the wide range of B2B
project styles enumerated earlier:
 Vendors such as Crossgate, GXS, Inovis, Sterling Commerce and Tieto offer stand-alone B2B
integration and outsourcing services, typically for traditional e-commerce projects, such as supply
chain integration.
 Vendors such as Atos Origin, Capgemini, HP (EDS) and IBM offer B2B integration and
outsourcing, more typically in the context of larger outsourcing projects, such as business
process outsourcing.
 Vendors such as Appirio, Bluewolf and Celigo conduct B2B integration and outsourcing, often in
conjunction with the system integration they offer for cloud-computing/SaaS projects.
 SaaS providers, such as Workday, offer B2B integration and outsourcing in conjunction with their
SaaS offerings to lower obstacles to doing business with them (see "Seeding the Cloud: B2B
Flexibility Drives SaaS Adoption").
 Providers such as Boomi, Cast Iron Systems — just acquired by IBM (see "IBM Adds
Comprehensive Cloud Service Integration to WebSphere via Cast Iron Acquisition") — Informatica
and Pervasive Software deliver IaaS as an enabling technology, so that other IT service providers
can bundle it into B2B integration and outsourcing; these providers also offer IaaS for direct
consumption by companies that implement B2B themselves.
 Providers such as E2open, Elemica and Hubspan deliver B2B integration and outsourcing bundled
into business process networks that combine prebuilt integration and networks for specific
multienterprise processes, such as order-to-cash, vendor-managed inventory (VMI) or
transportation management.
Several recent industry events underscore that there is a broad, industrywide recognition of the
importance of B2B integration outsourcing and the expectation that this market segment will continue
to expand: GXS and Inovis merged (see "GXS/Inovis Merger Is Likely Precursor to an Initial Public
Offering"), and SPS Commerce recently became an initial public offering (see "SPS Commerce Will
Wield Its IPO Like a Sword, But Not Lethally, in the Battle for B2B" and "SAP Finally Makes a Decisive
Move in the B2B Market"). All of these companies specifically cite B2B integration outsourcing as their
more-important, fastest-growing lines of business.
Given these industry events and our perception of substantially increased client interest in this
approach to B2B, we believe that B2B integration outsourcing is just short of the Peak of Inflated
Expectations. We believe that the Peak of Inflated Expectations is likely to occur in the next 12 months,
then IT users will experience a very brief dip into the Trough of Disillusionment as they experience
minor disappointment from oversimplified vendor positioning and commitments, discover that many
"off the shelf" B2B integration outsourcing offerings don't easily support their custom B2B project
requirements, and experience minor disruptions and confusion as vendors in the B2B integration
solutions market segment, merge or are acquired. We don't believe the dip into the Trough will be
dramatic, and, after that, B2B integration outsourcing will soon progress onto the Plateau of
Productivity.
Based on the combined factors above, and our perceptions from client discussions of increased demand
and solution maturity, and in line with our 2009 expectations, we believe that, through 2014, B2B
integration and outsourcing services will show a five-year average compound annual growth rate of
nearly 20%.
User Advice: Consider B2B integration outsourcing when you need to implement an IT project to
integrate your internal applications and data with your external business partners or with cloud
services, but would prefer to consume IaaS and have someone else implement and manage the B2B
integration project.
Like internal integration, multienterprise integration is a complex task. Also, much of the intellectual
property associated with B2B projects is often "sticky" and, as such, difficult to transfer to another
provider or to return in-house. You, therefore, need to select B2B integration outsourcing vendors
carefully, treating them as strategic technology partners. This is important because, although
"multisourcing" such projects could save you if one vendor falters, this approach also means that
intellectual property related to integration — such as maps for translation — is implemented using
different solutions from different providers. Another drawback of multisourcing is lower economies of

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scale — relative to a larger project with a single vendor — which is likely to mean a higher overall
project cost.
Vendor viability will be particularly important for larger projects (involving hundreds or thousands of
external business partners) with a five-year or longer life span. Although complex projects may require
custom implementations and quotes, prospective customers should consider vendors that manage
costs by using a multitenant B2B infrastructure implementation — and (when available) prebuilt
integrations, rather than custom deployments — and that offer unit pricing for one-time and recurring
fees (rather than custom quotes).
Business Impact: Although many companies implement their own B2B integration projects, the
alternative — B2B integration outsourcing — offers potential benefits for almost all firms, small or
large, across all industries and geographies. This is because these IT projects are relatively easy (e.g.,
compared with more-complex application infrastructure projects involving SOA) to segregate and
outsource, and because providers of B2B integration outsourcing offer a viable and cost-effective
alternative to implementing these projects in-house. The impact of B2B integration outsourcing will
continue to be substantial, and we predict that most midsize and large companies will still outsource at
least some of their multienterprise integration projects and implement some in-house (see "Q&A: Hot
Questions for Multienterprise (B2B) Integration").
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: Accenture; Advanced Data Exchange; Appirio; Atos Origin; Bluewolf; Capgemini;
Celigo; Comarch; Crossgate; DiCentral; eBridge Software; eZCom Software; E2open; EasyLink
Services International; EDS; Elemica; GXS; HP; Hubspan; IBM; Infosys Technologies; Inovis; Kewill;
Liaison Technologies; nuBridges; OmPrompt; QLogitek; RedTail Solutions; Seeburger; SPS Commerce;
Sterling Commerce; Tieto; Wipro Technologies; Workday
Recommended Reading: "Magic Quadrant for Integration Service Providers"
"Knitting Clouds Together: How Integration as a Service Enables B2B Integration Outsourcing"
"Q&A: Hot Questions for Multienterprise (B2B) Integration"
"Taxonomy and Definitions for the Multienterprise/B2B Infrastructure Market"
"Market Trends: Multienterprise/B2B Infrastructure Market, Worldwide, 2008"
"Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed"
Back to Table of Contents

Process Templates for SCM Innovation


Analysis By: Tim Payne
Definition: Service-oriented architecture (SOA) approaches will facilitate the decomposition of
business processes through widely deployed, reused and standardized services. Differentiated and
innovative business processes will emerge from the normal competitiveness of industry, but the
business application technology that makes this innovation operational will be deployed not as a
packaged application, but as a custom-assembled set of process, application and data services built up
from the decomposed process, data and functionality services. These SOA-oriented composites will be
more easily replicated than packaged applications, thus driving the process of the commoditization of
process innovation more quickly. These SOA-oriented composites will be more easily replicated than
packaged applications, thus driving up the process of commoditization of process innovation more
quickly. It will be more easily revised, with time and cost reduced for other enterprises to develop new,
innovative process forms.
The basis for how IT supports competitive requirements will change. It will no longer be serviced by
packaged application vendors, but from innovative business processes delivered by a range of vendors
as "interoperable services." The providers of these unique business services — business process
templates, next-practice models (as opposed to standardized, commoditized best practice models),
industry-specific data and process models, as examples — will emerge from a small number of best-of-
breed or pure-play SCM vendors evolving from packaged application development and becoming SCM
innovation partners. Other vendors addressing the SCM market, including external service providers
and business process management application vendors, may also bring to market SCM process
innovation templates.
Position and Adoption Speed Justification: As end-user enterprises build out their business process
platforms (BPPs), leading best-of-breed SCM vendors and system integrators are beginning to make
the necessary technical and strategic changes to work within a BPP framework. The rate of BPP
adoption, which is driven by the need for IT and the business to govern its existing business processes,
business applications and business intelligence assets and services, is creating an environment for the
packaging and repackaging of those artifacts: the process templates. Innovation emerges over time
from the unique combinations within and support by those templates. These processes can be internal
and external to the organization.
User Advice: Regardless of how they're sourced — behind the firewall, hosted or as software as a
service — for differentiated business processes, SCM process innovation templates help reduce the
reliance on inflexible packaged applications. There are changes to the technology (the asset, no longer
a larger, packaged application, will become a set of reconfigurable application and data services) and
provider (it's no longer the application vendor but the integrator that understands how to assemble a
valuable composite application for the business). Companies should select and validate IT partners
based on this emerging model to prepare for the future needs of process innovation.
Business Impact: By offering innovative templates in the form of whole business processes, process
extensions and data and process models that consume standardized services, the provider of these
templates — the SCM innovation partner — will enable the mainstream adoption of innovative
processes via business process orchestration with minimal disruption, while preserving and recognizing
the value of innovative business application providers.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: CSC; IBM; Infosys; JDA; Manhattan Associates; Tata Consultancy Services
Recommended Reading: "Process Templates Emerging as Key Tools in SOA Projects and Application

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Strategy"
"Look Outside Core Application Platform Vendors for SCM Innovation Partners"
"The SCP for Process Innovation Landscape"
Back to Table of Contents

Battery-Powered RFID
Analysis By: Timothy Zimmerman
Definition: There are two types of battery-powered radio frequency identification (RFID) tags: battery-
assisted passive (BAP) tags and active tags, which are used to collect and communicate asset-level
information. BAP, or Generation 2 (Gen 2) Class 3, tags use a battery for the operation of the internal
circuitry that facilitates the collection, processing and storage of ancillary information. The additional
energy may also be used to boost the communication process in difficult usage scenarios, such as
personnel tags. Active (Gen 2 Class 4) tags use batteries to power all functions of the tag — the
receiving and transmitting of a signal, as well as the power for the processing and memory chips. Both
solutions differ from passive-only tags, where there is no battery for communication, additional
processing or storage. Although active and BAP tags can technically be implemented at all frequencies
in which RFID is used, they are most common at 433MHz, 900MHz and 2.4GHz.
Position and Adoption Speed Justification: Cold storage, healthcare and perishable food supply
chain process requirements need tags to know where the asset is located, as well as to know about the
environment. To acquire this information, more intelligence is being added to RFID tags, so they can
measure such variables as temperature, vibration or humidity, which can affect products in transit. The
evolution of battery technology and the integration of sensors into RFID packaging are fueling the
adoption of these types of RFID solutions. However, there are still problems with the lack of
communication standards and interoperability in some of the applicable frequencies, making the
available information on the tag vendor-specific.
User Advice: Users need to understand their business requirements and the expectations of a battery-
powered RFID solution. Many solutions continue to be proprietary (depending on the frequency and
format), are not interoperable, and will require trading partners to agree on a common implementation
to clear this hurdle through alliances or standards. Vendor differentiation and technical competition will
improve the performance of battery-powered RFID and the robustness of data collected, but this will
also create the need for use-case testing.
Business Impact: Battery-powered RFID will continue to address asset knowledge applications,
requiring the collection of data during the transportation of goods in the supply chain. Cold storage,
healthcare and perishable goods items can see a significant return on investment for using the sensor
capability of battery-assisted and active tags, because the safety and shelf-life of these products can be
adversely affected by changing transit or storage conditions. A battery-assisted passive tag is the tag
of choice when it is available, because it usually has a lower cost, compared with equivalently
functional active solutions. As technologies develop, the surge will continue with the integration of RFID
tags with additional functionality into new areas where temperature, vibration or new parameters
enable vendors to make better business decisions.
Benefit Rating: Moderate
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: AeroScout; Axcess International; Ekahau; Intelleflex; RF Code
Recommended Reading: "Assessing the Capabilities of RFID Technologies"
Back to Table of Contents

Profitable to Promise
Analysis By: Tim Payne; Andrew White
Definition: Profitable-to-promise (PTP) systems build on the capabilities found in available-to-promise
(ATP) and capable-to-promise (CTP) systems. PTP, however, also considers the projected profitability
of fulfilling a specific customer order at the time of acceptance, taking into account the opportunity cost
of not consuming resources and leaving them for forecasted orders.
PTP commits customer orders based on inventory (planned and available), production capacity
(planned and available), equipment, people and materials (planned and available), supply chain
constraints (now and future), multiple steps and nodes in the production process and supply chain
network, and transportation capacity (available and planned). It also considers the opportunity costs of
accepting the order against the value and revenue of fulfilling a future possible order (forecast) of a
higher margin. This means PTP reconciles actual customer requests, orders and order forecasts for
resource consumption. It should also be able to assess the relative profitability of the different
scenarios (e.g., part ship, delay, expedite and decline) and the customer placing the order: Is this a
profitable order from a profitable or strategic customer? Is this an unprofitable order from a profitable
customer? Is this a profitable order from a nonstrategic or unprofitable customer? Depending on the
answers to these questions, different order acceptance and promising outcomes could be possible.
PTP enables organizations to get a clear view of the true profit generated by accepting a specific order
(or not accepting one in favor of a forecasted order with greater margin). It can also indicate the
impact on overall profitability at the customer and organizational level. Without this capability,
organizations are left to accept orders on the basis of available inventory and/or capacity, with a
margin assessment based on absorbed costs and average selling prices. This doesn't provide a true
view, given the prevailing circumstances of the supply chain, of the real profit generated by taking the
order.
Position and Adoption Speed Justification: Variations of PTP have been around for years, usually in
the form of sophisticated CTP systems with additional cost and pricing attributes. The PTP market has
been quiet for the past two years as companies struggled to implement basic ATP and more complex
CTP systems for their supply chains. However, the stuttering economic recovery has put the focus on
costs, with many supply chain organizations asking what a profitable response to demand is. As the
recovery gathers steam and demand picks up in several industries, there's a likelihood of under supply.
For this reason, utilizing constrained capacity to maximize profitability will be a competitive advantage.
More companies will look to PTP capabilities to help them make complex decisions in near real time.
They'll be disappointed, though, since they won't have sufficient integration across the planning
processes of their supply chains or detailed and relevant-enough cost information to drive coherent and

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meaningful PTP calculations. This often results in aggregate- or average-level cost information used to
derive customer-level profitability analysis, which limits the usefulness of the calculations in
determining the true impact of customer-level activity on the supply chain.
User Advice: Be practical in terms of what you can achieve: get ATP and CTP up and running before
jumping to PTP. ATP and CTP initiatives will quickly highlight issues with system or process integration
and supply chain data availability and quality. PTP layers in another requirement for integration to
customer management and information processes as well as meaningful cost data. Since PTP is hard to
bolt on to existing planning systems, carefully consider the right technology to support it.
Business Impact: PTP brings the examination of what drives profitability to the operational level,
where it's often missing. How the supply chain is run has a significant impact on a company's
profitability, but most detailed analyses of profit are backward looking. Any forward-looking profit
analysis is typically very high level and fairly meaningless to operations. Profit-generating policies can
be devised and enacted in operations through the deployment of PTP.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: JDA; Logility; OM Partners; Quintiq; River Logic
Back to Table of Contents

Sliding Into the Trough


TMS Multimodal/International
Analysis By: Dwight Klappich
Definition: Global logistics applications help automate the movement of goods globally by ensuring
processes are synchronized with all parties involved in international shipments. International shipments
are typically complex, multileg movements in which goods and information flow among many
constituencies, such as suppliers, port operations, governments, ocean and air carriers, and domestic
truck or rail carriers. Global logistics must support different modes of transportation (including water,
truck, rail and air), with unique planning and execution requirements not traditionally addressed by
domestically oriented transportation management systems designed for truck and rail transport.
Position and Adoption Speed Justification: Solutions are changing rapidly because of pent-up
buyer demands and consideration of global shipping requirements by many enterprises, coupled with
the increasing economic pressures to reduce supply chain costs. Although solutions are incomplete,
they are maturing rapidly, and support for international shipping requirements is improving. Getting
accurate source data, such as vessel sailing schedules, as well as difficulties in modeling the
complexities of itinerary construction across multiple models, such as wait time at port, have limited
adoption of these solutions as well. Legislation such as the U.S. Customs and Border Protection 10+2
program will increase demand for international logistics tools that capture many of the data elements
required to support 10+2 and similar global initiatives.
Market demand of these technologies by freight owners (that is, shippers) is less than might be
expected, given the continued growth in international sourcing. This phenomenon is largely because a
high percentage of shippers outsource international logistics to 3PL and freight forwarders. Logistics
service providers are a key target market for these types of solutions as well as those large
international shippers that are increasingly looking to manage their international shipping in-house.
An interesting dichotomy is that global trade compliance (GTC) is more mature than multimodal
international shipping solutions. This is largely because GTC is based on published rules and regulations
that used to be in books. Consequently, it was easier for vendors to automate these functions because
the needs were more explicit. International logistics remains a largely manual process, where freight
forwarders or 3PLs use phone and fax to communicate with all parties. The technology needed to
automate the multienterprise workflow inherent in international logistics is less well defined and harder
to automate, which is a main reason for the difference in maturity level.
User Advice: Enterprises with significant international logistics operations should consider these
solutions, paying particular attention to the breadth and depth of the TMS solutions, with equal or
greater attention focused on vendors' global logistics domain expertise.
Business Impact: Complexity and the rising cost of global logistics, particularly rising fuel costs,
combined with the need to manage international operations cost effectively and with sufficient
management controls for the safe and secure transit of goods, drive the need for software to help
manage global logistics operations.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Adolescent
Sample Vendors: GT Nexus; JDA; JDA (i2); Log-Net; Manhattan Associates; Oracle; SAP
Recommended Reading: "Report Highlight for Market Trends: Transportation Management Systems,
Worldwide, 2006-2011"
"Self-Diagnostic Model for Building a TMS Business Case and Evaluating TMS Sourcing Options"
"Issues to Consider When Building a TMS Business Case and Evaluating TMS Sourcing Options"
"TMS Sourcing Options Are Expanding With the Increase in the Number and Types of Products"
"Stratifying Transportation Management Systems: A Multilevel View"
"Magic Quadrant for Transportation Management Systems"
Back to Table of Contents

MDM of Product Data


Analysis By: Andrew White
Definition: Master data management (MDM) of product data (formerly known as product information
management [PIM]) is a discipline that seeks to achieve a "single version of the truth" for product data
enterprisewide. The discipline is technology-enabled as a workflow-driven or transaction-oriented
process to cleanse, identify, link, harmonize, publish and protect common product information assets.
The technologies create and manage a physical, database-based system of record, often called a
"central product master," and enable the delivery of a single product view across channels, systems
and lines of business, usually, but not only, in the operational environment. This can greatly aid an

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organization's ability to increase revenue, optimize cost, increase agility and meet compliance
requirements.
MDM of product data systems is relevant to all industries and government, but the projects take
different forms. This depends on whether the product is a physical product or a service, on the
complexity of the product structure and consuming business processes, and on whether the focus is on
the sell or buy side of the business.
An MDM of product data strategy is part of a wider, multidomain MDM strategy (potentially
encompassing customer, product, supplier, employee, location, asset and financial master data). An
MDM program is a key part of a commitment to enterprise information management (EIM) and helps
organizations and business partners break down operational barriers, enabling greater enterprise agility
and simplifying integration activities.
Position and Adoption Speed Justification: In the past 18 months, growth in the MDM of product
data solutions market has slowed because of changes in MDM business drivers, with a greater focus on
cost optimization and asset utilization. In 2010, we see a slow return to business growth and customer
service drivers. Related hype in the past 12 months had slowed, but is showing signs of responding to
or leading spending trends.
MDM of product data is increasingly defined by complex requirements (see "Magic Quadrant for Master
Data Management of Product Data"), which have converged around different user-oriented focal points.
Adoption and maturity of this technology varies by industry, technology adoption criteria and vendor
strategy.
 Industry adoption varies where enterprises with physical products (not services) focus on this
technology longer than other enterprises, due to the need to share such data among
organizations in B2B relationships.
 Innovators (Type A organizations) have adopted this technology and are deploying the second
master data domain (e.g., customer). Fast followers (Type B organizations) are active with the
technology and are implementing it. Mass-market (Type C) organizations are showing signs of
interest, as the global economy seems to be improving. This suggests the start of a significant
upswing in demand and hype.
 Large megavendors (IBM, Oracle, Microsoft and SAP) have acquired and/or developed their MDM
of product data capability, and this is at the heart of their information architecture strategy.
 Small, niche or custom-made solution vendors in this market — like Data Foundations, Kalido,
Orchestra Networks and DataFlux — continue to survive by offering differentiated capabilities.
Open-source MDM technology made a splash in 2009 with Talend, an open-source vendor of data
integration and data quality technology.
This market has spawned other MDM segments, MDM of asset data and MDM of purchased parts, two
other "things" of differentiation across industry, use case, drivers, implementation styles, etc. Some
vendors have specialized across these data domains. 2011 will be a key year for MDM of product data
vendors as they race against MDM of customer data vendors to claim the lead in mastering multiple
domains. By 2012, product MDM will introduce ways to manage generic master data domains and
another wave of vendor consolidation.
User Advice: Make MDM of product data part of your overall MDM strategy, and determine when, not
whether, to adopt MDM. Seek business benefits across all IT programs, and business intelligence and
application programs, that can be addressed with one information management approach, rather than
a piecemeal approach. Review the organization's capabilities and challenges in governance, process
and organizational change, toward uniformly managing product data, as well as its ability and political
willingness to use one product view. Educate the organization about the challenges and their effects on
the business.
Create a vision (how sustaining a single view of product/thing data supports preferred business
outcomes like reduced time to market) for what can be achieved. Consider creating a central MDM for a
product data repository that integrates with established source systems and becomes the system of
record for master product data in a synchronized, heterogeneous environment. Focus on key business
problems, and build a business case based on benefits. Analyze likely short- and long-term scenarios
where the enterprise wants to use an MDM system. This will guide your choice of a vendor, because
products have different sweet spots that differ by industry and implementation style. MDM of product
data systems must have rich, tight-knit facilities, including a comprehensive data model, information
quality tools, workflow engine and integration infrastructure. Evaluate MDM products, including those
embedded within business applications, based on objective, balanced criteria, including industry
experience. Start small, "think big," and deliver early and often.
Business Impact: Large, complex and heterogeneous enterprises and many midsize enterprises
spread product data across many systems. It is fragmented and often inconsistent. This makes it hard
for organizations to streamline business processes and operations efficiently, and to develop new, agile
business processes. Without a single view of a product, organizations can't effectively deliver better
effectiveness across the supply chain or a sustained and effective customer experience, leverage
operational benefits from merger and acquisition activity, identify efficiencies on the buy side with deep
insights on spending data analysis, or a competitive new-product introduction process. There will be
upsell and cross-sell inhibitors if organizations don't have a good handle on the products and services
customers have acquired. Thus, the single-product view is key for managing the value chain. The
impact on business applications and intelligence can be significant, as organizations grapple with the
complex workflow of this initiative. MDM and, specifically, MDM of product data, impact all business
applications and intelligence data stores, in that it becomes the centralized governance framework
across all data stores.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Early mainstream
Sample Vendors: DataFlux; IBM; Kalido; Oracle; Riversand; SAP; Stibo Systems; Teradata; Tibco
Software
Recommended Reading: "Mastering Master Data Management"
"Ten Best Practices for MDM of Product Data"
"How MDM Can Help Enterprises Achieve a Single View of Product"
"Toolkit Best Practices: Strategies for Successful MDM Implementation"

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Back to Table of Contents

Foreign/Global Trade Compliance


Analysis By: Dwight Klappich; Will McNeill
Definition: Foreign/global trade compliance (GTC) refers to a category of software that addresses the
rules and regulations and trade-specific costs of conducting cross-border trade. Fundamental to the
execution of cross-border transactions, GTC addresses the regulations of the importing and exporting
countries, rules governing the parties allowed or restricted from participating in international
transactions, the categorization of goods, the intended usage/state of the goods and the source and
destination of goods. Critical to trade compliance solutions is the richness and flexibility of the content
databases that codify trade regulations and restrictions.
GTC solutions have two primary components: the business application and the trade content. Trade
content is the repository of the data, rules and costs for each harmonized tariff schedule code by
source or destination country. Some GTC vendors provide both the application and content, while
others only provide the application and the customer sources content independently. Holistic GTC
solutions cover restricted/denied/sanctioned/Office of Foreign Assets Control (OFAC) screening, import
compliance, export compliance and support for free trade zones.
Although elements of GTC have been in place in the United States since World War I, like restricted
party/OFAC screening regulations, knowledge of these rules is widespread in some industries (such as
financial services and exporting), but nonexistent in others. Although OFAC affects individuals directly,
few have heard of it, except as a Cold War artifact restricting their access to Cuban cigars and rum. The
usefulness of sanctions as a tool of statecraft has been questioned, but trade sanctions and interdiction
lists are an increasingly popular "action other than war" to enforce national policies with a limited risk
of casualties.
Position and Adoption Speed Justification: GTC is a maturing application category, but solutions
continue to evolve to cover more geographies within a single solution and to enable broader trade
compliance coverage. However, GTC remains underautomated, largely because many companies lack
the internal expertise to perform GTC in-house, irrespective of the availability of good systems, so they
outsource this activity to third parties like customs brokers, 3PLs or freight forwarders. Gartner finds
the GTC vendor landscape changing, with new entrants moving in front of more established vendors for
several reasons, including better technology, richness of trade content or the availability of GTC as part
of an integrated suite. Today, no single GTC application covers every type of trade control across all
industries or geographies, so specialized solutions remain. Furthermore, as the scope of global trade
controls expands, specialized solutions emerge, and these capabilities are slowly merged into broader
GTC suites.
Some areas of GTC are mature and minimally differentiated, such as denied-party screening, while
other areas are maturing as large, sophisticated users work with vendors to add functionality and
expand coverage internationally. Large suite vendors, such as SAP and Oracle, are entering the market,
which will likely accelerate adoption for less complicated environments, while best-of-breed vendors
that provide applications, trade content and services will continue to succeed in the more complex
environments.
Additionally, trade sanctions and interdiction lists are not only an increasingly popular action to enforce
national policies at limited risk of casualties, but they are increasingly favored by nongovernmental
bodies as a way to express the opinions of their constituencies and enforce their vision of proper
behavior. Gartner expects to see more nongovernmental interdiction lists that highlight offenders
against corporate social responsibility issues and socially unpopular industries. Various industries will be
at different stages of the cycle at anytime because the need for the products and the hype vary
unpredictably, based on current events. Plus, they are currently at a very low ebb.
User Advice: Users must understand that the business application and trade content are two
independent but tightly connected aspects of GTC solutions. Users must first understand their content
needs and then use this information as they evaluate GTC offerings to ensure the solutions address
their compliance needs. Although there are advantages to a single-vendor offering of both the
application and content, this should not overshadow all other considerations, such as integration to
back-end systems, vendor domain expertise and the cost of ownership.
Enterprises and individuals should prepare for unannounced shifts in enforcement emphasis and ever-
tightening regulations. Essentially, the heat can be turned up or down at will by executive fiat (for
example, through the granting of "humanitarian exemptions") without legislative or judicial input, as a
way of fine-tuning governmental pressure on a foreign entity.
Business Impact: GTC is an application category that is important, but not value-adding. GTC is
important because not adhering to the rules that govern trade can result in delays and, in some cases,
fines and seizure of goods. However, being world class at trade compliance is not a source of business
differentiation and, short of avoiding fines, it is not a source of financial return. Users must be able to
comply with the rules that govern global trade, and any viable application must be able to support this
need. GTC is primarily a risk-avoidance investment, and doing compliance better than a competitor is
not a source of strategic differentiation. The business benefits can include reduced administrative costs,
avoidance of penalties and less disruption in the flow of goods.
Benefit Rating: Moderate
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: ChoicePoint; Integration Point; Kewill; LexisNexis; Management Dynamics; MIC
Customs Solutions; Nextlabs; QuestaWeb; SAP; TradeBeam; World-Check
Recommended Reading: "Changing Face of OFAC Tools, 2007"
"Banks Should Trust No One When Screening for Risk"
Back to Table of Contents

Inventory Strategy Optimization


Analysis By: Tim Payne; Andrew White
Definition: Inventory strategy optimization (ISO) is an analytic application that helps users optimize
their supply chain response strategies across a multiechelon supply chain. This technology evolved
from what was known four years ago as multiechelon inventory optimization (MEIO), which initially
looked only at optimizing total inventory assets across the network. ISO is slowly evolving to help users

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look beyond just inventory to include all facets of the supply chain (sourcing, pooling, replenishment
strategies and demand priorities, for instance) in order to develop segmented supply chain response
strategies (e.g., plan inventory levels, sourcing points, postponement, routing rules and push-pull
decoupling points) for customer and channel segmentation. ISO technology is beginning to integrate
with and even encompass supply chain network design constraints and tools at one end and operational
supply chain planning (SCP) constraints and tools on the other.
Most ISO products use optimization-based technologies with limited business intelligence (BI) and
analytics capability. Over time, they're adopting event-based simulation and stochastic algorithms that
enable companies to represent uncertainty factors. Long-term business what-if evaluations and
scenario planning will eventually be commonplace to support any number of strategy and tactical what
ifs. Users will need frameworks to support the allocation of products to specific supply chain response
models.
Position and Adoption Speed Justification: A small number of vendors have defined the basis of
this technology. The ones that originally offered MEIO are expanding their functional footprints to help
users model any number of constraints, with a view to determining the range of responses needed to
achieve business objectives. These capabilities will eventually evolve into innovation and/or best-
practice templates. However, the majority of user deployments remain focused on inventory
optimization across multiechelon supply chains.
Fewer independent vendors remain in the market, since SCP vendors have either developed or acquired
the capability to offer as an add-on to their application suites. Longer term, it's likely the operational
and tactical inventory optimization capability will be commoditized into the SCP suites to support
integrated inventory policy optimization. More specialized modeling tools — the ones supporting
segmented supply chain design and postponement strategies, for instance — will likely merge and/or
integrate with IBP tools to support more strategic supply chain analysis and design.
User Advice: For complex, distribution-intensive industries like consumer products, retail, aerospace
and defense, utilities or telecom, use these and classic SCP tools to extract the greatest value from
inventory and supply chain assets.
Business Impact: ISO solutions enable enterprises to use supply chain assets — people, equipment,
inventory, money, suppliers, routes, locations and promises — more effectively, while at the same time
realigning or segmenting their use across multiple customer and channel segments.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Adolescent
Sample Vendors: IBM; JDA; LLamasoft; Logility; Oracle; SmartOps; ToolsGroup
Recommended Reading: "The SCP for Process Innovation Landscape"
"Top Supply Chain Planning Processes"
"Chaos-Tolerant Networks Will Drive Adoption of Inventory Strategy Optimization"
Back to Table of Contents

Mobile (Wireless) Enhanced Supply Chain Management


Analysis By: Dwight Klappich
Definition: To improve the effectiveness of distributed supply chains, logistics and distribution-related
processes, mobile (wireless) supply chains automate data capture, communications and user activities
by integrating one or more of the following: RFID, Wi-Fi, GPS, vehicle connectivity and cellular phones.
Supply chain management (SCM) mobility solutions integrate the processing of mobile workers' tasks
and activities with enterprise applications and provide data capture from, monitor and track mobile
assets, such as trucks. Mobile supply chains span multiple capabilities, enabling mobile worker tools to
access and share information, including deliveries and delivery confirmations, and monitor the location,
condition or behavior of mobile assets.
Position and Adoption Speed Justification: Maximizing the effect of mobile/wireless technologies
on the supply chain requires high levels of standardization and the redesign of business processes
based on the unique needs of mobile people and assets as well as technological capabilities, such as
real-time data capture, input and distribution. Simply applying mobile technology like RFID to
established processes, however, is not likely to yield much ROI. Although mobile technologies have
been mainstream in such areas as the warehouse, route delivery and retail, emerging technologies
have not been widely deployed, nor have they embraced core standards for interoperability among
supply chain partners. Technologies such as location-aware applications are still in their infancy, and
they require broader implementation and new types of service pricing commensurate with the value
they bring to the supply chain — for example, consumer smartphone pricing will not work for machine-
to-machine (M2M) applications.
Emerging mobile applications will use the capabilities offered by mobile technologies, such as GPS
tracking or pulling data from the vehicle's engine computer, to create new or enhanced business
solutions that exploit these capabilities. Wireless technologies now permit automation to reach out to
every area of the supply chain, creating the possibility of highly integrated, long streams of automated
processes. For example, GPS on a vehicle could be used to "geo-fence" a location so that a message to
the facility is automatically generated when the vehicle is within a specified distance. Tools such as
appointment scheduling could then use this information to automatically confirm an appointment.
Mobility solutions that pull data from onboard computers on trucks and distribute the information via
satellite communications are mature, but historically expensive. Newer solutions exploit less-expensive
technologies, such as cellular, and are making the value of these solutions available to a larger market.
As such, the solutions built for the increased availability of information, such as automated hours of
service or vehicle/driver performance based on vehicle activities, such as idling or hard-stopping, are
becoming more pervasive.
Gartner finds that user interest in mobility, especially in transportation, is increasing for several
reasons. First, companies recognize that for many supply chains there are as many, if not more, users
outside the enterprise as there are within the four walls, yet their focus and investment on these
mobile workers has been minimal. Second, as the pervasiveness of consumer use of mobile
technologies has grown, non-white-collar mobile business users have also started requesting mobile
technologies to replace paper and provide real-time communication. Third, the price of mobile
technologies has come down, thus expanding the potential market. Large organizations are developing
comprehensive mobility strategies that include both white-collar and non-white-collar users.

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The solution market for SCM mobility solutions remains highly fragmented, with no dominant vendors
yet emerging. A high percentage of early adopters have been forced to assemble and build their own
solutions, which has previously limited the market. The market is currently divided among large
equipment providers, applications providers and specialized system integrators. Over the next several
years, the market will consolidate and more holistic solution providers will emerge.
User Advice: Be realistic about the potential for mobile technologies to improve your SCM processes.
Maximizing their value will depend on an enterprise's ability to leverage real-time data in new or
improved processes, including automated alerts. These processes are based on consistent data
communication standards.
Develop a multiphase IT strategy that leverages mobile technologies' short-term potential, such as
vehicle inventory management, and establishes an infrastructure to fully exploit a technology's long-
term potential, such as automated appointment scheduling or real-time routing and scheduling.
Recognize that a real-time supply chain requires a real-time information chain beneath it. Without
wireless, such an information chain is not possible.
Business Impact: A mobile supply chain brings the real-time enterprise scenario closer to SCM.
Although initial solutions will augment established processes with moderate benefits from automation,
future generations of solutions will exploit mobility technologies to engineer new or significantly
enhanced processes that add greater levels of value.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Adolescent
Sample Vendors: Cadec; EDS; PeopleNet; Qualcomm; Rockwell Automation; Sprint Nextel; Symbol;
Trimble; Trimble (@Road); Xata
Recommended Reading: "Cool Vendors in Supply Chain Management, 2009"
Back to Table of Contents

Passive RFID-Based Inventory Management


Analysis By: Tim Payne
Definition: RFID-based inventory management involves inventory visibility and tracking with tags and
readers. Most applications use passive RFID along with a range of software to support the relevant
business processes of managing inventory, such as direct sensing and observation. Tracking containers
and other types of assets that contain inventory falls under asset management.
Position and Adoption Speed Justification: Retailers and their suppliers have been the most
prominent users of passive-RFID-based inventory management, and the well-publicized delays and
difficulties they experienced with the technology have led many observers to extrapolate a broader
problem for it. However, the industry's focus on retail RFID projects and their use as a broad indicator
for the overall health of RFID is somewhat misleading. Prominent retailers have pursued open-loop
RFID projects that spread the cost of the implementation across many business partners, which can
potentially share the information on the tag. The successes or failures of large retailers trying to
broadly implement RFID don't predict how well other enterprises can use passive RFID.
As the technology evolves and addresses operational concerns, the success of most inventory-based
RFID projects is tied to the business case and the company's ability to construct business processes
that use the additional information RFID provides on inventory and products. There have been many
successful implementations with closed-loop applications, where the company deploying the technology
has more control over the end-to-end solution.
Therefore, the maturation of passive-RFID-based inventory management will depend largely on specific
business process conditions an enterprise faces rather than industrywide mandates of the technology.
User Advice: The worst thing that happened to RFID was that it was proclaimed to be the "next bar
code" and that the "five-cent tag" would be a reality. These assumptions caused many enterprises to
replace bar codes with RFID, which embodies the worst elements of business-case construction. For the
most part, the bar-coding process works, and RFID technology is unable to match it in many ways. In
fact, bar coding is usually the better option — that is, unless it isn't physically feasible, like when
there's a lack of line of sight or specific process conditions — especially if the business process is under
the authoritative control of the enterprise.
Gartner recommends that inventory-focused, passive-RFID applications concentrate on supporting
inventory visibility, traceability and management in more chaotic business processes that are out of the
authoritative control of the enterprise and where additional information is needed beyond what a bar
code traditionally supplies. For example, retail shop floors and hospitals are relatively chaotic process
environments compared to a factory floor or a disciplined warehouse. This is a key factor that
determines whether inventory-based, passive-RFID projects will be successful or not.
Business Impact: This technology provides the opportunity to extend control over business processes
that are invisible to the enterprise. By 2017, at least one Global 2000 enterprise will exploit sensory-
based inventory management to reshape its business operations and dominate its industry. For others,
this technology will provide an early warning into supply chain or operations issues and allow proactive
responses. However, this type of business case is often difficult to assess.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Check Point Software Technologies; IBM; Intermec; Motorola; Oracle; SAP;
TrueDemand Software
Back to Table of Contents

Dock Scheduling and Carrier Appointment Management


Analysis By: Dwight Klappich
Definition: Dock scheduling and carrier appointment management refers to the use of optimization
and scheduling tools to automate carrier appointment scheduling and improve the overall use of
shipping and receiving docks in distribution centers. In this system, a dock calendar is maintained,
showing all operating constraints, such as open/close time, commodities accepted through the dock
door (e.g., refrigerated or ambient) and trailer types accepted. Carriers, customers and suppliers with
pending shipments or receipt requests can query the system to determine available dock times. In the

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most sophisticated optimization systems, these external queries are held together with load tenders
and are optimally assigned at a specified point based on maximum resource use. For example, if there
is congestion during a particular period, then the system would not operate on a first-come, first-serve
appointment basis. Instead, the materials being delivered or shipped would be evaluated based on
criticality or capacity to determine which appointments must be scheduled during the congested period,
and which can be scheduled during alternative periods.
Position and Adoption Speed Justification: Scheduling functionality is a long-standing concern
among many of the world's largest shippers. However, recent challenges in carrier capacity, increasing
customer requirements for on-time shipment performance and the effects of government mandates
(such as hour-of-service rules that demand faster and more consistent shipment turnaround) have
driven more enterprises to evaluate this technology. With the economic slump, some of the business
drivers have eased, but pressures to reduce costs and increase productivity have kept up interest in
dock scheduling. In addition, a scheduling and appointment management system can be used in
conjunction with constraint-based warehouse optimization to begin creating a supply chain execution
model that moves more toward flow-through and cross-docking models.
Integration with warehouse management systems, transportation management systems or yard
management systems is becoming a more important consideration, and vendors of these types of
solutions are adding rudimentary, often Web-based appointment requesting and dock-door allocation.
More advanced solutions are emerging from the leading WMS vendors. Current models use portals to
request appointments, but increasing acceptance and availability of mobile applications offer the
potential to move this closer to the driver and mobile assets, as well as to add additional capabilities,
such as geo-fencing, wherein a GPS device notes when a truck is within a certain distance of the
distribution center and the appointment can then be electronically confirmed.
User Advice: Users with capacity constraints in their yard or dock areas should evaluate this system.
In addition, users that are capacity-constrained within the warehouse should evaluate dock scheduling
and optimization as part of an overall flow-through system. Users with large numbers of unnecessary
penalties for excessive dwell time caused by drivers having to wait for a dock should also look at these
technologies.
Business Impact: Dock scheduling and carrier appointment management reduces the amount of
administrative time required to set carrier appointments and manage the dock schedule. If managed
properly, this approach can improve relations with an enterprise's carriers, customers and suppliers
because the system can be more responsive than manual processes. Finally, scheduling and
appointment management can improve the overall throughput and capacity of a warehouse by
optimizing appointments and activities, reduce operating labor costs by reducing idle time and lower
transportation costs by increasing the number of cross-docking opportunities.
Benefit Rating: Moderate
Market Penetration: 5% to 20% of target audience
Maturity: Adolescent
Sample Vendors: i2 Technologies (JDA); Manhattan Associates; One Network; Oracle; RedPrairie
Recommended Reading: "Issues to Consider When Building a TMS Business Case and Evaluating
TMS Sourcing Options"
"TMS Sourcing Options Are Expanding With the Increase in the Number and Types of Products"
"Evaluating the Efficacy of TMSs as SaaS"
"Stratifying Transportation Management Systems: A Multilevel View"
"Magic Quadrant for Transportation Management Systems"
Back to Table of Contents

Radio Frequency Identification for Logistics and Transportation


Analysis By: Dwight Klappich; Timothy Zimmerman
Definition: Radio frequency identification (RFID) is an automated data collection technology that uses
radio frequency waves to transfer data between a reader and a tag to identify, track and locate the
tagged item. RFID does not necessarily require physical sight or contact between the reader and the
tag.
An RFID reader is a radio frequency device that emits a signal through an antenna. This signal is
received and responded to by the RFID tag. Readers come in various forms. A portal reads tags as they
pass through it. A handheld device reads tags in a portable manner. Mounted readers are affixed to
mobile assets to communicate with tags.
RFID tags are small devices that have a range of capabilities in terms of memory, read range and level
of read/write. They contain information ranging from the product serial number to product history.
There are two basic categories of tags: passive and battery enabled. Passive RFID, specifically
ultrahigh-frequency (UHF) passive, is the most common form of an RFID system in the logistics
market. A traditional, passive tag does not have a battery, collecting the necessary power from the
radio interrogation of the reader. It usually provides only minimal information, such as identification
numbers, and has a limited read distance. These fairly inexpensive tags cost from $0.10 to $10.00,
with a range not normally exceeding 20 feet.
Battery-enabled tags fall into two major groupings: battery-assisted passive (BAP) technology and
active RFID tag technology. BAP tags maintain many of the characteristics of traditional passive tags,
but add additional value in two ways:
 Increasing read reliability
 Holding more than a product ID (for example, they can be used to monitor the condition of
goods, such as temperature or excessive vibration)
Active RFID uses an integrated battery to respond to a reader and provides more capabilities, such as
identifying individual items and offering basic processing. These tags have historically operated at
433MHz and 900MHz. The cost of active RFID runs from $5.00 to hundreds of dollars, with a range not
normally exceeding 300 feet.
BAP technology is essentially a low-cost active tag, but it is referred to as BAP because it uses passive
RFID protocols. BAP is being researched. It enables the long read range of active tags to be combined
with the low cost of passive tags.
Position and Adoption Speed Justification: Numerous RFID applications have been hyped for

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inventory management. However, RFID and similar sensory technologies are emerging as a strong
asset management tool, with the ability to collect information about an asset as it moves through the
supply chain and provide asset location visibility. Many large carriers and shippers will consider RFID-
enabled projects because of the global adoption of electronic manifesting. Standard RFID technologies
alone cannot provide long-range geolocating, such as tracking the location of a vehicle miles from its
domicile, so look for sensory technologies to intertwine with RFID tags to observe and communicate
location and environmental conditions.
One trend in this market is the combination of sensory technologies (for example, RFID/GPS,
RFID/onboard computer, RFID/bar codes and RFID/Wi-Fi). Sensor-based combinations will become
more viable with the standardization of the interface between the tag and the sensor, which is currently
defined as Gen 2 Class 3.
It has been assumed that a network of connected RFID readers will emerge at ports of entry,
warehouses or mobile assets, such as on light rail, but this has not yet materialized beyond narrow
pilots. The technical and architectural requirements of sensory-based combinations, or "automated
identification technologies," will be dramatic in scale. This will be difficult and expensive to achieve
beyond specific usage scenarios. If the technical and architectural goals are achieved, it will be vital to
understand what to do with the data now being collected along a sensory supply chain to provide a
realistic return on investment. Although there have been some large-scale deployments (such as the
U.S. Department of Defense) that span multiple organizations, these specialized and often expensive
initiatives have not been fully commercialized. More narrowly focused offerings that are more
commercialized will help improve adoption.
Various technologies will coexist because each technology is suitable to specific process situations.
RFID use varies by segment, with asset management (such as tracking returnable assets and
transportation) leading adoption. On the government track, be prepared for RFID-enabled projects to
monitor assets with relatively long use cycles. Toll payment (900MHz) and contact-less cards
(13.56MHz) have been in use for some time, whereas applications in logistics and traffic management
are emerging. However, RFID will not replace bar codes or other mobility solutions, such as GPS.
User Advice: Monitor and be aware of privacy impact assessments. Participate in RFID-enabled
tracking systems, if only as a pilot project, to gain experience and positioning for the widespread
adoption of larger, RFID-based system implementations in the future. RFID will require an
infrastructure beyond tag/reader, necessitating data storage, network performance, middleware and
applications.
Business Impact: Major initiatives that use or propose to use this technology will include tracking of
assets, loss prevention, inventory management, rail transportation, logistics, toll payment, traffic
management and transportation asset tracking and control. The impact and business value will vary
across industry segments, proposed use or business solutions and regions. Within an enterprise, the
value will be derived from the potential additional benefits of using RFID technologies versus other
identification technologies, such as bar coding. In these cases, a cost-benefit analysis should compare
the various identification technologies, and RFID should only be chosen if the business case proves it to
be the better approach.
The grander yet still elusive vision is the value RFID would offer as part of the extended supply chain
and logistics challenge, where it would be used to track, monitor and facilitate the flows of products
and modes of transportation across the global supply chain. To achieve RFID's end-to-end vision,
standards must emerge that define the requirements the system components must follow to operate
across enterprises and geographies. For example, global supply chains will require a set of common
standards to facilitate proper interchanges of information across the entities involved in an international
shipment transaction.
As the vision for RFID has evolved away from a replacement for bar codes to places where it could offer
unique benefits, there exists potential for RFID to be transformational as unique and highly valuable
solutions emerge. Indeed, not all projects will be transformational, and the value will depend on the
RFID use case.
Benefit Rating: Transformational
Market Penetration: 5% to 20% of target audience
Maturity: Emerging
Sample Vendors: Alien Technology; Atmel; Hi-G-Tek; IBM; Intermec; Lockheed Martin; Motorola
(Symbol); Savi; Texas Instruments
Recommended Reading: "Securing UHF RFID Passive Tag Communications"
"RFID in the 2009 Supply Chain: Overview and Best Practices for Maximum Investment Value"
"Cool Vendors in Supply Chain Management, 2009"
Back to Table of Contents

Distributed Order Management


Analysis By: Gene Alvarez
Definition: Distributed order management (DOM) enables an organization using e-commerce to
capture a multiline order containing items such as products and services, and DOM can be used for
multichannel order capture. However, after the order is captured, DOM can manage the order across
partner systems (for example, distributors, wholesalers and resellers) outside the firewall, or multiple
internal back-office systems inside the firewall as one single order.
Position and Adoption Speed Justification: The adoption of this technology has been slow, because
few early adopters have been able to deploy DOM, and downstream partners have been resistant. This
is due to process challenges, such as how to sell and bundle a product that the enterprise sells with
services that are delivered by a partner. There are also technical issues, such as managing technology
inside and outside the firewall, and integrating multiple systems inside and outside the enterprise,
which can be complex and expensive to implement. However, some industries, such as automotive and
high technology, have been using DOM, and retail and communications have also begun to adopt the
technology.
User Advice: Focus on communicating the value of this technology to downstream partners and, in
B2B cases, with end customers to gain acceptance. Organizations that intend to sell bundled offerings
that can be fulfilled from multiple distribution points or partners should evaluate DOM. This is necessary
to avoid fulfillment issues, which can arise from disconnections between sales orders and the fulfillment
systems and partners.

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Business Impact: DOM can significantly reduce costs, such as the interoperation costs for
coordinating a sale with a partner, eliminate manual intervention during a sale by enabling the
organization to work with partner systems information and eliminate manual intervention required to
follow through or correct partner orders. DOM can also enable an organization to sell products and
services it doesn't own or stock — selling a product or service that is fulfilled by a channel partner or
distributors. DOM can create partner loyalty by reducing the number of errors a partner needs to
resolve after a sale and decreasing the amount of support during a sale. Additionally, organizations are
beginning to use DOM solutions for their multichannel and cross-channel order management where
orders now go into a single DOM queue from multiple customer channels.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Adolescent
Sample Vendors: CommerceHub; Jagged Peak; Manhattan Associates; Oracle; OrderMotion; SAP;
Sterling Commerce
Back to Table of Contents

Global Trade Compliance


Analysis By: Dwight Klappich; Will McNeill
Definition: Global trade compliance (GTC) — that is, import and export compliance — refers to a
category of software that addresses the rules and regulations and trade-specific costs of conducting
cross-border trade. GTC is fundamental to the execution of cross-border transactions. It addresses the
regulations of the importing and exporting countries, the parties involved in the transaction, the
categorization of goods, the intended usage/state of the goods, and the source and destination of
goods, while considering things like free-trade zones. Critical to trade compliance solutions is the
richness and flexibility of the content databases that codify trade regulations and restrictions.
GTC solutions have two primary components: the business application and the trade content. Trade
content is the repository of the data, rules and costs for each harmonized tariff schedule (HTS) code by
source/destination country. Some GTC vendors provide both the application and content, while others
only provide the application and the customer sources content independently. Holistic GTC solutions
cover restricted/denied/sanctioned/Office of Foreign Assets Control (OFAC) screening, import
compliance, export compliance and free-trade-zone support.
Position and Adoption Speed Justification: GTC is a relatively mature application category, but
solutions continue to evolve to cover more geographies within a single solution and enable broader
trade compliance coverage. However, GTC remains underautomated, largely because many companies
lack the internal expertise to perform GTC in-house, irrespective of the availability of good systems, so
they outsource this activity to customs brokers, third-party logistics (3PL) providers and freight
forwarders. We find the GTC vendor landscape changing, with new entrants moving in front of more
established vendors due to several factors, including better technology, richness of trade content or the
availability of GTC as part of an integrated suite.
User Advice: Users must understand that the business application and trade content are two
independent but tightly connected aspects of GTC solutions. Users must first understand their content
needs and then use this information as they evaluate GTC offerings. Although there are advantages to
a single-vendor offering of both the application and content, this should not overshadow all other
considerations, such as integration to back-end systems, vendor domain expertise and the cost of
ownership.
Business Impact: GTC is an application category that is important, but not value-adding. Users must
be able to comply with the rules that govern global trade. Any viable application must be able to
support this need, but GTC is primarily a risk-avoidance investment, and doing compliance better than
a competitor is not a source of strategic differentiation. The business benefits can include reduced
administrative costs, avoidance of penalties and less disruption in the flow of goods.
Benefit Rating: Low
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: Customs Info; Integration Point; Kewill; Management Dynamics; Oracle; Precision
Software; QuestaWeb; SAP; TradeBeam
Recommended Reading: "Target Global Trade Investments Tactically"
"Developing an End-to-End Global Trade Management Functional Map"
"The Pull-Push Paradox of Global Supply Chain Management"
"Develop an Application Portfolio Strategy to Address the Needs of Global Trade Management"
"How Globalization Has Affected Direct Material Sourcing"
"Global Economic Crisis Demands New Strategies for Managing Global Supply Chains"
"Supply Chain Management Vendor Guide, 2008"
"Roundup of Supply Chain Execution Research, 2008"
Back to Table of Contents

Climbing the Slope


Software-as-a-Service Supply Chain Execution
Analysis By: Dwight Klappich
Definition: Supply chain execution (SCE) as software as a service (SaaS) refers to SCM software that
is owned, delivered and managed remotely by one or more providers. Supply chain execution refers to
the category of SCM technologies used to support SCM execution tasks of transportation, warehousing
and global trade management. Companies have multiple options for sourcing SCE applications: on-
premises, hosted, on-demand/SaaS or outsourced/managed service. If the SCE vendor mandates
installation of software on premises using the companies' infrastructure, this is not SaaS. SaaS SCE
requires that the vendor provide remote, outsourced access to the SCE application, as well as
maintenance and upgrade services for it. The infrastructure and IT operations supporting the
applications must also be outsourced, but unlike with hosting, the infrastructure is shared across user
organizations. Just having a subscription pricing model does not qualify an application as SaaS, unless
it meets the criteria we've just presented.

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In some cases, SaaS is simply an alternative method for sourcing SCM functionality. However, in the
SCM areas where software as a service is used most, such as supply chain collaboration, transportation
management and global trade management (GTM), this approach offers additional characteristics that
support these multienterprise processes and differentiate it from on-premises implementations of the
same functionality.
In the case of transportation management systems, a distinguishing characteristic of SaaS TMS is the
availability of a pre-onboarded carrier network that gives shippers electronic access to a large
population of freight carriers. With SaaS TMS, users can theoretically tender shipments to any carrier
already on the network. In most cases, however, shippers will only work with carriers with which they
already have negotiated a contract.
In GTM, there are two areas where SaaS is prevalent: trade compliance and global visibility. With
global visibility, the differentiating characteristic of SaaS is similar to SaaS TMS. There is a pre-
onboarded network of carriers and other trading partners that participate in international shipments,
wherein users are electronically connected to organizations on the network. With trade compliance, the
differentiating characteristic of SaaS is on-demand access to trade compliance content — the rules and
regulations for conducting cross-border trade transactions. Because compliance content can change
daily, SaaS allows the vendor to update content once for all users, whereas on-premises models
require a content publishing capability.
SaaS in other SCE areas, notably warehouse management systems, is not as prevalent, nor in demand
by users, because other SCE areas have not been as affected by the need to operate multienterprise
processes. However, there are some vendors beginning to offer SaaS versions of WMS. In these cases,
SaaS is simply an option to on-premises deployments of the technology, making the business drivers
for SaaS more economic.
Position and Adoption Speed Justification: On-premises applications are still the dominant delivery
vehicle for SCE applications. Over all, SaaS represents less than 20% of the SCM application market,
almost all of which is with TMS and GTM. However, SaaS is growing in these areas, having moved from
just one option to a preference for many users. SaaS is becoming the preferred TMS delivery option for
smaller shippers (with annual freight spending of less than $50 million per year), and it is a viable
alternative in half or more of large shippers considering TMS. Overall, market penetration of SaaS TMS
remains modest, but in the aforementioned categories, it is growing rapidly. And for GTM, most of the
vendors favor SaaS deployment; vendors that offer on-premises are the exception. In other areas, like
supply chain planning and warehouse management systems, growth is negligible. Finally, the focus for
SaaS WMS has largely been on the very low end of the WMS market. While the numbers of customers
of SaaS WMS have grown, vendor revenue remains very modest.
User Advice: Understand and evaluate the trade-offs between rich functionality (which, for most
categories other than GTM, favors leading on-premises SCE applications) and upfront costs (which, in
most cases, favor SaaS). Companies with complex requirements that want and need more than the
basic SCE capabilities should focus on market-leading SCE solutions, which are primarily on-premises
solutions today. Companies with less-stringent requirements or ones looking for an interim solution —
less than three to five years of planned solution life — should consider SaaS SCE. Model costs for on-
premises and SaaS to at least five to seven years. This will enable users to compare the total cost of
ownership of looking at long-term subscription costs compared with upfront license and annual
maintenance costs, taking into consideration possible annual increases. Carefully review
implementation costs for which many SCE SaaS vendors overstate their advantages.
Business Impact: In general, SaaS SCE applications deliver the same business advantages of the
relative SCE application category, whether on-premises or SaaS. However, in TMS and GTM, the
availability of a pre-onboarded network improves the ability to collaborate with trading partners,
allowing for added flexibility for users to change their networks when and if needed, without the burden
of onboarding new trading partners each time.
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: 3PL Central; Descartes Systems Group; E2open; GT Nexus; Integration Point; JDA
(i2); LeanLogistics; Log-Net; Management Dynamics; Manhattan Associates; QuestaWeb; RedPrairie;
Sterling Commerce; Syncron; TradeBeam; TradeCard; Wesupply
Recommended Reading: "The Emergence of the Multienterprise Business Process Platform"
"Issues to Consider When Building a TMS Business Case and Evaluating TMS Sourcing Options"
"TMS Sourcing Options Are Expanding With the Increase in the Number and Types of Products"
"Evaluating the Efficacy of TMSs as SaaS"
Back to Table of Contents

Yard Management
Analysis By: Dwight Klappich
Definition: Yard management is a set of capabilities, which is normally closely associated with
warehouse management, that deals with the management and process execution tasks and activities
related to or that impact a company's shipping yard and dock doors. It takes into consideration
equipment/facility/employee constraints and activity demands, focusing on the location and movement
of trailers in the yard. The scope typically starts at the guard-gate with check-in/check-out,
determining where to move incoming trailers, identifying where trailers are parked, coordinating
movements in the yard via onboard capabilities provided to "yard jockeys" and, increasingly,
coordinating with dock scheduling. The market is dividing between traditional data capture mechanisms
for locating assets and the use of real-time location (RTL) technologies, such as RFID, for automatically
identifying the location of assets.
Position and Adoption Speed Justification: In modern, large, high-volume logistics operations, the
yard has become an extension of the warehouse, both in terms of synchronizing the yard with dock
doors for shipping and receiving and in using the yard as a supplementary storage location.
Coordinating and managing the flow and movement of vehicles and trailers throughout the yard has
become an important activity for logistics operations. Yard management can be fairly rudimentary, with
the application simply noting manual entries of asset movements in and out of parking spaces to very
advanced use of real-time, asset-tracking technologies, such as RFID and related technologies. Real-
time visibility of asset movements is well-addressed by mature applications, while RTL technologies are

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less mature, although solutions exist and are evolving rapidly.


User Advice: High-volume logistics operations with 100 or more trailer parking places should consider
yard management, preferably as an extension of their WMSs, for integration reasons. However, the
largest and most complex yard operations should consider best-of-breed solutions that offer real-time
locating technologies.
Business Impact: Improving logistics throughput demands that yard activities are coordinated with
warehouse activities like receiving and shipping to ensure that goods flow smoothly and as quickly as
possible. For very large yards, the ability to quickly identify the location of goods in the yard can
eliminate wasted time looking for the right trailer or containers. Yard management can also provide
improved security of goods coming into and moving around the yard.
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: C3 Solutions; Manhattan Associates; Pinc Solutions; RedPrairie
Recommended Reading: "Supply Chain Management Vendor Guide, 2008"
"Roundup of Supply Chain Execution Research, 2008"
Back to Table of Contents

Capable-to-Promise Systems
Analysis By: Dwight Klappich
Definition: Capable-to-promise (CTP) systems enable enterprises to commit to customer orders based
on production/resource capacity (available or planned) and inventory. CTP solutions consider resource
(equipment, people and materials) availability, capacities, constraints, work in progress or planned
work, multiple steps in the production process, multiple nodes in a supply chain network (including, in
some sophisticated use cases, supplier networks) and various rules to calculate accurate promises.
Newer systems also consider nonproduction-related constraints, such as transportation, which enable
delivery factors (such as shipping mode options) to be factored into promise dates.
Position and Adoption Speed Justification: CTP products are available and proven, but many users
struggle with issues of data availability, accuracy, information latency and cultural change. Although
CTP technology has been around for several years, adoption has not been widespread, and further
adoption will remain relatively slow because of user demand, not for lack of CTP technology. Many
customers have resorted to less-sophisticated, available-to-promise (ATP) systems, even though
visionaries are already talking about concepts beyond CTP, such as profitable-to-promise systems.
Historically, best-of-breed solutions have been the most robust alternatives, and they created
integration challenges. However, some ERP vendors are enhancing their CTP capabilities, but they are
not likely to see increased adoption until the economy supports more long-term investment efforts
needed to support CTP.
User Advice: CTP is a more sophisticated technology than ATP because it must look at more resources
and constraints. Select the appropriate approach that yields the desired level of customer service.
Recognize that CTP requires greater integration and more data from supply chain planning solutions
than ATP engines.
Business Impact: CTP systems enable enterprises looking at postponement, make-to-order and
assemble-to-order strategies to better use their assets and improve customer satisfaction by providing
better and more informed promise dates.
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Mature mainstream
Sample Vendors: Adexa; i2 Technologies (JDA); Infor; JDA; Logility; OM Partners; Oracle; Quintiq;
SAP
Recommended Reading: "MarketScope for Supply Chain Planning: Process Automation, 2009"
"Confusion Escalates in SCM Demand Planning Market"
"SCM Requires the Alignment of Decision-Making Solutions"
"Predicts 2009: How ERP and the Supply Chain Are Adapting to a Changing Economy"
"A Roundup of Supply Chain Planning Research"
"Use the Gartner SCM Maturity Model to Show the Business Benefits of SCM Investments"
"Roundup of Supply Chain Execution Research, 2008"
"The Four Technologies Most Used to Aid in Strategic Decision Making"
"Supply Chain Analytics: Driving Toward Product Performance Management"
Back to Table of Contents

Sales and Operations Planning


Analysis By: Tim Payne
Definition: Sales and operations planning (S&OP) means different things to different people. Gartner
defines S&OP as a performance-based, cross-functional business process that harmonizes and aligns
operational plans across sales, marketing, procurement, manufacturing, distribution, product
development and finance. It requires technology that supports the harmonization of operational plans,
such as demand, supply, production and new product launch. It's linked to capable performance
management technology, such as dashboards and scorecards, and can support the process
management aspects of running an effective process.
Position and Adoption Speed Justification: The concept of S&OP — to harmonize business
strategies and operational plans — has been around for many years, and it's particularly well-known in
manufacturing organizations. But the strategic dimension is now mostly absent, incorporated into
overlay capabilities to S&OP, such as integrated business planning (IBP). S&OP is mainly focused on
operational reconciliation, using supply chain planning (SCP) as the basis.
Successful adoption of S&OP has been limited by organizational issues and the inability of technology to
support a truly cross-functional process with integrated what-if and execution capability. SCP and ERP
vendors are focusing on providing basic S&OP capability and pure-play solutions. Discrete S&OP
technology, as opposed to using existing SCP applications, is slowly maturing, with some adding more

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capability to bring a stronger financial analysis dimension to the process.


During the recent turbulent market conditions, we've seen a significant increase in interest in S&OP.
Users are reexamining their processes and trying to figure out how to make them more effective. This
interest is driven by the need for better visibility and scenario management in the supply chain to help
evaluate different potential outcomes and effects arising from rising uncertainty on the supply and
demand sides.
User Advice: To support your S&OP initiatives, evaluate the tools on the market. Pay attention to how
they support the business processes of S&OP, not just the data aggregation and representation
requirements. Understand that the demand planning, sales pipeline planning, or product and
distribution planning solutions that have been extended with S&OP screens and reports won't
necessarily support all the process requirements and financial impact analyses of best-practice S&OP.
Functionality sources include SCP applications, ERP suites, business intelligence (BI) suites and best-of-
breed applications.
Business Impact: S&OP applications help companies make better use of resources by balancing
supply with demand. They also deliver improved collaboration throughout the organization, what-if and
scenario management capabilities to help in the evaluation of alternate operational options and the
reconciliation of operational plans to financial plans and budgets.
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: IBM (Cognos); JDA; Kinaxis; Logility; Oracle; Steelwedge Software
Recommended Reading: "MarketScope for Sales and Operations Planning"
Back to Table of Contents

SCM in India
Analysis By: Yanna Dharmasthira; Denise Ganly; Asheesh Raina
Definition: Supply chain management (SCM) refers to the processes of creating and fulfilling demands
for goods and services. It encompasses a trading-partner community engaged in the common goal of
satisfying end customers.
Position and Adoption Speed Justification: Although SCM is gaining momentum, market
penetration in India remains low, especially in the small or midsize business (SMB) market.
Organizations continue to prioritize or remain focused on implementing and improving core applications
(such as ERP).
As the economic situation improves, organizations are back in growth mode, and market competition is
increasingly stiffened. Indian organizations that have adopted ERP and appreciated its benefits are
moving on to improve their supply chain capabilities, seeking cost optimization and market
competitiveness. The fast-growing Indian economy continues to trigger growth in all vertical industries.
This, in turn, increases demand for more sophistication in logistics and capability for supply chain
forecasting and planning, specifically in manufacturing, retail, distribution and automotive.
As the Indian manufacturing and distribution industries are integrating with the global supply chain
market, the need to trace goods in the supply chain cycle is increasingly crucial in the competitive
global trading environment. In addition, from the sourcing perspective, organizations continue to
improve their strategic purchasing cycle.
User Advice: The maturity of SCM technologies in India continues to lag behind the North American
and European markets, as well as mature markets within Asia/Pacific. Indian organizations considering
adopting SCM must ensure that their vendors are committed to the Indian market for their solution and
support. Obtain relevant Indian market references for any technologies under consideration. Advanced
SCM initiatives are likely to be needed to manage increasingly complex supply chains in India's
booming manufacturing industries, including steel, automotive and retail.
Because SCM skills are scarce in India, ensure that there are consulting resources for the deployment
and support of products under consideration, and expect to pay a premium for these resources. Given
the skill shortages, software as a service and cloud deployment may provide alternatives to in-house
deployment of SCM technologies, especially for SMBs. Because many SCM projects rely on collaboration
with trading partners that may lack SCM skills, enterprises should include trading partner training and
joint business planning as initial steps in an SCM project. This proved to be essential for many North
American and European SCM projects.
Business Impact: SCM affects all areas of an organization that deal with the processes of creating
and fulfilling demand. Supply chain capabilities will improve sourcing, supply chain planning and
execution processes. Once SCM consultants and skills are more prevalent in the local market, the
adoption toward mainstream will be more rapid.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Ariba; JDA; Oracle; SAP
Recommended Reading: "Forecast: Enterprise Software Markets, Worldwide, 2009-2014, 2Q10
Update"
"User Survey Analysis: Plans for SaaS Application Software Use, India, Singapore, Hong Kong, 2009"
"Key Issues for SCM IT Leaders, 2010"
"Market Share: All Software Markets, Asia/Pacific and Japan, 2009"
"Market Trends: Supply Chain Management, Worldwide, 2009-2010"
"The Mahindra Group: Closing the supply chain loop"
Back to Table of Contents

Supply Chain Collaboration


Analysis By: Tim Payne
Definition: One view of supply chain collaboration (SCC) is represented in the following examples:
 Multiple stakeholders share a common objective, such as promotion, business plan, product
launch or development.

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 A high degree of data integration is necessary to synchronize stakeholder systems and


applications.
 A flexible, scalable and real-time business process is required that enables all stakeholders to
participate effectively (e.g., business process design, workflow, business activity monitoring or
BI).
However, these are examples of one-to-one or one-to-many collaboration between supply chain
partners, not true multienterprise collaboration.
SCC solutions contain business processes that are defined by a business process management (BPM)
engine or represented by business application logic. Collaboration technology can be sourced from
business process networks (BPNs), business process hubs (BPHs) and business application vendors.
These forms of collaboration are structured and can use industry-specific data and/or process standards
(such as collaborative planning, forecasting and replenishment, or CPFR), additional standards that
follow industry orientation, or ones that are unique to a particular organization. Other forms of
collaboration exploit technology standards for data interchange, although the business processes for
which collaboration occurs are often supported by custom applications.
Position and Adoption Speed Justification: Formalized, enterprise-to-enterprise business
collaboration — that is, one to one — has been available since the original Voluntary Interindustry
Commerce Solutions Association's CPFR standard was established more than 10 years ago. Although it
has rarely been deployed outside channel-master or brand-owner efforts in a scalable, repeatable or
sustainable manner, it's simpler than large-scale, one-to-many collaboration. One-to-many
collaboration, however, still takes place in numerous industries, such as retail, consumer products,
automotive, industrial, chemical, oil and gas and utilities.
Gartner continues to see supply chain collaboration evolving and reemerging with newer technologies
(master data management to ensure data consistency in processes and global data synchronization to
synchronize data and ensure data semantics in the B2B sphere, for instance) that remove technical
barriers to large-scale integration, which is a precursor to effectiveness. Historically, SCC technology
has had a bad reputation, but most often it's the users that fail to organize properly for effective
collaboration. The technology is no longer the barrier.
User Advice: At the heart of supply chain collaboration is a business process. Look for business
applications that embed collaboration technology in this process. Apply collaboration technology outside
the business process and application only as a last resort to minimize the impact on process integrity.
Focus collaboration programs on developing shared risk and reward measures for all stakeholders to
ensure that alignment and organizational governance is in place.
Business Impact: SCC technology affects complex supply chain business processes. It can be a
source of competitive differentiation when enterprise-centric business processes can no longer be
squeezed for cost savings or competitive advantage. This technology is common in initiatives such as
distributed order fulfillment, CPFR and vendor-managed inventory (VMI), and it supports an
organization's desire to better manage its extended supply chain. With this objective in mind, the value
proposition can be significant.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: E2open; Eqos; JDA; Logility; Oracle (Syncra); SAP
Recommended Reading: "Best Practices: Checklist for Issues to Consider in Multienterprise
Collaboration"
"The Emergence of the Multienterprise Business Process Platform"
Back to Table of Contents

Integration as a Service
Analysis By: Benoit Lheureux; Paolo Malinverno
Definition: Integration as a service (IaaS) is integration functionality — i.e., secure B2B
communications, data and message translation, and adapters for applications, data and cloud APIs —
delivered as a service. IaaS is always scalable, sometimes elastic, but is almost always deployed with
enough multitenancy capabilities (see "Reference Architecture for Multitenancy: Enterprise Computing
'in the Cloud'") such that one instance of a provider's IaaS functionality can support multiple B2B
integration projects across multiple B2B communities.
There are two categories of IaaS:
 IaaS for traditional e-commerce projects
 IaaS for cloud service integration
The first category has existed for over 20 years and is associated with traditional e-commerce (supply
chain integration) projects, and the second category has emerged in the last four years in conjunction
with the emergence of cloud services. While these two forms of IaaS share much in terms of their
definitions and functionality, they differ substantially in terms of their approach to implementation,
usage scenario, vendor landscape and user ecosystem.
IaaS for Traditional E-Commerce
Twenty years ago, providers of IaaS were generally called value-added networks (VANs), trading
networks, Internet VANs, etc. However, in recent years, traditional EDI vendors have evolved, and new
vendors have introduced new types of IaaS to address various forms of e-commerce. IT providers have
labeled their various IaaS offerings as VANs, transaction delivery networks, Web services networks,
business process networks, business integration networks, business process hubs, integration service
providers, marketplaces, EDI SaaS, integration SaaS and so on. Regardless of what vendors have
named their B2B services, we have considered and rated them as integration service providers for the
purposes of the "Magic Quadrant for Integration Service Providers." Nearly 100 IT service providers
worldwide offer some form of IaaS, but other than that point of commonality they are exceptionally
diverse in their overall portfolios of IT services and industries served. Such providers include:
 Evolving EDI VANs — for example, GXS, Inovis and Sterling Commerce
 Emerging Internet VANs — for example, EasyLink Services International, Hubspan and SPS
Commerce
 Providers from a particular industry (but now serving multiple industries) — for example,

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Compuware (Covisint), Elemica, Liaison Technologies, Quadrem and Railinc


 E-commerce-focused providers offering SaaS and IaaS — for example, E2open, eZCom Software,
RedTail Solutions and SPS Commerce
 SIs offering IaaS — for example, Atos Origin, Bluewolf, HP Enterprise Services and IBM
IaaS for Cloud Service Integration/SaaS Integration
As SaaS and other forms of cloud services proliferate, there has been a corresponding increase in the
need to integrate cloud service functionality with on-premises business applications and data, or to link
cloud services directly among various cloud service providers. While integration software is one
approach to solving this requirement, many IT users choose IaaS for cloud services, in part because
that is consistent with their desire to shift the cost of IT infrastructure from a capital to an operational
expense.
From the basic functionality point of view, IaaS for cloud service integration is much like IaaS for
traditional e-commerce — it includes secure communications, data translation and adapters. But
beyond these functional similarities, IaaS implementations for cloud service integration differ
substantially. Most providers of IaaS for cloud service integration (see "Who's Who in Cloud-
Computing/SaaS Integration, Volume 1" and "Who's Who in Cloud-Computing/SaaS Integration,
Volume 2") leveraged the intellectual property they originally developed for traditional e-commerce
integration projects and enhanced it — e.g., by adding or improving multitenancy, provisioning
capabilities and direct cloud API support — prior to launching new IaaS offerings for cloud service
integration projects. Many IaaS for cloud service integration offerings — e.g., from Bluewolf, Boomi,
Cast Iron Systems and Informatica —include cloud-based integration development environments (IDEs)
that can be executed from a standard Web browser. IaaS solutions for cloud service integration are
often distinguished by their emphasis on packaged integration specifically for cloud service integration
problem scenarios, such as synchronizing customers and orders between salesforce.com and Intuit
(QuickBooks).
Position and Adoption Speed Justification: IaaS Adoption for Traditional E-Commerce
Companies worldwide heavily leverage IaaS for traditional e-commerce projects (such as supply chain
integration in retail and manufacturing) and for various other industry-specific requirements (such as
track-and-trace in logistics or claims adjudication in healthcare). IaaS for such uses is quite mature,
and providers of IaaS have invested in their IT operations to enhance functionality (e.g., adding
business activity monitoring and improved community management), and to drive increasing scale and
efficiencies (e.g., switching to more-modern, scalable IaaS architectures). Those IT modernizations,
combined with increasing adoption and the prevailing perception that IaaS is increasingly a commodity,
have been driving down IaaS prices for nearly a decade. Nevertheless, IaaS for traditional e-commerce
is still a valuable IT service for companies doing B2B integration; therefore, adoption continues to
increase, as indicated by the increasing numbers of companies and transactions handled by the
providers of IaaS each year (generally ranging from a 10% to 100% increase in the number of
companies served and transactions exchanged per year, depending on the size of the provider). This
trend has been consistent worldwide year to year — even during the current worldwide recession — as
more companies seek outsourcing (subscription) alternatives to the significant (capital) cost of
expanding B2B infrastructure and staffing when it is necessary to scale up their B2B projects.
IaaS Adoption for Cloud Service Integration
Cloud service integration is a relatively new B2B integration project scenario, yet the buyers of IaaS for
cloud service integration range from line-of-business IT buyers — primarily only focused on the cloud
service to on-premises integration problem — to more-traditional IT buyers — focused on cloud service
integration and on traditional e-commerce integration. Providers of IaaS for cloud service integration
often sell directly to IT end-users; they also sell a substantial proportion of their IaaS services (we
estimate 50%) through IT channel partners such as SaaS providers, system integrators, value-added
resellers and megavendors, such as Amazon and Google. This is because many IT service providers —
particularly SaaS providers — must address cloud service integration, yet would prefer to invest their
limited R&D capabilities on differentiated functionality that builds a barrier to entry in their target
markets, rather than making substantial investments to solve a technically complicated integration
problem. Four years ago, there was basically no market for IaaS for cloud service integration. Today,
we estimate that companies spend $50 million on IaaS for cloud service integration, and that this IT
market segment will grow at 25% CAGR for the next five years.
IaaS Position Justification
The widespread use of IaaS for traditional e-commerce projects has been pulling IaaS steadily up the
slope toward the Plateau of Productivity, and the fast-growing adoption of IaaS for multienterprise SOA
projects and cloud-computing/SaaS integration projects is helping to drive IaaS' momentum up the
slope and ultimately into the Plateau of Productivity during the next few years. IaaS is being offered by
a wide range of providers, from vendors that are primarily focused on traditional e-commerce projects
(such as GXS) and those focused primarily on cloud-computing/SaaS integration projects (such as
Boomi).
Although the Trough of Disillusionment is several years past, IaaS is slowly traveling up the slope to
the Plateau of Productivity. Vendors continue to expand and refine their IaaS offerings to incorporate
new capabilities, including programmatic APIs (such as from Loren Data) to provision and access IaaS
services. Vendors are also implementing Web-based IaaS development in support of IT end-user and
independent software vendor (ISV) self-provisioning of IaaS functionality; adding better Web services
and governance to support multienterprise service-oriented architecture (SOA) projects; expanding
operations, including multisite regional data centers to more effectively support international B2B
projects; and improving community management tools to enable self-service IaaS and drive down
costs for hubs managing large multienterprise communities.
User Advice:
 Consider IaaS for traditional e-commerce when you need to electronically exchange transactions,
documents and messages with external business partners, and you do not wish to deploy your
own B2B-enabled integration middleware and directly connect to the members of your B2B
community directly.
 Consider IaaS for cloud service integration when you must integrate cloud services among cloud
providers or with on-premises applications or data, and you prefer to consume this capability as a
service, rather than purchase and deploy integration software.
 Multinational IaaS capabilities are maturing, but prospects should always verify whether a

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potential IaaS provider can meet their particular country-by-country requirements, including
local-language support, e-invoice formats and regulations, and in-country IaaS network points of
presence.
 When negotiating an agreement with providers, look for transparent and predictable pricing.
Customers are increasingly signing deals with "bundled" B2B integration features, such as a
tiered number of external business partners and volume, fixed-price in-line translation, and
process visibility that associates relevant B2B documents (for example, purchase orders,
advanced shipment notices and invoices for order to cash).
 Refer to the "Magic Quadrant for Integration Service Providers," "Who's Who in Cloud-
Computing/SaaS Integration, Volume 1" and "Who's Who in Cloud-Computing/SaaS Integration,
Volume 2" to gain an understanding of the highly diversified IaaS vendor landscape.
 Integration projects can be deceptively complex, and, by itself, IaaS doesn't always sufficiently
address customer requirements. Determine whether your IaaS provider also offers such services
as B2B integration outsourcing (see "Taxonomy and Definitions for the Multienterprise/B2B
Infrastructure Market").
Business Impact: IaaS has been widely deployed worldwide for more than a decade. In 2009, IaaS
generated more than $1 billion in IT revenue worldwide for traditional e-commerce projects and more
than $50 million in IT revenue for cloud service integration. This makes IaaS one of the most widely
adopted and well-established forms of application infrastructure delivered as SaaS (see "Application
Infrastructure for Cloud Computing: An Emerging Market"). Although many companies still implement
B2B projects themselves, leveraging a combination of in-house integration middleware and B2B
standards or Web APIs, companies of all sizes in all industries and in most well-developed regions have
the option to outsource their B2B infrastructures, rather than licensing and deploying some form of in-
house B2B integration software.
Multienterprise projects are typically mission-critical, but the increased modernization, reliability and
scale provided by most providers of IaaS mean that companies have a viable alternative to B2B
software and in-house B2B infrastructure projects. Hence, from a sourcing point of view, they should
treat B2B infrastructure investments like any other IT investment when choosing between
implementing an in-house B2B infrastructure or relying on IaaS.
Even the simplest in-house, single-server B2B infrastructure project may require off-site hosting, high-
availability server configurations, disaster recovery capabilities, monitoring tools, archival of business
documents and a well-trained staff. Service providers with well-established, multitenant infrastructures
can generally achieve economies of scale to deliver such capabilities. For common integration
scenarios, they often provide some form of configurable or customizable prepackaged integration
solutions. This means they have the opportunity to save companies 10% to 30% on the cost of
implementing B2B infrastructure themselves in-house, by leveraging their packaged integration, as well
as fault-tolerant and disaster recovery capabilities across multiple B2B communities.
Benefit Rating: High
Market Penetration: More than 50% of target audience
Maturity: Mature mainstream
Sample Vendors: Bluewolf; Boomi; BT Group; Cast Iron Systems; Comarch; Crossgate; DiCentral;
E2open; EasyLink Services International; Elemica; GXS; Hubspan; Informatica; Inovis; Kewill; Liaison
Technologies; Mincom; nuBridges; OmPrompt; Perfect Commerce; Pervasive Software; Railinc; RedTail
Solutions; Seeburger; SPS Commerce; Sterling Commerce; T-Systems; Tieto; True Commerce
Recommended Reading: "Forecast: Sizing the Cloud; Understanding the Opportunities in Cloud
Services"
"Who's Who in Cloud-Computing/SaaS Integration, Volume 1"
"Who's Who in Cloud-Computing/SaaS Integration, Volume 2"
"Cool Vendors in Multienterprise B2B, 2010"
"Magic Quadrant for Integration Service Providers"
"SaaS Integration: How to Choose the Best Approach"
"Cost Savings Finally Make the (European) E-Invoicing Steamroller Pick Up Speed"
Back to Table of Contents

Real-Time Factory Scheduling


Analysis By: Simon Jacobson
Definition: Factory scheduling, often termed finite scheduling or finite capacity scheduling (FCS), is a
supply chain planning technology designed to translate demand requirements into a granular, daily
manufacturing plan. Supporting technology translates demand into requirements to optimize the
allocation of production resources.
Traditionally, these applications have been batch centric: Planning data is input daily, schedules are
created in batch-planning cycles overnight and changes between planning cycles are handled manually.
Real-time scheduling can take current constraints, including resource (physical assets and raw
materials) and appropriate staff availability, into account, interfacing back to planning systems so that
they are updated based on the actual expected production.
Position and Adoption Speed Justification: As manufacturers seek to design and manufacture
anywhere to meet demand globally, an electronic capability to "operationalize" and synchronize
production plans with demand is needed. The abundance of traditional, batch-centric and Microsoft
Excel spreadsheet-based applications in the market can't keep up with these demands. The emerging,
next generation of factory-scheduling software applications are more closely integrated with shop-floor
applications and can dynamically change schedules as real-time capture of production data and
scheduling rules permit. As more of these applications are deployed, manufacturing organizations will
be able to effectively and realistically translate volatile demand into requirements that optimize the
allocation of production resources, while earning the highest margin possible.
User Advice: Factory scheduling must be deployed as part of a value network excellence program for
improving supply chain visibility of manufacturing operations and synchronizing plant operations with
the greater supply chain. It enables companies to close the gaps in manufacturing responsiveness,
schedule adherence, manufacturing flexibility and visibility by increasing throughput, reducing costs
and improving schedule performance.
Factory scheduling is an overlay to other plant systems, and it is only as good as the data used to drive

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the optimization. For this reason, understanding the available capacity and continuing to improve
demand sensing shouldn't be overlooked.
To do factory scheduling right, great attention must be paid to having accurate manufacturing master
data. Important elements include data from formulation systems, plant HR master data on
maintenance-mechanic and factory-worker skill levels and capabilities, changeover times and plant
variances, plant capabilities of each asset for each product, yields and yield variances and the reliability
of systems for first-pass yield. To make these systems work, the master data must be reviewed and
updated quarterly.
The provider landscape is industry- and manufacturing-style specific. As a result, technology providers
tend to be either mass market and generalists, or very small firms with less-established
implementation methodologies and a greater risk of going out of business. It is crucial the buyer is
extremely clear on the objectives and requirements for planning — for example, what's to be modeled,
how it's to be modeled and the need for what-if requirements — even more so than for other types of
advanced planning and scheduling systems.
Business Impact: Global manufacturers, on average, operate fleets of over 25 factories and
outsource some manufacturing to third parties. By leveraging real-time, factory-scheduling
technologies, enterprises can support better capable-to-promise strategies and improve customer
service with improved promise-date compliance.
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Adolescent
Sample Vendors: Apriso; AspenTech; JDA; Optessa; Oracle; Plex Systems; Rockwell Automation;
SAP; Synchrono; WAM Systems
Back to Table of Contents

Business Process Hubs


Analysis By: Tim Payne; Andrew White
Definition: A business process hub (BPH) is a process-specific instance of a business application or
applications running between two or more companies. A BPH is not a category of IT vendor — it is what
emerges from an alignment of technology supporting private communities for specific business
processes. In addition to being process-specific, most BPHs are industry- or geography-specific as well.
From the business process point of view, a BPH arranges the design, orchestration and execution of a
specific business process, such as order to cash, claims adjudication, procure to pay, demand
forecasting collaboration, product planning/design, global logistics or sourcing between trading
partners. Many BPHs leverage an integrated business process network (BPN) to provide detailed,
transaction-level integration between companies. The business applications can leverage business-to-
business (B2B), such as RosettaNet; business process, such as Voluntary Interindustry Commerce
Standards (VICS); collaborative planning, forecasting and replenishment (CPFR) standards; Commerce
XML (cXML); or proprietary specifications. The BPH also often supports community management
services, where it provides technical and user help desk services to all participants (for example,
running campaigns to help enroll business partners).
From the community point of view, the scope of a BPH can be one-to-many or many-to-many. BPHs
that are implemented only between an enterprise and its private external business partners are
effectively hosted (or even managed) partner-facing portals. Those BPHs that have not previously
supported integration are evolving by offering technology to integrate the B2B transactions that
underpin the BPH applications, known as BPNs. Other BPHs are beginning to adapt beyond supporting a
BPN, and are evolving toward multienterprise business process platforms (ME-BPPs). As ME-BPPs
emerge, BPHs (if they fail to evolve) may become marginalized, more niche and more focused.
Position and Adoption Speed Justification: Historically known as "e-marketplaces," BPHs never
matched their hyped value, because many focused on business processes that were in conflict with the
way enterprises actually behaved to each other. For the most part, those BPHs that have survived have
shifted their focus to catalog and item-part data content synchronization, the hosting of traditional
applications and Web-based collaboration to support transaction cost reduction, supply chain visibility
and performance management, as well as supply chain collaboration. Some BPHs are reinvesting in e-
marketplace functionality, particularly in support of excess inventory liquidation, supplier information
management (SIM) and the leveraging of memberships to enable participants to find new suppliers. A
few offer group contracts. Some are transitioning their focus to hosted application services.
User Advice: Consider BPHs that function in your industry as strong candidates for procurement
applications, supply chain visibility and supply chain collaboration. Enterprises that are already engaged
with a BPH should insist that charges be broken out among the solutions they consume from the BPH.
They should exercise due diligence periodically to ensure that the cost for the use of those tools is in
line with the market and is price-competitive (via economies of scale) versus what it would cost to
implement the same functionality themselves.
Business Impact: BPHs can offer value to their customers by providing industry-specific hosted
applications, or many-to-many applications that offer procurement-related and supply-chain-related
functionality and services for "one-stop shopping." These vendors exist in only a limited number of
industries. Their value often depends on the level of standardized communication among members of
the same industry and the maturity of supply chain management business processes operating in the
industry.
Benefit Rating: Moderate
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Ariba; e-Builder; E2open; Elemica; Exostar; GT Nexus; Hubwoo; Liaison
Technologies; Log-Net; Mitrix; One Network Enterprises; Quadrem; SciQuest; Wesupply
Recommended Reading: "The Emergence of the Multienterprise Business Process Platform"
"A Tectonic Shift in the Business Process Center of Gravity"
Back to Table of Contents

Strategic Network Design


Analysis By: Tim Payne

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Definition: Strategic network design tools are typically stand-alone applications deployed on premises
or through external consulting services to help organizations analyze and design their distribution,
transportation and manufacturing networks. Companies can also use these products to support the
evaluation of different risk scenarios and options for strategic sourcing. Given specified constraints,
these applications use sophisticated mathematical solvers to optimize designs for network costs,
service levels and, increasingly, carbon emissions to find the optimum solution for a prescribed set of
inputs. Some simulate the performance of a particular network design over a specified period of time so
that users can study the behavior of a supply chain over a number of months or years.
Historically, consultants primarily used these tools to help companies realign their networks. The tools
were periodically used (about every three to five years) to help make strategic supply chain design
decisions. Today, many companies run these tools more frequently, using strategic network design to
facilitate tactical decisions, such as addressing seasonal builds, realigning their networks based on
seasonal supply-demand fluctuations and evaluating the network impact of a new large customer or
market. These tactical scenarios are then evaluated as part of a company's sales and operations
planning (S&OP) process.
Position and Adoption Speed Justification: Strategic network design tools have been in the market
for many years. They're used extensively by a limited number of sophisticated enterprises with
complex, multigeographical supply chains. With an increase in globalization and supply chain
complexity, more organizations want to use these tools to help optimize and simulate their supply chain
networks. Additionally, as strategic network design becomes more tactical, the need for solver
capabilities that can drive a higher level of granularity across global networks will become more
important.
Organizations will also need to link strategic network design applications with inventory strategy
optimization (ISO) tools so that the supply chain design and making specific inventory targets
operational can be modeled explicitly. Those that don't have the internal skills and expertise needed to
support this technology in-house will look to source strategic network design as a service from either
consultancies or vendors, which will build and operate the models on the customer's behalf.
User Advice: As the complexity of a company's supply chain increases, and as supply chain costs
become a greater pain point, companies should investigate strategic network design tools to help
identify more cost-effective supply chain models to deploy. These tools are available from specialized
vendors and some best-of-breed, broad-line SCP vendors.
Business Impact: These applications enable companies to identify significant cost reductions in their
networks through redesign, consolidation and optimization.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Mature mainstream
Sample Vendors: Barloworld Supply Chain Software; IBM; Insight; JDA; LLamasoft; OM Partners;
Oracle
Back to Table of Contents

Supply Chain Analytics


Analysis By: Dwight Klappich
Definition: Supply chain analytics refers to the methodologies, metrics, processes and systems used
to monitor and manage the performance of a portion of a supply chain, including portals, dashboards,
key performance indicators (KPIs), industry templates and business activity monitoring solutions.
Position and Adoption Speed Justification: Supply chain analytics comprise the tools needed to
support supply chain performance management (SCPM) at a departmental or functional level. They are
key to monitoring and measuring a supply chain's activities and performance. Most enterprises have
some, although often rudimentary, measurement systems. It will be several years, however, for use to
reach expectations and for solutions to mature, since it takes time to develop the measurement
strategies and then deploy the necessary processes and integrated systems. Basic supply chain
analytics will devolve into tactical departmental analytics, while a more strategic use of SCPM will
replace it with an end-to-end view of supply chain management (SCM) and product performance
management. Consequently supply chain analytics will become obsolete before reaching the plateau as
it is superseded by SCPM.
Vendors of departmental SCM applications, such as SCP, TMS or WMS, have been enhancing their
supply chain analytics capabilities over the last several years, with most choosing commercial business
intelligence (BI) tools as the foundation of their solutions. The vendors augment the generic BI tools
with functionally specific metrics, KPI and user views needed to satisfy the departmental users. One of
the problems with this approach, and one that will see this approach evaporate as SCPM matures, is
that companies often need to support multiple analytical tools and solutions, so concatenating
performance information across these solution silos is difficult, if not impossible. SCPM will replace
functionally specific analytics because of this reality.
User Advice: Enterprises should look first at analytic solutions that are seamlessly integrated with
their core SCM applications. Consider stand-alone systems only in the following circumstances:
 You have extreme SCM application heterogeneity. In this case, focus on the SCPM solutions.
 You are looking for a consolidated view of SCM metrics where underlying data may reside in
multiple applications. Again, focus on SCPM solutions.
 You find it impossible to choose a single solution from a single application vendor.
Business Impact: Supply chain analytics bring about proactive, intelligent management of an
enterprise's supply chain functions by using ongoing monitoring and feedback to adjust and fine-tune
processes and activities.
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: IBM (Cognos); Informatica; JDA; Manhattan Associates; Oracle; RedPrairie; SAP;
SAP (Business Objects); SAS; Teradata
Recommended Reading: "Top KPIs for Supply Chain Management"
"Confusion Escalates in SCM Demand Planning Market"

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"SCM Requires the Alignment of Decision-Making Solutions"


"Predicts 2009: How ERP and the Supply Chain Are Adapting to a Changing Economy"
"A Roundup of Supply Chain Planning Research"
"Use the Gartner SCM Maturity Model to Show the Business Benefits of SCM Investments"
"Roundup of Supply Chain Execution Research, 2008"
"The Four Technologies Most Used to Aid in Strategic Decision Making"
"Supply Chain Analytics: Driving Toward Product Performance Management"
Back to Table of Contents

Supply Chain Management C&SI Services


Analysis By: Dana Stiffler
Definition: Consulting and system integration (C&SI) services for supply chain management (SCM)
include the design and deployment of business processes. They also cover the design, development and
implementation of related applications in support of sourcing and procurement, transportation,
warehousing and logistics and supply chain planning.
Within consulting, services that focus on improving SCM are considered business operations
improvement (BOI) advisory services. Gartner defines BOI consulting as consultation and advice
related to the strategy, planning, design and implementation of options to improve business operations.
Business operations include the activities involved in creating, making and distributing goods and
services, such as sourcing, manufacturing, logistics and other traditional supply chain activities, as well
as R&D and service innovations.
This SCM C&SI profile does not address business process management (BPM) technologies or related
consulting offerings.
Position and Adoption Speed Justification: Demand for project-based supply chain services has
been strong in recent years. It was even surprisingly resilient during the downturn, where the focus
was on lowering costs and gaining efficiencies, particularly through aggressive inventory management,
spend management and supply chain cost benchmarking. Looking at that sustained activity, and taking
into account current buyer needs as well as the improved market conditions across all three main
supply chains — consumer, industrial and healthcare — the position of SCM C&SI in this Hype Cycle has
pushed further along the curve into the Plateau of Productivity.
Emerging markets helped create additional demand for strategic, operations and IT-related SCM
consulting and solution implementation along three axes: helping new clients based in emerging
markets to establish, automate or improve their supply chains; helping existing clients leverage these
markets as lower cost nodes for their global sourcing and manufacturing operations, and helping
existing and new clients operate in and sell to businesses and consumers in emerging markets. As a
result, many external service providers (ESPs) with well-established North American and European SCM
practices are investing and expanding their portfolios in emerging countries and regions such as China,
India, the Association of Southeast Asian Nations and Latin America.
Prior to these developments, SCM consulting, such as improving sales and operations planning (S&OP),
supply network optimization and strategic sourcing, was already a mature set of service offerings, but
there are challenges for large, established players. One trend that’s quite pronounced, even as market
conditions improve, is the insistence on using boutique or midsize consultants and service providers
wherever possible. Another is to look to tactical staffing rather than marshaling internal and external
resources to comprehensively address a problem.
Appetites for all-encompassing, transformational consulting and outsourcing sales pitches are at an all-
time low. The best opportunities for service providers to win big strategic engagements, and the best
shot for buyers to succeed with larger transformational undertakings, will emerge from trusted, long-
term relationships. Otherwise, multiphased projects with well-defined scope and short times to benefit
are a better fit with what clients need today.
User Advice: Before evaluating C&SI partners, buyers need to understand the preliminary scope, scale
and nature of their internal needs or risk choosing the wrong provider. SCM service providers’ strengths
and weaknesses in BOI consulting, SCM-related IT consulting and process and technology
implementation should be evaluated in an industry-specific context: food and beverage expertise is
unlikely to translate to the aerospace and defense (A&D) industry, for example. Buyers should ask
tough questions about how the consultant’s specific approaches to SCM will improve their business and
precisely what role it will play: advisor/coach, hands-on program manager and implementation partner,
technology resource or all three. Because of the diverse skill sets required and broad impact of SCM
initiatives on multiple domains, most users that work with external providers must be prepared to work
in a multivendor selection and partner management model.
Vendors, in turn, need to demonstrate the ability to generate both bottom-line and top-line benefits.
They should also be prepared to commit to being compensated on business value delivered and other
execution-oriented deliverables, rather than billing on a time and materials basis. Their SCM services
portfolios should not only focus on lowering costs associated with plan, source and deliver processes,
but also on how supply chains, recast as demand-driven value networks (DDVNs), can be used for
competitive advantage. In emerging regions and countries, vendors need to take more responsibility
for educating end users on the benefits of SCM and best practices to match the specialized needs of
these clients.
Business Impact: Although SCM consulting is a mature market, its potential to improve
competitiveness and profitability for clients remains high. As industries evolve and macroeconomic
indicators shift, there are always new developments that create demand for expert advice and problem
solving. DDVN-oriented supply chain initiatives are one example, and supply chain risk management
consulting another.
The fundamental challenge of SCM improvement — and the dynamic that makes it a never-ending
consulting revenue stream — is that it’s difficult to make positive changes stick over long periods of
time. Targets are perpetually moving. Combine this with a major skills shortage and the fact that
multiple business functions have to collaborate to meaningfully improve any key supply chain capability
(S&OP comes to mind), and it’s clear SCM will continue to be a C&SI revenue engine for years to come.
Benefit Rating: High
Market Penetration: More than 50% of target audience
Maturity: Mature mainstream

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Sample Vendors: Accenture; Archstone; BearingPoint Europe; Bristlecone; Capgemini; Celerant;


Chainalytics; Ciber; Cognizant Technology Solutions; CSC; Deloitte; Fujitsu; Hitachi Consulting; IBM;
Infosys Technologies; Keane; Kurt Salmon Associates; Northrop Grumman; Plan4Demand; PRTM;
PricewaterhouseCoopers; SAIC; Spinnaker; S&V Management Consultants; Tata Consultancy Services;
Tompkins Associates; Unisys; Wipro Technologies
Recommended Reading: "AMR Research 2009 Deal Review Data: Supply Chain Consulting Bounces
Back, Outsourcing Quieter"
"Leading Manufacturers and Retailers Rely on Value Chain Service Providers"
"Key Issues for Cross-Industry Supply Chain Leaders, 2010"
"Key Issues for SCM IT Leaders, 2010"
Back to Table of Contents

Voice-Directed Picking in Warehouse Management


Analysis By: Dwight Klappich; Timothy Zimmerman
Definition: Voice-directed picking in warehouse management involves the use of voice recognition and
speech synthesis technology to drive activity in warehouse operations, enabling hands-free and eyes-
free operations. (Here, we refer broadly to voice-directed activity in the warehouse, regardless of
implementation style.) Most implementations take place via a proprietary interface and proprietary
hardware. However, there is an industry move to an open-standard technology implementation of
voice-directed picking. Typically, this is a third-party subsystem, rather than an integral part of the
WMS.
The major consideration for this technology has been where to perform voice processing and synthesis.
Now this has been largely resolved, with the portable unit receiving machine instructions that are
translated into speech synthesis or recorded voice instructions for the warehouse operator. Speech
feedback and confirmations from the user are interpreted on the machine, rather than by passing the
sound file over the network, and a confirmation is passed to the host system. In the case of speech
recognition for multilingual workers, some systems have the ability to translate instructions into the
workers' native language, which can broaden the workforce and eliminate errors. Hands-free speech
recognition solutions can be used to replace pick-to-light anywhere in the warehouse or distribution
center, with the ROI often achieved from reductions in service and maintenance costs alone.
Most warehouse management applications focus on voice-directed picking activities. However, some
enterprises are considering the technology to direct other activities, such as putaway or replenishment.
Although this technology is most common in high-speed picking applications, additional
implementations of the same model are found in convenience stores (which have many small items in a
single location), as well as liquor and cigarette distributors.
Speech recognition can be used in a multimodal capability (such as voice plus bar code) with many
handheld platforms. In this implementation, speech recognition is used for only the operations or inputs
that require eyes-free and hands-free operations, with other processes implemented via bar code or
keyboard as needed. Additionally, the availability of a screen and keyboard provides not only a backup
input capability for speech recognition operations when the voice recognizer has difficulty (for example,
because of an accent), but also the ability to address more complex activities, such as exceptions.
Position and Adoption Speed Justification: After several years of competing designs and styles, the
industry has settled on the design and use of the system outlined above. The initial uses were grocery-
oriented because the systems were so complicated and training requirements high. This meant that
only large warehouses, such as those for grocery facilities, could afford the upfront investment.
However, the technology has matured to the point that most facilities with meaningful picking volumes
can afford to use voice technology.
Adoption is increasing as the costs of the hardware, software and services to deploy voice have come
down. We still find most of the use of voice in picking where hands-free operation is valuable, though
some companies are attempting to replace all radio frequency (RF) users with voice. We also find
increased demand for hybrid voice/RF solutions, where part of the communication with the users is
voice commands and part is scanning. A common hybrid use case is providing picking instructions in
voice, but allowing the users to scan items to more quickly and accurately pick up items with multidigit
lot or serial numbers, which are often hard to capture verbally.
User Advice: All users with intensive picking requirements, such as case-picking operations, should
evaluate voice picking as an addition to a warehouse management environment. It's possible to go
directly from paper-based picking to voice picking, so there is no need to step through RF picking
before implementing voice picking. Users will need to ensure that the warehouse has good wireless
network coverage. Additionally, users need to consider whether they should upgrade their WMS as part
of the project to ensure that voice picking is implemented on top of modern business practices,
although business benefits can be had without upgrading the underlying WMS.
Business Impact: Voice-directed picking can improve the productivity of order selectors, especially in
situations where both hands are required to perform picking operations, such as case picking for pallet
building. The use of voice direction can improve safety in the warehouse because employees are not
distracted by reading a screen for instructions. In hands-free operations, the productivity improvement
can exceed 30%, and the ROI is less than one year, in comparison to the paper-based systems that
they often replace. Productivity improvements will be lower when integrating with a more modern WMS
that has RF picking and integrated task management. This is because many of the productivity
improvements cited when moving from paper picking to voice picking result from the use of task
management technology, which would have been implemented in a modern WMS.
Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Mature mainstream
Sample Vendors: Aldata; Inther; Vocollect; Voxware
Recommended Reading: "Magic Quadrant for Warehouse Management Systems, 2007"
Back to Table of Contents

Warehouse Labor Management Systems


Analysis By: Dwight Klappich
Definition: In a warehouse labor management system, the best work patterns are employed to

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construct goal times for the performance of each discrete task in the warehouse. These are called
"engineered labor standards." This is done at a detailed level and can be based on a library of best
work standards that specialist implementers and vendors have developed. For example, the difference
in time it takes to reach the top shelf of a warehouse rack versus what is required at eye level is taken
into account. One of the most important components of this system is the incorporation of travel times
into the goal time. For this reason, it's important to pay attention to how the travel paths are
constructed in the system.
Once these parameters are determined, each pick task is analyzed by the warehouse management
system (WMS) or labor management system (LMS) to determine its goal time based on the individual
elements of that task, such as beginning and ending zone, person assigned the task and time on shift
(to account for things such as fatigue). Then, the actual time is compared to the goal time for the
specific task, and achievement is evaluated. This is superior to productivity management systems that
evaluate only the completion of an aggregate number of tasks during a work period (such as picks per
hour) because the more precise specifications of goals and performance enable the manager to
properly evaluate work, counsel for improvement and fairly compensate good performance. However,
most vendors have not completed the technology projects to enable the systems to fully comply with
restrictive labor laws outside the U.S. In addition, there are still few reference customers on these
systems outside the U.S., although some European companies use them at the aggregate level.
While basic labored reporting is mature, leading-edge systems are being extended to support labor and
resource planning and scheduling. The goal is to provide tools that will consider all the activities of the
warehouse, projected over a time frame, so that the labor and resource requirements can be more
accurately forecasted and scheduled. This trend is accelerating as warehouse managers strive to be
more proactive in planning and managing the work within their warehouse operations, taking into
consideration constraints and projected work requirements.
Position and Adoption Speed Justification: LMS use is mature in large grocery facilities, but the
technology and engineering standards have expanded during the past several years, making the
technology and labor management processes applicable to most midsize to large warehouse facilities.
However, most buyers of LMS remain users with large workforces working in large warehouses. LMSs
were once specialized systems, but with general use, there's more emphasis on integration with the
WMS and the technical fit and finish of the systems.
Most LMS implementations have been in the U.S. European companies have generally resisted this
technology because of local labor laws or perceived cultural constraints. In parts of Europe, unions or
work councils restrict detailed worker oversight from the use of tools such as labor management.
Therefore, LMSs are used only at the aggregate resource management level. Some vendors have
begun focusing on deployments outside the U.S., amending systems to meet local conditions. Gartner
expects these changes as well as real-world experience in other countries to accelerate adoption by
users outside the U.S. LMS can be an add-on to established WMSs.
Although the value is high and the market is mature, adoption as a percentage of the total addressable
market is low. There are several reasons for this. Many companies continue to operate aging WMSs
that do not have LMS as part of the package. These users are first focused on upgrading to a newer
WMS. However, we find that LMS is now a common requirement for a new WMS. Another reason is that
an LMS historically fit certain environments like grocery because the solutions were not strongly
packaged. Plus, the total cost of ownership (TCO) and the time, effort and cost to implement and
support LMS was high, so only operations with large workforces could justify it. As LMS has matured
and become more standard and prepackaged, the costs and complexity have come down, opening the
LMS market to more and smaller warehouse operations.
User Advice: Most users with over 100 workers in their warehouses in the U.S. should evaluate or
implement an LMS based on engineered standards. However, it isn't enough to just install the system.
Users must be willing to incorporate best work practices as well as build a program of worker training
and rewards based on the system. This requires a high degree of change management. Users that work
with labor unions should employ a consultant with specialized expertise in working with labor unions
regarding the deployment of labor management systems to ensure that a win-win business case and
business process are developed. Users outside the U.S. should begin evaluating LMSs to determine
whether there are real or perceived issues with cultural fit and legal regulations.
Business Impact: A typical warehouse might be performing at 50% to 70% of optimal performance
through the use of productivity management tools and a good WMS. The implementation of an LMS can
bring a warehouse to 90% to 100% of optimal performance. The deployment of pay-for-performance
schemes based on engineered labor standard goal times can move a warehouse to 110% to 120% of
"optimal" levels for true best-in-class performance. Sometimes, these systems can be used to evaluate
temporary labor to determine whether a full-time offer should be extended based on performance.
The scheduling components can be used to forecast labor requirements and reduce overtime
expenditures. The time-and-attendance systems can reduce the need for costly third-party systems
Benefit Rating: High
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: Catalyst International; CyberShift; HighJump Software; Infor (WFM Workbrain);
Kronos; Kurt Salmon Associates; Manhattan Associates; RedPrairie; SAP
Recommended Reading: "Magic Quadrant for Warehouse Management Systems"
"Supply Chain Management Vendor Guide, 2008"
"Gartner's SCM Scenario: Post-Lean Supply Chain, 2008 and Beyond"
"Key Issues for SCM, 2009"
"Predicts 2009: How ERP and the Supply Chain Are Adapting to a Changing Economy"
"A Roundup of Supply Chain Planning Research"
"Use the Gartner SCM Maturity Model to Show the Business Benefits of SCM Investments"
"Roundup of Supply Chain Execution Research, 2008"
"Stratifying WMS: A Multilevel View"
Back to Table of Contents

TMS Shipper-Centric Multimodal Domestic


Analysis By: Dwight Klappich

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Definition: TMS shipper-centric multimodal domestic refers to transportation management systems


(TMSs) intended for and used in a specific region or geography, such as North America or Western
Europe. These are holistic solutions intended to manage domestic freight operations. Transportation
management systems are used to plan freight movements, perform freight rating and shipping across
all modes (truckload, less than truckload, air, parcel, rail and intermodal), consolidate orders, select
the appropriate route and carrier, communicate (tender) with carriers and manage freight bills and
payments. These systems are used for domestic freight operations, not for complex multileg
international, cross-border or global shipping.
Position and Adoption Speed Justification: Domestic multimodal TMS solutions are a mature
market, emerging in the early 1990s. Until recently, penetration was limited to large shippers (more
than $100 million per year in freight spending) because of the high cost of TMS applications and the
constrained benefits of more narrowly focused ones. With expansion of the TMS functional footprint to
holistically cover most freight activities — from planning, to execution, to audit and settlement — as
well as more options for how users buy these types of solutions, the market has now expanded to
include shippers from as little as $15 million per year in freight spending.
The emergence of alternative TMS deployment models — notably, software as a service (SaaS) — has
also helped to expand the market to smaller shippers. Breadth and depth continues to improve, but the
basic core functions of planning, execution and audit/pay are mature, while other areas like
procurement, performance management and support for all modes and styles of transportation (e.g.,
bulk, packaged, dry van and flatbed) remain differentiated across vendors.
Although overall market adoption is estimated at slightly more than 20%, large-shipper adoption is far
higher (50% of the large-shipper market), and smaller-shipper adoption remains quite low (5% to 10%
of midsize- and small-shipper market). It's growing rapidly, however, because of pent-up buyer
demand and consideration of the high value and return on investment of TMS applications. While the
weak global economy negatively impacted many supply chain management (SCM) application
categories, demand for TMS remained steady, given the strong potential for cost reductions.
User Advice: Enterprises with more than $15 million in annual freight spending that spans multiple
modes of transportation should consider using TMS, but they should be diligent in creating a business
case and selecting solutions that fit their budgets. Larger shippers with $50 million or more in annual
freight spending should consider these solutions as well, paying particular attention to the breadth and
depth of the TMS solutions being considered, with particular focus on the planning engines.
Business Impact: Rising transportation costs (particularly volatile fuel costs), combined with the need
to manage freight operations cost effectively and provide high levels of customer service, make TMS
almost a necessity for midsize to large shippers. Although many transportation metrics, such as lower
fuel costs and freight capacity, improved in late-2008 and into 2009, most shippers and carriers believe
this is a temporary respite, with costs likely to spike in years to come. Cost reduction and payback are
high, with most organizations finding a return in less than 12 months post implementation and cost
reductions of normally 10% or more of annual freight spending.
Benefit Rating: High
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: Descartes Systems Group; HighJump Software; i2 Technologies (JDA); Infor; JDA;
LeanLogistics; Logility; Manhattan Associates; One Network; Oracle; Precision Software; RedPrairie;
SAP; Sterling Commerce; Transplace
Recommended Reading: "A Self-Diagnostic Model for Building a TMS Business Case and Evaluating
TMS Sourcing Options"
"Issues to Consider When Building a TMS Business Case and Evaluating TMS Sourcing Options"
"TMS Sourcing Options Are Expanding With the Increase in the Number and Types of Products"
"Stratifying Transportation Management Systems: A Multilevel View"
"Magic Quadrant for Transportation Management Systems, 2009"
Back to Table of Contents

Service Parts Planning


Analysis By: Will McNeill; Dwight Klappich
Definition: Service parts planning (SPP) applications optimize the forecasting, stock locating and
replenishment planning of service parts, balancing customer service with inventory and supply chain
costs. These applications are specialized versions of supply chain planning (SCP) applications that focus
on the unique characteristics of service parts management, such as part failure / demand uncertainty,
asset and part population planning, reverse logistics and large-part inventories. SCP solutions have
additional features to support SPP, including modeling of returns, support for erratic and irregular
demand planning, and multiechelon inventory optimization (MEIO).
Position and Adoption Speed Justification: Core SPP, which includes parts forecasting and basic
inventory and replenishment planning, is a mature application category. There is minimal innovation in
core SPP functionality. However, innovation continues in MEIO and support for performance-based
logistics (PBL), which are typically targeted at the most sophisticated environments, such as complex
high technology or aerospace and defense. There is a widening gap between the most sophisticated
users of SPP in the aforementioned industries, which are looking for very advanced applications, and
less demanding enterprises that don't understand the value of more advanced SPP capabilities.
Therefore, they make do with traditional SCP technology.
A large and growing number of vendors are targeting SPP, including specialized SPP-only vendors, SCP
vendors with some SPP capabilities and some ERP vendors. ERP vendors have deepened their SPP
offerings. For this reason, competition in this market segment across suite and best-of-breed vendors is
high. As ERP vendors add some SPP to their suites, it will become further legitimized for the less
sophisticated user, shifting the value proposition from pure depth of functionality to other factors, such
as integration, single-vendor offering and breadth of offering.
Given the maturity level, we now find some users considering second- and third-generation SPP
solutions, with a level of sophistication warranting more advanced capabilities. The prime driver,
though, is technical obsolescence of previous-generation systems. Most large and complex SPP
operations have some form of SPP solution today, while the small or midsize business (SMB) market is
less penetrated. However, the SMB market is less likely to value or exploit the more sophisticated and

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specialized SPP offerings.


While the SPP market has long been dominated by specialist vendors, it's consolidating at the same
time SCP suite vendors are adding more SPP capabilities. The leading best-of-breed vendors continue
to offer differentiated functionality for the most advanced SPP users, but others are adding functionality
that can support basic requirements.
User Advice: Service parts operations can achieve better inventory asset utilization through more
specific functionality from SPP technology vendors. When aftermarket inventory management is a
critical business issue, look to vendors that specialize in SPP solutions over generic best-of-breed SCP
or ERP / suite offerings.
Business Impact: These tools can help improve parts availability while reducing inventory carrying
costs for holding large populations of parts. They can also help improve service reliability and cost by
having the right parts available when needed. In addition, they can enable enterprises to share supply
and demand data internally and externally. The business impact of core SPP capabilities, like
forecasting and inventory replenishment, is strong. When advanced capabilities like MEIO are added,
the value grows significantly because inventories can be reduced even more than with just core SPP.
Benefit Rating: High
Market Penetration: More than 50% of target audience
Maturity: Early mainstream
Sample Vendors: Baxter Planning Systems; GAINSystems; Logility; MCA Solutions; Oracle; SAP;
SAS; Servigistics; Syncron; ToolsGroup
Recommended Reading: "MarketScope for Service Parts Planning, 4Q07"
"Supply Chain Planning Market Is Bifurcating Into Process Automation and Process Innovation Markets"
Back to Table of Contents

Entering the Plateau


Supply Chain Planning for Process Automation
Analysis By: Tim Payne
Definition: Users focused on supply chain planning for process automation have higher interest in
planning more efficiently versus how they do SCP in support of competitive advantage. To that end, a
focus on supply chain efficiency, best practices (both repeatable and standardized) and competitive
parity characterizes SCP for process automation. This contrasts with SCP for process innovation, which
focuses on effectively using supply chain for competitive advantage and includes areas such as
inventory strategy optimization (ISO), multienterprise collaboration, causal forecasting and service
parts planning.
SCP refers to applications that optimize the delivery of goods and services and balance supply and
demand. An SCP suite integrates with a transaction system to provide planning and analysis of basic
what-if scenarios.
Gartner has seen a split in the SCP market between SCP for process automation and SCP for process
innovation. More users and vendors are focusing their efforts and solutions on SCP for process
automation. Its core features include demand planning, inventory planning, replenishment planning,
available to promise, manufacturing planning and scheduling, and collaborative planning (mainly
internally focused), without support for industry specialization or process innovation.
Position and Adoption Speed Justification: Most users (70% to 80%) are focused on SCP for
process automation. Because this is the biggest part of the market, so are most vendors, in terms of
the solutions available. Products are now more robust and scalable. They can do more, with expanding
functional footprints and the addition of capabilities such as supply chain analytics. Improved
implementation frameworks ensure a higher likelihood of success as well as a greater and faster ROI.
Gartner still sees a strong future in these solutions, since many companies are still in the throes of their
first SCP implementations.
User Advice: If your supply chain is an asset to be optimized or a source of cost savings or efficiency,
use SCP for process automation technology to help manage decision making. It's widely available from
ERP suite vendors and from stand-alone, best-of-breed providers.
Business Impact: These applications enable enterprises to make better use of resources by
coordinating supply and demand and using business activity monitoring to identify anomalies in
demand and supply conditions.
Benefit Rating: Moderate
Market Penetration: More than 50% of target audience
Maturity: Mature mainstream
Sample Vendors: Infor; JDA; Logility; OM Partners; Oracle; SAP
Recommended Reading: "MarketScope for Supply Chain Planning: Process Automation, 2009"
"Supply Chain Planning Market: Process Automation Characteristics"
"Supply Chain Planning Market Is Bifurcating Into Process Automation and Process Innovation Markets"
Back to Table of Contents

Appendices

Figure 3. Hype Cycle for Supply Chain Management, 2009

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Source: Gartner (July 2009)

Back to List of Figures


Back to Table of Contents

Hype Cycle Phases, Benefit Ratings and Maturity Levels

Table 1. Hype Cycle Phases

Phase Definition

Technology A breakthrough, public demonstration, product launch or other event generates significant press and
Trigger industry interest.

Peak of Inflated During this phase of overenthusiasm and unrealistic projections, a flurry of well-publicized activity by
Expectations technology leaders results in some successes, but more failures, as the technology is pushed to its
limits. The only enterprises making money are conference organizers and magazine publishers.

Trough of Because the technology does not live up to its overinflated expectations, it rapidly becomes
Disillusionment unfashionable. Media interest wanes, except for a few cautionary tales.

Slope of Focused experimentation and solid hard work by an increasingly diverse range of organizations lead
Enlightenment to a true understanding of the technology's applicability, risks and benefits. Commercial off-the-shelf
methodologies and tools ease the development process.

Plateau of The real-world benefits of the technology are demonstrated and accepted. Tools and methodologies
Productivity are increasingly stable as they enter their second and third generations. Growing numbers of
organizations feel comfortable with the reduced level of risk; the rapid growth phase of adoption
begins. Approximately 20% of the technology's target audience has adopted or is adopting the
technology as it enters this phase.

Years to The time required for the technology to reach the Plateau of Productivity.
Mainstream
Adoption

Source: Gartner (July 2010)

Back to List of Tables


Back to Table of Contents

Table 2. Benefit Ratings

Benefit Definition
Rating

Transformational Enables new ways of doing business across industries that will result in major shifts in industry
dynamics

High Enables new ways of performing horizontal or vertical processes that will result in significantly
increased revenue or cost savings for an enterprise

Moderate Provides incremental improvements to established processes that will result in increased revenue or
cost savings for an enterprise

Low Slightly improves processes (for example, improved user experience) that will be difficult to translate
into increased revenue or cost savings

Source: Gartner (July 2010)

Back to List of Tables

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Back to Table of Contents

Table 3. Maturity Levels

Maturity Level Status Products/Vendors

Embryonic  In labs  None

Emerging  Commercialization by vendors  First generation


Pilots and deployments by industry leaders High price
Much customization

Adolescent  Maturing technology capabilities and process  Second generation


understanding Less customization
Uptake beyond early adopters

Early mainstream  Proven technology  Third generation


Vendors, technology and adoption rapidly evolving More out of box
Methodologies

Mature  Robust technology  Several dominant vendors


mainstream Not much evolution in vendors or technology

Legacy  Not appropriate for new developments  Maintenance revenue


Cost of migration constrains replacement focus

Obsolete  Rarely used  Used/resale market only

Source: Gartner (July 2010)

Back to List of Tables


Back to Table of Contents

Recommended Reading

"Understanding Gartner's Hype Cycles, 2010"


"Key Issues for SCM IT Leaders, 2010"
"Key Trends in ERP and Supply Chain Management, 2010 to 2015"
"A Roundup of Supply Chain Planning Research 2010 for SCM IT Leaders"
"Supply Chain Management Market and Vendor Guide, 2009"
"Gartner’s SCM Scenario: Post-Lean Supply Chain, 2008 and Beyond"
"Supply Chain Management Glossary 2.0, 2010"
"Top Supply Chain Planning Processes"
"Top Six Supply Chain Execution Processes, 2009 to 2014"
Back to Table of Contents

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