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Research

Publication Date: 30 July 2009 ID Number: G00169602

Hype Cycle for Supply Chain Management, 2009


Tim Payne, Benoit J. Lheureux, Paolo Malinverno, Andrew White, Deborah R Wilson, C. Dwight
Klappich, Tim Zimmerman

The focus in SCM is on cost optimization; competitive advantage via the supply chain
has slipped down executive agendas. Market hype is centered on capabilities that
support a chaos-tolerant supply chain theme, which firms can use to understand cost
and competitive drivers in their supply chains.

© 2009 Gartner, Inc. and/or its Affiliates. All Rights Reserved. Reproduction and distribution of this publication in any form
without prior written permission is forbidden. The information contained herein has been obtained from sources believed to
be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Although
Gartner's research may discuss legal issues related to the information technology business, Gartner does not provide legal
advice or services and its research should not be construed or used as such. Gartner shall have no liability for errors,
omissions or inadequacies in the information contained herein or for interpretations thereof. The opinions expressed herein
are subject to change without notice.
TABLE OF CONTENTS

Analysis ............................................................................................................................................. 4
What You Need to Know ...................................................................................................... 4
The Hype Cycle .................................................................................................................... 4
The Priority Matrix ................................................................................................................ 9
On the Rise......................................................................................................................... 10
'MDM Aware' Applications ..................................................................................... 10
Segmented Supply Chain Response .................................................................... 12
Integrated Business Planning................................................................................ 13
Product Portfolio Optimization............................................................................... 14
Multienterprise Business Process Platform........................................................... 15
Chaos-Tolerant SCM............................................................................................. 17
Mobile-Asset Optimization..................................................................................... 19
Supply-Chain-Centric, Carbon-Sensitive Planning and Execution ....................... 22
Supply Chain Performance Management ............................................................. 23
Product Performance Management ...................................................................... 24
Battery-Assisted RFID ........................................................................................... 26
At the Peak ......................................................................................................................... 27
Business Process Networks .................................................................................. 27
Process Templates for SCM Innovation................................................................ 29
B2B Integration Outsourcing ................................................................................. 30
Inventory Strategy Optimization ............................................................................ 33
TMS Multimodal/International................................................................................ 33
Mobile (Wireless) Enhanced Supply Chain Management..................................... 34
Sliding Into the Trough ....................................................................................................... 36
Master Data Management of Product Data........................................................... 36
Dock Scheduling and Carrier Appointment Management ..................................... 38
Direct-POS Analytics Applications ........................................................................ 39
Radio Frequency Identification for Logistics and Transportation .......................... 40
Global Trade Compliance (Import and Export)...................................................... 42
Yard Management ................................................................................................. 44
Supply Chain Management (SaaS)....................................................................... 44
Climbing the Slope ............................................................................................................. 46
Capable-to-Promise Systems................................................................................ 46
RFID and Sensor-Based Inventory Management ................................................. 47
Sales and Operations Planning............................................................................. 48
Multienterprise Supply Chain Collaboration .......................................................... 49
Voice-Directed Picking in Warehouse Management............................................. 50
Integration as a Service......................................................................................... 52
Supply Chain Analytics.......................................................................................... 54
Business Process Hubs......................................................................................... 56
Warehouse Labor Management Systems ............................................................. 57
Service Parts Planning .......................................................................................... 59
Entering the Plateau ........................................................................................................... 60
Supply Chain Planning for Process Automation.................................................... 60
Appendixes ......................................................................................................................... 61
Hype Cycle Phases, Benefit Ratings and Maturity Levels .................................... 63
Recommended Reading.................................................................................................................. 64

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LIST OF TABLES

Table 1. Hype Cycle Phases ........................................................................................................... 63


Table 2. Benefit Ratings .................................................................................................................. 63
Table 3. Maturity Levels .................................................................................................................. 64

LIST OF FIGURES

Figure 1. Hype Cycle for Supply Chain Management, 2009 ............................................................. 8


Figure 2. Priority Matrix for Supply Chain Management, 2009 ....................................................... 10
Figure 3. Hype Cycle for Supply Chain Management, 2008 ........................................................... 61

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ANALYSIS

What You Need to Know


Traditional supply chain management (SCM) techniques have led to finely tuned and well-
engineered process models that describe how supply chains should operate and respond under
predictable conditions. These strategies can generate value in predictable and steady-state
environments.
With significant uncertainty and unpredictability now dominating most supply chains, and a
relentless focus on reducing costs, while maintaining 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, supply chain processes are not capable of closing this gap. Perfectly engineered
processes and response patterns are inconsistent with reality and with how to survive in new and
mature markets. A new approach — chaos-tolerant SCM — continues to emerge, and technology
underpinnings are emerging (for example, product performance management and integrated
business planning) to enable the adoption of such an approach.
Supply chains are longer, more complex, more connected and more dependent on other nodes,
and these chains are operating more as ecosystems. Chaos-tolerant behavior and capability is
increasingly becoming the "next big thing" for coping with this increasing supply chain complexity.
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
chaos-tolerant SCM strategies and that help improve the effectiveness of decision making across
the operating ecosystem.

The Hype Cycle


The common characteristics from the traditional focus of supply chain has been around the
portfolio of business processes that make up SCM. Good practioners of SCM tended to have a
laser-like focus on their SCM processes (for example, demand management process, inventory
planning process, warehouse execution processes). However, the key learning that has recently
come out of this era of economic volatility is the increasing value of information in a supply chain
context (for example, the use of Six Sigma in the supply chain has highlighted to companies the
need for data to support improvement efforts, as well as the general lack of readily available
relevant information). Information about the environment, customers, suppliers, assets, people,
plans and businesses are key to success and to coping better with your competitors; supply chain
performance is now the right focus (as opposed to fragmented optimization), with strong links
between the supply chain and other key business functions (such as financial planning and
strategic planning); all characteristics of a chaos-tolerant SCM strategy.
Information is the core enabler of next-generation supply chain strategies: viable, complete,
available, relevant and consistently interpreted information. As part of an integrated performance
management framework, it is the "DNA" that makes a supply chain effective and competitive in
the new operating environment, and to layer on top of traditional SCM capabilities. Getting access
to this information, in terms of supply chain performance, is a key first step, but the step up in
value comes from how an enterprise uses this information to analyze and remodel its supply
chain to effectively change its performance profile to better match current operating and strategic
conditions. This has to be a continuous effort, as these operating and strategic conditions will
change, and the supply chain response model will need to change with it. Evidence of this shift
exists already; companies that had moved manufacturing offshore through the early 2000s are re-

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evaluating whether this strategy still makes sense (for all products) when transportation costs
have increased along with demand-side volatility. Gartner has seen an increase in inquiries,
during the last six to nine months, from clients looking for analytical support that they can use to
evaluate different scenarios that incorporate aspects of supply chain risk management.
Enterprises' supply chains are typically part of a network of trading partners' supply chains. These
supply chains increasingly overlap and form networks that create new relationships and
behavioral patterns that look more like an ecosystem that is characterized as being transient,
dynamic, changeable and unpredictable. These characteristics drive chaotic behavior that cannot
be designed out, or negated, with better engineering of business processes. The historical
approach of trying to build a model to represent all this complexity and then optimize this model is
neither possible nor usable by most enterprises. What is needed is a strategy that makes a
supply chain tolerant to this chaos by:

• Harmonizing enterprise behavior end to end, spanning end customers through to


suppliers (horizontal perspective)

• Harmonizing enterprise boardroom goal setting (strategy) and tactical planning all the
way to operational execution (vertical perspective)

• Exploiting the convergence of business intelligence (where users accept decisions) and
business applications (where users make decisions happen) and technologies through
embedded analytics to drive more-expansive and deeper analytical capabilities
The leaders of SCM in 2009 and beyond will embed a supply chain and performance
management capability at the heart of their SCM chaos-tolerant strategies. They should look to
the 2009 SCM Hype Cycle first to see what is emerging, then decide what to support and exploit.
The technologies we review in this Hype Cycle converge on this common framework: from the
more mature supply chain analytics, and sales and operations planning, to the emerging
integrated business planning (IBP), multienterprise business process platforms (BPPs) and
segmented supply chain response. Review all these technologies and the others in this Hype
Cycle in light of a BPP strategy — that is, how your business plans to govern its business process
and application assets — as well as from a chaos-tolerant SCM perspective. A BPP may be
represented by a large, single-instance enterprise application vendor suite, or it might describe a
complex, heterogeneous, multivendor, service-oriented architecture (SOA)-oriented stack. In all
cases, these SCM technologies must be looked at in relationship to a BPP strategy, because this
will help determine when, where and whether these SCM technologies will add the most value to
the business.
The technologies Gartner researched for this SCM Hype Cycle address a broad range of supply
chain capabilities. Many are mature and provide sound foundations, and organizations are
learning to apply them more effectively, while other technologies are new and offer significant
opportunities for innovation, often on top of stable foundations. Some technologies focus on:

• Process automation: performing SCM processes more efficiently and at lower cost

• Process innovation: changing the SCM processes

• Enterprise-centric activities: within the enterprise's four walls

• Multienterprise business processes (beyond the boundaries of the enterprise)

• Different aspects of performance management as it relates to the internal and external


supply chain

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• Integrating different planning regimes to ensure alignment and capable scenario
management
Review each technology to determine how it applies to your SCM strategies, and continuously
evaluate how each technology meets your evolving business strategies (see "Use the Gartner
SCM Maturity Model to Show the Business Benefits of SCM Investments").
Major Changes to the 2009 SCM Hype Cycle
The following technologies were deleted, renamed or merged on the 2009 Hype Cycles:

• Integrated demand and replenishment planning — retail-specific, and included on the


"Hype Cycle for Retail Technologies, 2009"

• SOA-enabled order management — SOA-enabled business processes are part of the


boarder adoption of SOA and BPPs. Merged with multienterprise business process
platform.

• Network-based inventory and supply chain management — for basic inventory


management requirements, see the profiles for multienterprise supply chain
collaboration and business process hubs; for more advanced inventory and supply chain
management requirements, see the profiles for business process networks and
multienterprise business process platform.

• Global data synchronization — retail-specific and included on the "Hype Cycle for Retail
Technologies, 2009"

• Supply chain planning (software as a service [SaaS]) — for some aspects of SCM,
SaaS is an alternative deliver model (see the supply chain management [SaaS] profile).
This is mainly in the areas of transportation planning and collaboration. However, supply
chain planning (SCP) SaaS is not evolving, and on-premises remains the dominate
delivery model for SCP functionality. Some vendors in the collaboration and process hub
market provide aspects of SCP functionality as part of their offerings as users look for
more value from multienterprise shared data. For collaborative demand and supply
planning, see profiles for multienterprise supply chain collaboration and business
process hubs; for more-advanced SCM requirements, see business process networks
and multienterprise business process platform. For traditional, integrated SCP, see the
profile for supply chain planning for process automation, which is not typically delivered
via SaaS.

• B2B project outsourcing — renamed as B2B integration outsourcing

• Supply chain and product performance management — renamed as product


performance management

• Gen2 class 3 sensor-based RFID — renamed as battery-assisted RFID

• Carbon-sensitive planning and execution — renamed as supply-chain-centric carbon-


sensitive planning and execution
The following technologies are new on the 2009 Hype Cycle:

• Product portfolio optimization

• Supply chain performance management

• Yard management

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• 'MDM aware' applications

• Radio frequency identification (RFID) for logistics and transportation

• Global trade compliance (import and export)


Notable Position Changes
Many of the SCM technologies represented on this Hype Cycle have changed position since
2008, most of them incrementally. Several, however, have changed more substantially, including:

• Supply chain analytics — now flagged as obsolete; before it was on the Plateau of
Productivity. More end-to-end supply chain performance management solutions (new for
2009) will replace departmental and functionally focused supply chain analytics
solutions, as they will mature relatively quickly and bring more value to the enterprise.

• Battery-assisted RFID — moving quickly toward the Peak of Inflated Expectations, on


the back of combined passive and active RFID tag characteristics, and better-
understood use cases.

• Multienterprise business process platform — moving up the trigger curve. Still no full
ME-BPPs on the market, but some vendors are evolving and moving in that direction.

• Master data management of product data — moving down toward the Trough of
Disillusionment; more implementations, but incomplete and/or industry-specific solutions
still prevail, as well as the need for strong governance of the data and associated
processes.

• Product performance management (PPM) — moving up the trigger curve. Aspects of


PPM, such as product portfolio optimization (PPO), are emerging to help companies
better understand product behavior in the value chain.

• Integrated business planning (IBP) — moving up the trigger curve. Sales and operations
planning (S&OP) solution providers and IBP point solutions are emerging and maturing,
and companies are starting to deploy them as part of their overall business planning
processes.
Technologies Unchanged
The following technologies have made slow progress since last year and remain in a similar
position this year:

• SCP for process automation

• Warehouse labor management systems

• Voice-directed picking in warehouse management

• Business process hubs

• Capable-to-promise systems

• Mobile (wireless) enhanced supply chain management

• Inventory strategy optimization

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Figure 1. Hype Cycle for Supply Chain Management, 2009

expectations

B2B Integration Outsourcing Inventory Strategy Optimization


Process Templates for SCM Innovation TMS Multimodal/International
Business Process Networks Mobile (Wireless) Enhanced Supply Chain Management

Battery-Assisted RFID
Product Performance Management
Supply Chain Performance Master Data Management of Product Data
Management Dock Scheduling and Carrier
Appointment Management Supply Chain Planning for
Supply-Chain-Centric, Carbon- Process Automation
Sensitive Planning and Execution
Mobile-Asset Optimization Direct-POS
Chaos-Tolerant SCM Analytics Applications Service Parts Planning
Multienterprise Radio Frequency Warehouse Labor Management Systems
Business Identification for
Product Portfolio Optimization Process Business Process Hubs
Integrated Business Planning Logistics and
Platform Transportation Supply Chain Analytics
Integration as a Service
Segmented Supply Voice-Directed Picking in Warehouse Management
Chain Response Global Trade Compliance Multienterprise Supply Chain Collaboration
(Import and Export)
'MDM Aware' Sales and Operations Planning
Applications Yard Management
RFID and Sensor-Based Inventory Management
Supply Chain Management (SaaS) Capable-to-Promise Systems
As of July 2009
Peak of
Technology Trough of Plateau of
Inflated Slope of Enlightenment
Trigger Disillusionment Productivity
Expectations
time
Years to mainstream adoption:
obsolete
less than 2 years 2 to 5 years 5 to 10 years more than 10 years before plateau
Source: Gartner (July 2009)

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The Priority Matrix
Mature SCM technologies that are yielding benefits for users within the two-year window include:

• SCP for process automation

• Warehouse labor management systems


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 SCM technologies promise significant benefits on the two-year window and beyond:

• Product performance management

• Supply chain performance management

• IBP

• Business process networks

• Integration as a service

• Inventory strategy optimization

• Master data management of product data

• Multienterprise supply chain collaboration

• Sales and operations planning

• Service parts planning

• TMS multimodal/domestic

• B2B integration outsourcing

• Capable-to-promise systems

• Supply chain analytics

• Voice-directed picking in WMS

• Yard management
These solutions (see Figure 2) are a mix of older technologies (for example, SPP and S&OP) and
newer technologies (such as product performance management and IBP), which leverage the
new IT landscapes, including SOA, converged business intelligence and business applications
and, overall, a broader strategy to reuse information and align business processes, within the
context of a BPP strategy.

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Figure 2. Priority Matrix for Supply Chain Management, 2009
benefit years to mainstream adoption
less than 2 years 2 to 5 years 5 to 10 years more than 10 years

transformational Integrated Business Chaos-Tolerant SCM


Planning

high Warehouse Labor Busines s Process Direct-P OS Analytics


Management Systems Network s Applications
Integration as a Serv ice 'MDM Aware' Applications

Inventory Strategy Mobile (Wireless)


Optimization Enhanced Supply Chain
Management
Master Data Management
of Product Data Multienterpris e B usines s
Process Platform
Multienterprise Supply
Chain Collaboration Process Templat es for
SCM Innov ation
Product Portfolio
Optimization Produc t Performance
Management
Radio Frequency
Identification for Logistics Segmented Supply Chain
and Transportation Response
RFID and Sensor-Based Supply Chain
Inventory Management Performance Management
Service Parts Planning TMS Multimodal/
International

moderate Supply Chain Planning for B2B Integration Battery-As sis ted RFID
Process Automation Outs ourcing
Capable-to-Promise
Busines s Process Hubs Systems
Dock Sc heduling and Mobile-Asset Optimization
Carrier Appointment
Management Supply-Chain-Centric,
Carbon-Sensitive Planning
Sales and Operations and Execution
Planning
Supply Chain
Management (SaaS)
Voice-Direc ted Picking in
W arehouse Management
Yard Management

low Global Trade Compliance


(Import and Export)

As of July 2009
Source: Gartner (July 2009)

On the Rise
'MDM Aware' Applications
Analysis By: Andrew White
Definition: "Master data management (MDM) aware" applications are not technologies that stand
alone, but are business applications that have been altered, developed or designed to work with
MDM solutions more effectively. As MDM slowly emerges as an underlaying part of an
enterprise's information infrastructure, the traditional business application architecture is

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challenged to coexist with MDM, because so much of the business application design assumes
that each business application is the manager of its own data. With MDM, this is no longer the
case.
The MDM discipline and governance process that is adopted will unify the controls to ensure the
integrity of the master data across all applications, data stores and MDM systems, using the
various implementation styles of MDM. Business application data is, therefore, governed
according to MDM, not according to each business application domain. 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
MDM/application). As more master data is externalized from application sources (packaged
applications, applications developed in-house, business intelligence data warehouses, etc.), the
implementation style of MDM will have to change, to take into account the growing number of
data sources and subscribers.
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. A significant amount of IT budget is spent on data and application
integration, the vast majority of which is spent on traditional point-to-point integration methods.
With the increased attention on initiatives such as enterprise information management and
service-oriented architecture (SOA), and business requirements for cost optimization, revenue
protection and compliance, the need to simplify data management increases, which explains the
ongoing high level of interests in MDM. To make MDM work effectively, legacy data stores that
keep a copy of master data for use in each specific application, and the emerging MDM systems,
need to evolve so that interaction between the two is radically simpler, faster and more easily
managed.
This development is due to the growth of MDM. 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. Being new,
and highly dependent on how MDM evolves and matures, these will require more application
interaction with MDM systems.
A consideration that will slow down the availability of such MDM-aware applications will be the
degree to which each MDM implementation style is adopted. Many early MDM initiatives focused
on specific styles; as additional master data domains came online, the master data life cycle was
highlighted and different implementation styles were needed. Application vendors are beginning
to feel the impact of the different implementation styles, and how each requires a different form of
interaction (messaging, publish/subscribe, push/pull, replicate, link) across the information
infrastructure.
User Advice: For users of packaged applications: Understand that there are very 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, as well as business intelligence and
analytic: Ensure that your application architecture supports an externalized master data model
that can support a uniform master data model for the enterprise. Ensure that your SOA strategy

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supports a publish/subscribe framework of services among the externalized (and legacy) data
stores with your MDM application.
Business Impact: Applications will have to become MDM aware to interact effectively wherever
MDM systems are deployed. Packaged applications (e.g., CRM, supply chain management, ERP,
product life cycle management, procurement and industry-specific), customized applications,
application development strategy and application architecture will have to adapt to this. 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
is a high degree 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 an MDM-
aware strategy.
The benefits will focus on:

• IT benefits, in terms of simpler and more-manageable integration environments across


heterogeneous systems, leading to lower costs.

• Business benefits, in terms of how implementation of new business applications will take
less time; data will be more accurate 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 business department and the domain that adopts the
MDM-aware application.
Benefit Rating: High
Market Penetration: Less than 1% of target audience
Maturity: Emerging
Sample Vendors: Aldata; i2 Technologies; Soft Solutions

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 help align supply chain performance profiles with the
characteristics of specific product/customer segments.
Position and Adoption Speed Justification: Segmentation, or classification, has been around
for many years in supply chains — ABC classification, for example. Customer segmentation has
also existed in the CRM arena. As supply chains have to cope with increasing levels of external
chaos (driven by such factors as globalization, virtualization and economic crisis), complexity and
business strategy diversity, a new strategic dimension is evolving that bestows a chaos-tolerant
capability on these supply chains.
Enterprises looking to expand the scope of their segmentation strategies have to bring together
capabilities from different technology areas, such as supply chain analytics, supply chain planning
(SCP) and supply chain execution (SCE) applications, ERP, business intelligence, sales and
operations planning, network design, simulation, and inventory optimization strategy applications.
During the next two years, some of these applications will continue to merge to progressively
form more-coherent capabilities that support aspects of segmented supply chain response. For

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example, inventory strategy optimization (ISO) and network design are already converging,
adding design capability to the analysis and modeling capabilities of the ISO solutions — all
important aspects of segmented supply chain response.
SCP and supply chain performance management are converging to enable business-intelligence-
derived insight to have an impact on business processes. These two islands have to converge for
strategic plans to align with operational plans. However, 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 of these domains. The initial identification and
analysis of product/customer clusters, as they are relevant to supply chain performance, are only
available via data mining and offline ad hoc analysis, and are fragmented across different
organizational domains, such as CRM and supply chain management.
User Advice: Segmented supply chain response is a set of competencies requiring a portfolio of
solutions and, as such, cannot yet be purchased in its entirety from one vendor. However, pieces
are available, with the most obvious route being through the use of network design and new
analytic applications, such as the slowly maturing inventory strategy optimization applications
used to leverage investments in SCP applications, as well as supply chain performance
management solutions, leveraging business intelligence capabilities. Users interested in
segmented supply chain response should start with these solutions. Eventually, this point-solution
sourcing approach will be replaced by the integration of planning and execution — perhaps via
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 to enterprises by addressing one of the primary reasons
for underperforming supply chains — the mismatch between product/customer characteristics
and the supply chain performance profile.
Benefit Rating: High
Market Penetration: Less than 1% of target audience
Maturity: Emerging
Sample Vendors: i2; IBM; JDA Software; Manhattan Associates; Optiant; Oracle; SmartOps
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"

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 that supports 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

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analytical application; by embedding analytics so closely in the business process, performance
management is more readily realized.
Position and Adoption Speed Justification: IBP is developing as a separate and distinct layer
of capability that sits over an operational S&OP process, and that is linked to a CPM solution as
part of a wider performance management initiative. S&OP has been available for many years,
and is particularly well-known in manufacturing organizations. S&OP was intended to reconcile
business strategies as well as operational plans. However, the strategic dimension is missing
from most S&OP processes, and they are mainly operational in nature instead. Therefore, the
concept of IBP is developing to embrace strategic and financial modeling and reconciliation
capabilities that leverage the operational planning and S&OP processes, and that link into the
organization's CPM initiatives.
User Advice: IBP requires a range of capabilities and, as such, cannot yet be sourced as a
complete product from one vendor. However, different classes of vendors are progressively
developing capabilities that are moving toward IBP capabilities (for example, CPM, supply chain
planning, ERP and best-of-breed IBP vendors). If you need to develop IBP capabilities, then
approach this with a best-of-breed strategy for the next few years, prior to more-integrated and
performance-management-enabled solutions emerging during the next one to two years. Work
with your S&OP vendors to see which areas of IBP they are able 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 of the different areas and integrate these pieces into
more-holistic solutions, although early releases will likely be functionally light.
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: i2; Jonova; Oracle; River Logic
Recommended Reading: "Assessing the Maturity of Your Sales and Operations Planning
Process"
"Integrated Business Planning Fills the Gap Between Strategic Planning and S&OP"
"MarketScope for Sales and Operations Planning"

Product Portfolio Optimization


Analysis By: Andrew White
Definition: Product portfolio optimization is an analytic 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 analytic
application that supports the business goal of enhancing PPM.

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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; and 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 quickly, because it represents the use of a known
technology capability to a different business problem (modeling, optimization, simulation and
analysis). The technology will likely evolve to include business process modeling technology for
more-complex process impact analysis. Vendors are emerging 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 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: Centric Software; Jonova; Lawson; River Logic
Recommended Reading: "Single View of Product Data Can Improve Supply Chain and Drive
Product Performance Management"

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

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processes and the contributing resources are governed. The ME-BPP is a combined set of
shared IT and shared business models that enables multienterprises to accommodate rapid but
controlled business process change through the use of an integrated composition environment
and reusable software business services in a shared managed environment. The business
services repository (BSR) portion of a business process platform (BPP) exposes automated
business functionality as reusable software assets to be used in process compositions.
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 BPM modeling tools to modify processes and define custom,
multienterprise composite applications that use the same infrastructure (that is, common
services). The result is a centralized offering of commoditized 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
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 BPP) in a unique fashion that we have not seen today. 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 in their ME-BPPs, that part of the
supply chain that gets value from shared governance: QED multienterprise applications.
Position and Adoption Speed Justification: There are no ME-BPP offerings on the market, per
se, although there are some business process hubs (BPHs) and business process networks
(BPNs) with a combination of technology and methodologies in varying stages of evolution
(notably, E2open, iTradeNetwork and Wesupply) that are converging toward an ME-BPP.
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, something 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, barriers that are slowing
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

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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 operational multienterprise processes,
clients should create a multienterprise process architecture that identifies the major core (aka
commoditized) versus differentiating multienterprise processes. Business process analysts
should focus on designing the differentiating multienterprise processes for change and 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 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, 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: Embryonic
Sample Vendors: E2open; Sterling Commerce; Wesupply
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"

Chaos-Tolerant SCM
Analysis By: Tim Payne
Definition: Supply chain management (SCM), as a discipline, is approaching a watershed where
the old precepts of well-engineered, but rarely connected, business functions and processes,
supported by fragmented business applications, will no longer be enough for the supply chains of
the next decade. Even when global economies come out of the recession, the role of an

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enterprise's supply chain will have changed forever. Gone will be the pure cost reduction and
efficiency focus of the past 20 years, to be replaced by a cost optimization and value
maximization mind-set that will require a radical rethinking of how SCM is practiced, and of some
of the technologies that will be required to support this brave new world. The best practices of the
1990s and early 2000s focused heavily on the lean and demand-driven strategies that have led to
precariously balanced supply chains. With change, volatility and unpredictability now at
unprecedented levels, supply chains that are based on out-dated, steady-state, traditional
concepts will continue to be at breaking point. Thus, something new must take over if
performance and effectiveness across the network is to be maintained and enhanced (see
"Development of Chaos-Tolerant Processes Is Key to Supply Chain Optimization").
Companies looking for superior supply chain performance will need to develop and adopt chaos-
tolerant SCM capabilities. These capabilities will be in addition to the concepts of lean and
demand-driven, and will give an enterprise the ability to compete more effectively in global
markets. Chaos-tolerant SCM is not a technology, but a business strategy/concept that will need
to be supported by a portfolio of specific technologies, namely:

• Multienterprise collaboration — many of the process components of chaos-tolerant


processes will depend on collaboration, not automated transaction processing,
throughout the value network.

• High-performance decision support — chaotic supply chains will not allow for the
construction of a well-thought-out policy and process design for every contingency or
disruption the enterprise will face. Much of the time that people spend responding to
unanticipated business conditions involves gathering the data required to formulate a
reasonable response. Performance management and scenario management, as well as
the ability to sense changes from the external environment, will be key.

• Data and process integration, integrity, and synchronization — to support chaos-


tolerant processes and performance management capabilities, a comprehensive master
data strategy and business process improvement routine are required, and they must
reach across trading partners and the enterprise.

• Sensory networks — radio frequency identification and other sensory technologies


yield the greatest value in situations without process discipline or formal process
controls. This makes them vital components of an operations strategy aimed at
managing chaos-tolerant processes.

• Business process platform (BPP) — a BPP strategy helps companies respond to


unanticipated events, if a business analyst is empowered to orchestrate a new business
process on the fly without prior process or policy guidance. The process agility coming
from a BPP enables an enterprise to rapidly incorporate lessons learned from dealing
with unanticipated processes introduced into its process library.
Position and Adoption Speed Justification: Until six to nine months ago, few enterprises were
pursuing an integrated chaos-tolerant SCM strategy, although elements of it may have been in
place or may have been planned, especially by Type A (innovators and early adopters)
companies. However, when the key characteristics of a chaos-tolerant strategy were described to
these end users, many "got it" and agreed that it made a lot of sense, even if current trading
conditions deprived them of the budget to pursue it. The economic conditions in the supply chains
of many companies have changed so much from 2H08 that the interest in aspects of a chaos-
tolerant SCM strategy and associated capabilities is starting to accelerate. User interest in areas
such as product performance management, integrated business planning (IBP), and
multienterprise business process platform and performance management has increased
significantly as enterprises try to figure out how to effectively manage their supply chains a new

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world that is characterized by volatility and unpredictability. However, mass adoption by Type B
(late adopters) and Type C (followers) companies will take many years, because these
organizations are mired in the weak economy, and are focused on adopting foundational SCM
capabilities (the right-hand side of the SCM Hype Cycle).
You cannot purchase chaos-tolerant SCM; it is a business strategy. As such, there is a
technology element, as well as knowledge, process and organizational elements. Also, a chaos-
tolerant SCM does not "emerge" automatically; rather, it must be a specifically desired behavior.
Service providers and technology providers can be of help.
User Advice: Although many companies are beginning to focus on collaboration tools, this
collaboration strategy must be extended to support value-network-level operations processes.
The collaboration tools need to have real-time links to operations data stores, and they must have
templates for dealing with operations, rather than administrative processes.
A high-performance decision support strategy mandates two adaptations that enterprises need to
take into account in their SCM technology strategies:

• Extending corporate performance management frameworks beyond finance, and


connecting supply chain performance to business strategy with analytic applications,
such as IBP

• Upgrading transactional and supply chain visibility applications to make them part of a
unified, event-driven architecture layered with business activity monitoring (BAM) tools
on top of operations processes, to enable the best operations decisions to be made "on
the fly," without the guidance of an operations or process policy
Companies should embrace a trading partner integration center and build an operations-oriented
master data management strategy. When taking a chaos-tolerant view, companies need to
consider technology and techniques that push the boundary of their sensory networks into their
customers' customers and suppliers' suppliers.
Users need to examine their IT strategies and ensure that critical SCM technologies are
supported, in terms of a BPP model, to the degree needed to support a chaos-tolerant SCM
strategy.
Business Impact: Leading organizations that create chaos-tolerant capabilities as part of their
overall SCM strategy will be able to deliver superior supply chain performance through better cost
optimization, competitive advantage and business growth, no matter what the operating
environment is or how it might change.
Benefit Rating: Transformational
Market Penetration: Less than 1% of target audience
Maturity: Emerging
Sample Vendors: i2; IBM Global Business Services
Recommended Reading: "Development of Chaos-Tolerant Processes Is Key to Supply Chain
Optimization"
"Gartner’s SCM Scenario: Post-Lean Supply Chain, 2008 and Beyond"

Mobile-Asset Optimization
Analysis By: Tim Payne

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Definition: Mobile-asset optimization refers to the use of a combination of business process
software, sensory technologies and operational research skills (such as demand forecasting), and
business intelligence 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 leveraging sensory technologies. Not all SCM principles apply to the
optimization of assets; however, many do, including demand forecasting, transportation
optimization and analytics.
Historically, asset management technologies, such as enterprise asset management, have been
the primary systems focused on assets. These solutions were concerned with managing the
maintenance of assets to ensure that the costs of downtime and maintenance 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 real-time location systems
(RTLS), where you not only know where the asset is, but also information about the variable
conditions. Most of these assets are mobile; the emerging systems focus on several phases of
mobile-asset optimization:

• Consumption forecasting (of asset inventory and/or capacity)

• Planning for the repositioning of assets for optimal use

• Locating assets

• Positioning assets according to plan

• Tracking the use of assets

• Analyzing data to infer improvements to business processes


In addition to these operational phases of mobile-asset optimization, there are three
administrative functions:

• Dynamically keeping a catalog of assets and their status

• Maintaining an on-demand view of where all assets are

• Assigning responsibility for the ownership and costing of asset use


These solutions are not specifically tied to a maintenance schedule, because they are not
maintained, or the primary concern isn't maintenance — that is, the assets involved are mobile
and they may cycle through the internal and external supply chain many times (for example, roll
cages used in distribution). This doesn't mean that these assets have short useful lives. It means
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 radio frequency identification (RFID), mesh networks, GPS, satellite technology and Wi-Fi-
based tracking systems, as well as emerging technologies, such as ultrawideband. However, it is
the use and associated decisions using the collected information that separates this solution from
independent sensory components.
Position and Adoption Speed Justification: This technology is emerging due to:

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• The emergence of sensory technologies (such as RFID and GPS) that enable mobile-
asset tracking and positions to be more accurately tracked

• An increasing desire of enterprises 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, and the solutions are still being
developed. At this point, there is no technology leadership regarding which sensory technologies
will be dominant. Users must still proactively identify and manage solution components. However,
these projects will be easier to pursue than sensor-based inventory projects. Mobile-asset
optimization technology does not usually compete with bar code technology, because it is not as
developed as bar-code-based inventory management.
There are numerous industry-specific examples of this technology, including knowing the status
and utilization of a kidney dialysis machine in addition to its location, 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 in mobile-asset optimization by establishing the discipline of a life
cycle of mobile assets and building business processes to optimize them. Many enterprises start
by just wanting to track assets, but they later find that they need a holistic view of mobile-asset
optimization to achieve business value.
From a sensory perspective, establish use cases and general infrastructure components for
mobile-asset optimization projects to understand the information that is available and the
additional information that may be needed to further optimize the process. Understand the
infrastructure patterns for indoor/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 the location and maintenance of assets. 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 assets become mobile. This can be used to infer the status of a
business process or assign responsibility for assets to the individuals or entities that controlled
the assets. Ultimately, this improves the efficiency or accuracy of the business process. It can
also reduce 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; WhereNet
Recommended Reading: "RFID in the 2009 Supply Chain: Overview and Best Practices for
Maximum Investment Value"

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Supply-Chain-Centric, Carbon-Sensitive Planning and Execution
Analysis By: Dwight Klappich
Definition: Carbon-sensitive planning and execution 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 around a limited set of
resource constraints, such as minimizing carbon footprints. Later, yet-to-emerge solutions will
extend across other resource constraints, such as emissions, and 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 impact, such as direct operational emissions of other pollutants,
energy consumption and waste generated.
Position and Adoption Speed Justification: Tools exist that can minimize or optimize variables
that can be inferred to affect the carbon footprint, such as transportation planning to minimize
wasted miles or transportation mode, which can be inferred to reduce carbon emissions.
However, tools that explicitly include 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, and quality is uneven.
Narrowly focused tools will first emerge on top of existing applications, such as transportation
management systems (TMSs) or network design, and these will simply add carbon
considerations as variables or data elements that can be optimization goals (for example, 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/application
domains, and that can optimize around and provide a more-complete picture of an organization's
carbon footprint.
User Advice: Identify the largest contributions to your supply chain carbon footprint.

• Complement your carbon footprint reporting, and move toward resource optimization.

• Adopt supply chain management technologies (such as new attributes, data and new
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 leverage their adoption of green initiatives as
good publicity. However, in many cases, optimizing around green considerations has
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; i2 Technologies; Infor; Lawson; SAS; Supply Chain Consulting
(Australia)

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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, 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. 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, key performance indicator (KPI) maps and the ability to drill down from high-
level metrics into lower-level metrics in support of root cause analysis.
Position and Adoption Speed Justification: SCPM contains the tools required to support more
end-to-end SCPM. By providing one point of performance management for the supply chain,
SCPM gets around the drawback of supply chain analytics (which monitor performance only at a
departmental or functional level) by providing a more complete and integrated view of SCPM.
SCPM is gaining interest from users who are currently using more departmentally focused supply
chain analytics solutions (often as part of their SCM vendors' solutions). SCPM will develop to the
point that it will replace disparate supply chain analytics solutions as users recognize the value of
having an integrated performance management capability across their supply chains. This more
integrated approach will facilitate the links between strategic and operational planning and
execution, whereas supply chain analytical solutions tend to support more on the departmental
operational level, and will be a key part of a companies broader performance management
initiatives, such as corporate performance management (CPM) and product performance
management (PPM), as well as supporting 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 will start to favor SCPM solutions over functionally specific
supply chain analytics solutions.
User Advice: SCPM solutions are just starting to emerge in the market, but these tend to be
analytical applications focused on aspects of SCPM, as opposed to platform-based SCPM
solutions addressing the whole supply chain. This emergence is being facilitated by business
application and business intelligence (BI) vendors converging and moving toward these more-
end-to-end, process-oriented performance management solutions. The acquisitions of BI vendors
by business application and technology vendors (for example, SAP and Oracle acquiring
BusinessObjects and Hyperion, respectively) are sign posts for these vendors intentions, as well
as a recognition that enhanced process performance has to come from a 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
capability.
Enterprises looking for departmental or functional SCM performance management support should
focus first on the performance management solutions that are seamlessly integrated with core
SCM applications.
Enterprises with extreme SCM application heterogeneity and/or looking for a consolidated view of
all SCM metrics should consider SCPM offerings, although these offerings are still immature and
incomplete, and may not cover all areas of SCM, depending on the historical focus of the vendor.

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The users likely to be interested in SCPM are those that focus on maximizing supply chain
performance, understanding the need to comprehend end-to-end performance and the necessary
trade-offs involved in supply chain management. SCPM solutions will be more applicable to
enterprises where a clear supply chain strategy is in place.
Business Impact: User focus on the linkages between the performance of adjacent processes
(horizontally and vertically) will support the maximization of end-to-end supply chain performance.
SCPM supports 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); Manhattan Associates; Oracle; SAP
Recommended Reading: "Supply Chain Analytics: Driving Toward Product Performance
Management"
"Top Seven Supply Chain Planning Processes, 2009 to 2014"
"Top KPIs for Supply Chain Management"
"Top 7 Supply Chain Execution Processes, 2009 to 2014"

Product Performance Management


Analysis By: Andrew White
Definition: Product performance management (PPM) is defined as the use of processes,
methodologies, metrics and technologies to manage, analyze and influence business
performance as it relates to all aspects of the product.
PPM provides a unified environment linking strategic analysis related to product performance (at
the highest level of the enterprise) with operational and day-to-day activities. Products move
physically through the business, from raw material suppliers to end customers. Traditionally,
performance of the product as it moves through the chain is measured in fragmented process
(horizontal and functional perspective) and departmental (vertical perspective) silos. Business
leaders are looking to move beyond this fragmented view that restricts the ability to measure and
optimize business performance holistically, toward an enterprisewide, process-centric analytic
application, to answer business decisions that are not supported by business intelligence (BI) or
business application technology. Short term, this is leading to new, stand-alone point solutions to
address the links between strategy and operations (for example, product portfolio optimization
[PPO], which helps executives across the business determine which markets and products to
sell). Long term, larger portfolio and application vendors are building out performance
management platforms to allow users to embed reusable analytic services into their reusable
business application assets (for example, business process platform). PPM is one element in an
enterprisewide adoption of performance management. The technology and disciplines needed to
adopt PPM overlap, and are consistent with, other performance efforts, such as supply chain
performance management.
Position and Adoption Speed Justification: Transactional-oriented business applications that
manage product performance do not have the analytic capabilities to support the business need
for PPM; thus, users have tended to create silos of reports and analyses. Users seek to make
better and smarter business decisions concerning how products perform across the value chain.

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However, this current architecture enforces a separation in role, technology and process between
business applications and BI (for example, using reports and dashboards to present data on
product profitability independent of the supply chain planning application that plans the sourcing,
making and moving of product, which contributes to its profitability, or not). This leads to multiple
data definitions and process silos that make answering complex business problems difficult and
leads to supply chains that can significantly underperform.
A new category of business application — PPO — is one of the first PPM applications. PPO
addresses the business problem that executives face: to determine, methodically, which markets
to sell to and which products to sell by simulating and optimizing alternative business plans,
taking into account market conditions, competitive dynamics and potential profitability. Analytics
and key performance indicators, specific to the product domain and appropriate for each industry,
are embedded in the business application that is used to make and take the business decision.
To date, there has been no effective business application vendor offering in this space, because
most users have focused on the transactional part of the business. PPO embeds analytics into a
business application that formalizes the process of portfolio management.
There are other new applications that support the needs of PPO, such as integrated business
planning (IBP), which helps manufacturers link strategic decisions to operational demand/supply
chain balancing activities. These are packaged applications that are noninvasive, in that they do
not replace previously installed applications; most of these business processes have little formal
IT support in the form of business applications. Some ERP vendors are developing this capability
(for example, Lawson), and some niche or best-of-breed vendors are as well (for example,
Jonova). As yet, there is no performance management platform on which to unify data, analytics
and processes.
User Advice: There are no comprehensive platform solutions for enterprisewide PPM, although
larger vendors are moving in this direction, as seen in the acquisitions of BusinessObjects by
SAP, Cognos by IBM, and Hyperion and Siebel by Oracle. Some small vendors are addressing
niche areas in which PPM can meet more-strategic business decisions related to product
performance. If you need to make a smarter decision related to product portfolio, then use a best-
of-breed strategy for the next couple of years as larger platform offerings emerge and mature.
Align your vendor partners with specific business "pain points" (such as PPO, or integrated
business planning, if you are a manufacturer) related to improving product-oriented decision
making across the value chain.
It is not necessary to adopt a BI platform strategy to adopt any performance management
strategy, but doing so will probably help. Technology from the BI platform world would have to be
transplanted (that is, more than integrated, and more like embedded) into the business
applications world for the business user to make and take decisions in one place. Until such
platforms exist, expect to deploy point solutions (such as PPO) that address specific
performance-management-related opportunities.
Business Impact: Immediate availability of fast maturing niche solutions targeting aspects of
PPM promise significant benefits to the business through the application of technology to a part of
the business that had previously been slow, informal and unintegrated with anything outside of
the boardroom. This value may be noticeable by the business because it is of great value, and
this will support running and growing the business type requirements; however, transforming of
the business requirements will not be accomplished until a platform approach is taken to support
PPM holistically. By more formally making business decisions that relate to product performance,
and by operationalizing and integrating them, an enterprise can make competitive decisions more
quickly, and execute and retune those plans more effectively than the competition.
Benefit Rating: High

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Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: InfoNow; Jonova; Lawson; QlikTech; River Logic; SAP
Recommended Reading: "Single View of Product Data Can Improve Supply Chain and Drive
Product Performance Management"
"Integrated Business Planning Fills the Gap Between Strategic Planning and S&OP"

Battery-Assisted RFID
Analysis By: Timothy Zimmerman
Definition: There are two types of battery-assisted 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 to manipulate and increase the read range of the tag. 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. While active and BAP tags can technically be implemented at all frequencies where
RFID is used, they are most common at 433MHz, 900MHz and 2.4GHz.
Position and Adoption Speed Justification: Cold storage and perishable food supply chain
process requirements need tags to know not only where the asset is located, but also to have
knowledge of the environment. To acquire this information, more intelligence is being added to
RFID tags so that they can measure variables, such as temperature, vibration or humidity, that
affect products in transit. The advancement of battery technology and the integration of sensors
into RFID packaging are fueling the adoption of these types of RFID solutions. However, there
continue to be issues with lack of communication standards and interoperability within some of
the applicable frequencies and within ultrahigh frequency ranges, where ISO 18000-6C provides
Gen 2 communication compatibility, the available information on the tag is vendor-specific.
User Advice: Users need to understand their business requirements and the expectations of a
battery-assisted 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. There will continue to
be vendor differentiation and technical competition that will improve battery-assisted RFID in
terms of performance and robustness of data collected, but that also creates the need for use-
case testing.
Business Impact: Battery-assisted RFID will continue to address asset knowledge applications,
requiring the collection of data during the transportation of goods in the supply chain. Cold
storage and perishable goods items can see a significant return on investment for using the
sensor capability of battery-assisted tags, because the safety and shelf-life of these products can
be adversely affected by changing transit 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, there is a surge in the integration of battery-
assisted RFID tags into new areas where temperature, vibration or new parameters enable
vendors to make better business decisions.
Benefit Rating: Moderate
Market Penetration: Less than 1% of target audience

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Maturity: Emerging
Sample Vendors: Alien Technology; Axcess International; Intelleflex; RF Code

At the Peak
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 type of
B2B IT project, something that a wide range of IT vendors and private 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 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 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 business process management 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 Wal-Mart, which operate their
own BPNs to support their supply chains.

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• 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 in paper and pulp, and Quadrem in mining.

• Procurement networks, a type of BPN 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, cc-hubwoo, SciQuest and Perfect Commerce (see "The
Role of Procurement Networks in EIPP").

• Organizations such as 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 and Sterling Commerce, also operate private
BPNs (for example, to support the supply chains for specific retailers or manufacturers)
and public BPNs, such as GDS, so that their customers can publish product information
to regional data pools.

• 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 decades. However, most B2B projects for specific multienterprise 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).
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 a 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, 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 of all sizes should look for opportunities to 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 multienterprise integration
project.

• 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.

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Business Impact: Enterprises can implement multienterprise 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 a multienterprise infrastructure 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 business processes among enterprises.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Ariba; cc-hubwoo; E2open; E4X; Elemica; Financial Information eXchange;
GXS; Inovis; Ketera Technologies; Liaison Technologies; Open Business Exchange; Perfect
Commerce; Quadrem; Quick Connect Computer Services; SciQuest; Society for Worldwide
Interbank Financial Telecommunication; Sterling Commerce; StrikeIron; SupplyOn;
Wesupply.com
Recommended Reading: "The Four Styles of Process Execution in Multienterprise Scenarios"
"Magic Quadrant for Integration Service Providers"
"The Emergence of the Multienterprise Business Process Platform"

Process Templates for SCM Innovation


Analysis By: Andrew White; Tim Payne
Definition: Web-oriented architecture (WOA) and service-oriented architecture (SOA)
approaches will facilitate commoditization of business processes, through widely deployed,
reused, standardized services. Differentiated and innovative business processes will still emerge
from the normal competitiveness of industry, but the business application technology that
operationalizes this innovation will not be deployed as a packaged application, but as a custom-
assembled set of process, application and data services. These SOA-oriented composites will be
more easily replicated than packaged applications, thus driving up the process of
commoditization of innovation more quickly, and will be more easily revised, thus reducing the
cost for many more enterprises to develop new innovative process forms.
The basis for how IT supports competitive behavior will change — it will no longer be serviced by
application vendors, but from innovative business processes delivered by a range of vendors as
"interoperable services." The providers of these unique business services — in the form of
business process templates, next-practice models (as opposed to standardized best practice
models), industry-specific data and process models and business services — will emerge from a
small number of best-of-breed or pure-play supply chain management (SCM) vendors that are
evolving away from packaged-application vendors to become SCM innovation partners. Other
vendors addressing the SCM market, including external service providers and business process
management solution 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 the BPP
framework. The rate of adoption of a BPP, itself being driven by the need for IT and the business
to govern its existing business application and business intelligence assets, is creating an
environment for the packaging and repackaging of those services — the process template.
Innovation emerges over time from unique combinations within and support by those templates.

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User Advice: Regardless of how they are sourced — behind the firewall, hosted or software as a
service — for differentiated business processes, SCM process innovation templates help reduce
your reliance on packaged applications. There is a change in the technology (the asset is no
longer a larger, packaged application, but will become a set of reconfigurable application and
data services), as well as the provider (it's no longer the application vendor, but the integrator that
understands how to assemble a useful composite application for your business). You should
already be selecting and validating your IT partners based on this emerging model to prepare for
the business's future needs for process innovation.
Business Impact: By providing innovative templates in the form of whole business processes,
process extensions, data and process models that consume standardized services, the provider
of those templates — the SCM innovation partner — will help enable mainstream adoption of
innovative processes (via SOA- or WOA-oriented business process orchestration) with minimal
disruption, while preserving and recognizing the value of innovative business application
providers in the market.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: CSC; i2; Infosys; Manhattan Associates; Tata Consultancy Services
Recommended Reading: "Signs That a BPMS Vendor Is Following One or More Technology
Evolutionary Paths"
"Process Templates Emerging as Key Tools in SOA Projects and Application Strategy"
"Look Outside Core Application Platform Vendors for SCM Innovation Partners"
"Innovation Shift for Business Applications: Major Suite Providers to Dominate"

B2B Integration Outsourcing


Analysis By: Benoit Lheureux
Definition: Business-to-business (B2B) integration outsourcing is an extension of integration as a
service (IaaS) and a specific category of discrete IT project outsourcing. It combines the
outsourcing of technical multienterprise (B2B) infrastructure (IaaS) and the outsourcing of B2B
projects (outsourcing of people and processes to implement and manage multienterprise
infrastructure). There is no well-established industry label or acronym for these projects, but B2B
project outsourcers have used labels such as "managed electronic data interchange" (EDI),
"outsourced EDI" and "EDI software as a service" (SaaS). So far in 2009, companies have spent
more than $500 million on B2B integration outsourcing, and, based on demand from IT end
users, we estimate that this market segment will register a compound annual growth rate of 20%,
at least through 2009 and 2010.
Companies outsource B2B infrastructure projects regardless of the type of project, but specific
multienterprise projects include:

• E-commerce projects (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 extension projects (when connecting ERP or other internal applications to external
business partners).

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• Service-oriented architecture (SOA) extension projects (similar to ERP extension
projects, but for connecting internal SOA infrastructure to external business partners).

• Cloud computing/SaaS integration projects (to integrate cloud-to-cloud and cloud-to-on-


premises applications and data).

• B2B consolidation projects (to combine multiple B2B projects in one infrastructure).
B2B integration outsourcing generally includes the following high-level components:

• B2B infrastructure (on-premises or on-demand) — in many cases, the B2B infrastructure


is a multitenant IT stack supporting multiple B2B projects, so the vendor benefits from
some economies of scale.

• One-time implementation of key B2B functionality — for example, B2B documents and
maps for translation.

• One-time provisioning of connections to trading partners and external service providers.

• In most cases such projects also include ongoing B2B infrastructure operations,
reporting and change management — that is, B2B integration outsourcing combines
project implementation tasks (above) with managed services for ongoing B2B project
operations.
Vendors such as GXS, Sterling Commerce and Inovis offer stand-alone B2B integration
outsourcing services, typically for traditional e-commerce projects. Vendors such as Capgemini,
EDS and IBM offer B2B integration 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 outsourcing in conjunction with cloud computing/SaaS projects. SaaS
providers such as Workday offer B2B integration outsourcing in conjunction with their SaaS
offerings so that integration is no obstacle to doing business with them (see "Seeding the Cloud:
B2B Flexibility Drives SaaS Adoption").
Position and Adoption Speed Justification: IT vendors have offered various forms of B2B
integration outsourcing for years, but the recent growth of multienterprise projects (see "Q&A: Hot
Questions for Multienterprise (B2B) Integration") is prompting more companies to reconsider their
B2B strategies, including whether to implement multienterprise infrastructure themselves or to
outsource this task. The proliferation of cloud computing including SaaS is also driving additional
forms of B2B integration outsourcing, to address cloud-to-cloud and cloud-to-on-premises
integration projects.
Although many companies successfully brought B2B projects "in-house" via B2B software during
the decline of EDI value-added networks in the early 2000s, the need to scale these projects up
to cope with more B2B dealings, combined with increasing pressure on IT organizations to
outsource noncritical competencies, is fueling a selective withdrawal from in-house B2B projects
and 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 also to outsource their cloud computing/SaaS integration
requirements.
Also, 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. Expectations (and hype) for
outsourced B2B integration will soon peak as companies look for relief. This will lead to a slide

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into the Trough of Disillusionment as the complexities of B2B projects — and the challenges of
outsourcing them, including customization (for example, to address compliance needs relating to
the U.S. Health Insurance Portability and Accountability Act and to meet B2B project
requirements ranging from EDI to SaaS and more complex supply chain management processes)
— become better understood.
User Advice:

• 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 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) pre-built 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
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 could be substantial, as we predict that, by 2011, midsize and large
companies will at least double the number of multienterprise integration and interoperability
projects they manage and will spend at least 50% more on B2B projects, compared with 2006.
We also predict that most midsize and large companies will both outsource 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; Crossgate; DiCentral; eBRIDGE Software; E2open; EasyLink Services
International; EDS; Elemica; GXS; Hubspan; IBM; Inovis; Liaison Technologies; nuBridges;
RedTail Solutions; SPS Commerce; Sterling Commerce; Tieto
Recommended Reading: "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"

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Inventory Strategy Optimization
Analysis By: Andrew White; Tim Payne
Definition: Inventory strategy optimization (ISO) is an analytic application that helps users
optimize their supply chain response strategy across a multitiered supply chain. This technology
has evolved from what was known three years ago as multiechelon inventory optimization
(MEIO), which initially only looked at optimizing total inventory assets across the network. This
technology is slowly evolving to help users to look beyond inventory in the supply chain, to
include all facets of it, including sourcing, pooling, replenishment strategies and demand
priorities, to develop segmented supply chain response strategies (for example, plan inventory
levels, sourcing points, postponement, routing rules and push/pull decoupling points) across the
entire supply chain, in response to customer and channel segmentation strategies. These
solutions are beginning to be integrated, and even encompass, at one end, supply chain network
design constraints and tools, as well as, at the other end, operational supply chain planning
(SCP) constraints and tools.
Most ISO solutions use optimization-based technologies with limited business intelligence
(BI)/analytics capability, and, over time, are adopting event-based simulation and stochastic
algorithms that enable companies to represent uncertainty factors. Long-term business "what if"
evaluations and scenario planning will be commonplace, in support of any number of strategy and
tactical "what ifs." Eventually, 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. Vendors originally offering MEIO are expanding their functional footprints to
help users model any number of constraints, with a view to determining the range of responses
that need to be adopted to achieve business objectives. These capabilities will eventually evolve
into innovation/best-practice templates.
User Advice: For complex, distribution-intensive industries (such as consumer goods, retail,
aerospace and defense, and utilities or telephone companies), use these tools, as well as classic
SCP tools, to extract the greatest value from inventory and supply chain assets.
Business Impact: These 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 (segmenting) their use across multiple customer and channel segments.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Adolescent
Sample Vendors: i2; IBM; JDA; Optiant; Oracle; SmartOps; ToolsGroup
Recommended Reading: "Overview: Top Seven Supply Chain Planning Processes, 2009 to
2014"
"Chaos-Tolerant Networks Will Drive Adoption of Inventory Strategy Optimization"

TMS Multimodal/International
Analysis By: Dwight Klappich
Definition: Global logistics applications help automate the movement of goods globally by
ensuring that processes are synchronized with all the parties involved in the international

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shipment. 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, such as by water, truck, rail and air, with unique planning and execution
requirements not traditionally addressed by domestically oriented transportation management
system (TMS) applications 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 Patrol 10+2 program will increase demand for international logistics tools that can capture
many of the data elements required to support 10+2 and similar global initiatives.
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; i2; JDA Software; 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"

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: radio frequency identification (RFID),
Wi-Fi, Global Positioning System (GPS), vehicle connectivity, cellular phones, etc. Supply chain
management (SCM) mobility solutions integrate the processing of mobile workers' tasks and
activities with enterprise applications, as well as provide data capture from, monitor and track

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mobile assets, such as trucks. Mobile (wireless) supply chains span multiple capabilities, enabling
mobile worker tools to access and share information (including deliveries and delivery
confirmations), as well as monitor the location, condition or behavior of mobile assets, such as
trucks.
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 (such as RFID) to established processes, however, is not likely to yield much
return on investment (ROI). Although mobile/wireless technologies have been mainstream in
such areas as the warehouse, route delivery and retail, emerging technologies such as RFID
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 for added benefit. 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 around the increased availability of information, such
as automated hours of service or vehicle/driver performance based on vehicle activities (for
example, idling or hard-stopping) are becoming more pervasive.
User Advice: Be realistic about the potential for mobile/wireless technologies to improve your
SCM processes. Maximizing the value from mobile technologies 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/wireless 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/wireless 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: 1% to 5% of target audience
Maturity: Adolescent

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Sample Vendors: Cadec; EDS; PeopleNet; Qualcomm; Rockwell; Sprint Nextel; Symbol;
Turnpike Global Technologies; @Road
Recommended Reading: "Cool Vendors in Supply Chain Management, 2009"

Sliding Into the Trough


Master Data Management 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 and maintain a "single
version of the truth" for product data across the enterprise and interested stakeholders. 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 that must be
shared enterprisewide. They create and manage a physical, database-based system of record,
often referred to as 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 assist an organization's ability to increase revenue, optimize cost,
increase agility and meet compliance requirements. MDM of product data solutions are beginning
to bridge needs for a "single view" across operational systems (transactional, ERP, core business
applications) as well as analytical and reporting systems (business intelligence platforms). As
such, firms are looking to manage and master relationship and hierarchy data in one place — the
MDM systems — to achieve single view objectives.
MDM of product data systems are relevant to all industries and to government; however, the
projects will take different forms, depending on whether the product is a physical product or a
service, the complexity of the product structure and whether the focus is on the sell side or the
buy side of the business.
An MDM of product data strategy forms part of a wider multidomain MDM strategy (potentially
encompassing customer, product, supplier, employee, location, asset and financial master data).
MDM ensures the consistency, accuracy, stewardship, semantic agreement and accountability for
the core information of the enterprise, enabling organizations to eliminate endless debates about
"whose data is right." 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: The market for packaged solutions for MDM of
product data is maturing quickly and has been growing since its inception in 2001. The early
products have evolved from traditional PIM to more holistic MDM solutions. The technology has
passed the Peak of Inflated Expectations, although MDM overall (suite-based or multidomain) is
approaching it. Gartner estimates that there are close to 1,500 implementations worldwide across
numerous industries, and, in 2009, service industries are increasingly looking to this technology
to help master complex configured product and services. The market is dominated by three
megavendors (IBM, Oracle and SAP), although niche or best-of-breed vendors are doing well by
specializing on data domain, industry and/or use case. Few, if any, vendors, even the large ones,
have created products or strategies that dominate niches (domain, use case) across more than
one or two significant industries.
The MDM of product data is increasingly defined by complex requirements, which are converging
around different user-oriented focal points.
Some of the main customer requirements include:

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• Complex, often-engineered products coinciding with the use of business applications
known as product life cycle management

• Highly heterogeneous and/or multidivisional ERP with large amounts of legacy business
applications with multicommerce (commerce, print/catalog, multichannel integration and
data sync) needs, with customers for sell-side (retail or manufacturing)

• Procurement, buy-side, distribution-intensive enterprises, across retail, distribution,


wholesale, healthcare and other industries

• Services (nonphysical products), most often financial services, banking, insurance and
telecommunications, with complex customer/event/order-bundling configurations and
rules
Industry adoption also varies where enterprises with physical products (rather than services) are
focused on this technology longer than other enterprises, due to the need to share such data
among organizations in business-to-business relationships. Early adopters are being joined by
fast followers, and there are potential benefits for those that can exploit the technology, coupled
with effective governance practices. Application platform vendors (such as IBM, Oracle and SAP)
have realized the strategic importance of managing master data and, specifically, product master
data. This market has spawned other segments of MDM, namely MDM of asset data and
procurement data. These two forms of MDM are slowing forming toward being legitimate markets.
By 2012, MDM of product data technology should be mature; in the meantime, be aware that
vendors' products vary in terms of maturity and capability, and there's likely to be further vendor
consolidation in the market.
User Advice: Make MDM of product data part of your overall enterprise MDM strategy, and
determine when, not whether, you will adopt MDM. Look for business benefits across all IT
programs, as well as business intelligence and application programs that can be addressed with
one information management approach, rather than the traditional piecemeal approach. Review
the organization's capabilities and challenges in governance, process and organizational change,
toward managing product data in a uniform manner, as well as its ability and political willingness
to use a single product view. Educate the organization about these challenges and their effects
on the business.
Create a vision (that is, business outcome, technology, processes and organizational
commitment) for what could be achieved. Think in terms of 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 that is based on benefits. Analyze the likely
scenarios in which the enterprise wants to use an MDM system in the short and long term. This
will guide your choice of an MDM vendor, because vendors' products have different "sweet spots"
that differ by industry and implementation style. MDM of product data systems must have a rich,
tightly knit combination of 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 a set of objective, balanced criteria, including
industry experience. Start small, but "think big," and deliver early and often.
Business Impact: Large, complex and heterogeneous enterprises, as well as many midsize
enterprises, spread product data across many systems. It is fragmented and often inconsistent.
This makes it difficult for organizations to streamline business processes and operations
efficiently, and to develop new, agile business processes. Without a single view of a product,
organizations cannot effectively deliver on the promise of increased effectiveness across the
supply chain, deliver a sustained and effective customer experience, leverage operational
benefits from merger and acquisition activity, identify efficiencies on the buy side with deep

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insights on spending data analysis, or achieve a competitive new-product introduction process.
There will also be some inhibitors on upselling and cross-selling if firms do not have a sufficient
handle on what products and services customers have acquired. Some form of a single product
view is, therefore, fundamental for managing the value chain. Over time, the impact on business
applications and business intelligence can be significant as firms grapple with the complex
workflow nature of this initiative. MDM, and specifically MDM of product data, impacts all
business applications and business 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: Adolescent
Sample Vendors: IBM; Oracle; Riversand Technologies; SAP; Siperian; Stibo; Tibco Software
Recommended Reading: "Mastering Master Data Management"
"How MDM Can Help Enterprises Achieve a Single View of Product"
"Toolkit Best Practices: Strategies for Successful MDM Implementation"

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 (for example, 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 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-served 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 around on-time shipment performance and the effects of
government mandates (such as hour-of-service rules that demand faster and more-consistent
shipment turnaround) were driving 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 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 (WMSs), 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

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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 reduce 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; 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"

Direct-POS Analytics Applications


Analysis By: Andrew White
Definition: Direct-point-of-sale (POS) or analytic-based vendor-managed inventory (VMI)
applications are tools that enable a supplier to automate, manage and ensure inventory-driven
customer service levels at customer locations. These tools are less than five years old. They
differ from order- and forecast-based solutions that are older and more mature, because they use
execution/POS data directly from retailers, with analytic engines to guide decision making in the
forecast/replenishment process to determine retail and supplier activities. These tools store POS
and other demand-type data from many sources and in many formats, across demand chains,
sales and marketing, and supply chains, including radio frequency identification (RFID), scanning
data, order management, syndicated data services, sales and marketing forecasts, estimates,
insights, supply chain planning data and so on. These technologies support various business
processes, including improved one-number planning, category planning and supply chain
planning, often named specifically for industry-oriented use.

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Some VMI approaches are scan-based (when the item has been sold); others are focused on
RFID (when the item has moved) or are syndicated POS-oriented repositories (provide remote or
delayed data, advising that an item has been sold) that aggregate demand data for more than
one channel. These solutions seek to ensure the accuracy of the demand (direct POS versus
syndicated POS, scan or RFID trigger), as well as the inventory record at the store, which is
notoriously difficult for suppliers to perform remotely, and for retailers to manage and share on a
timely basis with their partners.
Position and Adoption Speed Justification: Interest is again evident for direct-POS analytics
applications for VMI. Newer technology approaches are being offered to users who have a more
mature understanding of the process. VMI as a process is well-known, so visibility of these new
tools and technologies is increasing rapidly, hence the substantial movement along the Hype
Cycle. A range of tools offer this functionality, but only a few are deployed across multiple
channels, or model enough of the demand chain for one channel. During the next two years, this
should change, and the technology should begin to show stronger signs of maturity.
User Advice: Use direct-POS analytics applications when your VMI process is focused on the
need to ensure accuracy of the inventory data and demand trigger at the store level. When
visibility to future plans at the store level is required for midterm planning, integrate direct-POS
analytics applications with forecast-based VMI tools. Compare and contrast approaches, and
align the approach to your desired business goals and IT environment. It is possible that no single
approach will meet all business requirements across all channels, although this is being tested in
2009 and may yet be possible by year-end 2010. Most solutions in this wave of technology
innovation remain immature and limited in terms of numbers of channels modeled; therefore,
beware of vendor hype claiming maturity and large installed bases. Check with references to
ensure that you know exactly what was implemented.
Business Impact: Direct-POS analytics applications for VMI enable enterprises to align supply
(inventory and orders) and demand data (direct POS, RFID triggers and orders), and business
plans (including sales, forecasts, promotions, events and replenishment plans) between
customers and their suppliers. This should improve rates of in-stock availability at customer
locations, thus increasing sales, while reducing inventory and distribution costs, even in intensive
periods with excessive seasonal promotions.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Adolescent
Sample Vendors: Oracle; Retail Solutions (T3Ci); TrueDemand Software; Vendor Managed
Technologies; Vision Chain
Recommended Reading: "Vendor-Managed Inventory: Market and Technology Update"
"Top Seven Supply Chain Planning Processes, 2009 to 2014"

Radio Frequency Identification for Logistics and Transportation


Analysis By: Dwight Klappich; Timothy Zimmerman; Tim Payne
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

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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, and 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 RFID system in the
logistics market. A traditional passive tag does not have a battery, and collects 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 10 cents to $10, 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 two ways:

• By increasing read reliability

• Through the ability to do more than hold 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 the ability to identify individual items and provide 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 and enables the long read range of active tags to be combined with the low
cost of passive tags.
Position and Adoption Speed Justification: Numerous applications of RFID have been hyped
for 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, as well as provide asset location visibility. Airlines facing economically
challenging conditions will be slow adopters of RFID-enabled management systems for their
baggage-handling applications, as well as inventory parts tracking. Many large carriers and
shippers will consider RFID-enabled projects because of the global adoption of electronic
manifesting. However, 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: RFID/GPS, RFID/onboard
computer, RFID/bar codes, RFID/Wi-Fi, etc. Sensor-based combinations will become more viable
with the standardization of the interface between the tag and the sensor, which is currently
defined as Gen2 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

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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 — it will require 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 RFID 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 that 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 all
the entities involved in an international shipment transaction.
Benefit Rating: High
Market Penetration: 1% to 5% of target audience
Maturity: Emerging
Sample Vendors: Alien Technology; Atmel; Hi-G-Tek; IBM; Intermec Technologies; Lockheed
Martin; Motorola (Symbol Technologies); Savi Technology; 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"

Global Trade Compliance (Import and Export)


Analysis By: Dwight Klappich
Definition: Global trade compliance (GTC) — 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,
and addresses the regulations of the importing and exporting countries, the parties involved in the

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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 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 customs brokers. 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, and 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: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Integration Point; Kewill Systems; Management Dynamics; Precision Software
(a division of QAD); QuestaWeb; SAP; TradeBeam; Vastera (Morgan Stanley)
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"

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"Roundup of Supply Chain Execution Research, 2008"

Yard Management
Analysis By: Dwight Klappich
Definition: Yard management is a set of capabilities, 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, taking into consideration
equipment/facility/employee constraints and activity demands.
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 radio
frequency identification (RFID) and related technologies, to provide real-time visibility of asset
movements and locations. The former is well-addressed by mature applications, while the latter is
less mature, but solutions exist and are evolving rapidly.
User Advice: High-volume, logistics operations should consider yard management, preferably as
an extension of their warehouse management system (WMS), 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 be 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: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: C3 Solutions; Manhattan Associates; Navis; RedPrairie; WhereNet
Recommended Reading: "Supply Chain Management Vendor Guide, 2008"
"Roundup of Supply Chain Execution Research, 2008"

Supply Chain Management (SaaS)


Analysis By: Dwight Klappich
Definition: Supply chain management (SCM) as software as a service (SaaS) refers to SCM
software that is owned, delivered and managed remotely by one or more providers. Companies
have multiple options for sourcing SCM applications: on-premises, hosted, on-demand/SaaS or
outsourced/managed service. If the SCM vendor mandates installation of software on-premises
using the companies infrastructure, then this is not SaaS. SaaS SCM requires that the vendor
provide remote, outsourced access to the SCM application, as well as maintenance and upgrade
services for it. The infrastructure and IT operations supporting the applications must also be
outsourced; however, unlike with hosting, the infrastructure is shared across user organizations.

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Just having a subscription pricing model does not qualify an application as SaaS, unless it meets
the criteria we've just presented.
In some cases, SaaS is simply an alternative method for sourcing SCM functionality. However, in
the SCM areas where SaaS has the most usage aspects of supply chain collaboration,
transportation management and global trade management, SaaS offers additional characteristics
that support these multienteprise processes and differentiates it from traditional on-premises
implementations of the same type of functionality.
In the case of transportation management systems (TMSs), a distinguishing characteristic of
SaaS TMS is the availability of a preonboarded carrier network that allows shippers using the
SaaS TMS to have 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 whom they already have negotiated a contract.
In global trade management (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 preonboarded 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 traditional on-premises models require a content publishing
capability.
SaaS in other SCM areas is not as prevalent, nor in demand by users, because other SCM areas
have not been as affected by the need to operate multienterprise processes. However, there are
some vendors beginning to offer SaaS versions of supply chain planning and warehouse
management.
Position and Adoption Speed Justification: On-premises applications are still the dominant
delivery vehicle for SCM applications. Over all, SaaS represents less than 20% of the SCM
application market. However, in TMS and GTM, SaaS is growing and has moved from an option
to a preference for many users. In TMS, SaaS is becoming the preferred delivery option for
smaller shippers with annual freight spending of less than $50 million per year) and is a viable
alternative in one-half or more of large shippers considering TMS. For GTM, most of the vendors
favor SaaS deployment; vendors that offer on-premises are the exception. Over all, market
penetration of SaaS TMS remains modest; but in the aforementioned categories, it is growing
rapidly. In other areas, like supply chain planning and warehouse management systems, growth
is negligible.
User Advice: Understand and evaluate the trade-offs between rich functionality, which, for most
categories other than GTM, favors leading on-premises SCM applications, and upfront costs,
which, in most cases, favor SaaS. Companies with complex requirements and that want and
need more than the basic SCM capabilities should focus on market-leading SCM solutions, which
are primarily on-premises solutions today. Companies with less-stringent requirements or that are
looking for an interim solution — less than three to five years planned solution life — should
consider SaaS SCM. Model costs for on-premises and SaaS to at least five to seven years. This
will enable you to compare total cost of ownership 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 SCM SaaS vendors
overstate their advantages.
Business Impact: In general, SaaS SCM applications deliver the same business advantages of
the relative SCM application category, whether on-premises or SaaS. However, in TMS and

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GTM, the availability of a preonboarded network improves the ability to collaborate with trading
partners, and allows for added flexibility for users to change their network when and if needed,
without the burden of onboarding new trading partners each time.
Benefit Rating: Moderate
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Bolero International; Descartes Systems Group; E2open; GT Nexus; i2
Technologies; Integration Point; LeanLogistics; Log-Net; Management Dynamics; Manhattan
Associates; Sterling Commerce; Syncron; TradeBeam; TradeCard; Wesupply.com
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"

Climbing the Slope


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 non-production-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 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.

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Benefit Rating: Moderate
Market Penetration: 20% to 50% of target audience
Maturity: Early mainstream
Sample Vendors: Adexa; i2; Infor; JDA Software; 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"

RFID and Sensor-Based Inventory Management


Analysis By: Tim Payne
Definition: Sensor-based inventory management involves the visibility and/or tracking of
inventory with sensor technologies, such as radio frequency identification (RFID). Most of these
applications use passive RFID, along with a range of software, to support the relevant business
processes of inventory management. This concerns the direct sensing and observation of
inventory, because the tracking of containers and other types of assets that contain inventory is
likely to fall under sensor-based asset management.
Position and Adoption Speed Justification: Retailers have been the most-prominent users of
this technology. Retailer delays and difficulties with passive RFID-enabled inventory management
indicate to many observers a broader problem with passive RFID. However, the industry's
hyperfocus 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, where
the cost of the implementation is spread over many business partners that potentially can share
the information on the tag. The success or failure of large retailers that are trying to lead the
movement to RFID does not predict how well other enterprises can use RFID. As the technology
continues to evolve and address operational concerns, the success of most inventory-based
RFID projects is tied to the business case and the ability of the enterprise to construct business
processes that leverage additional information about the inventory and products that RFID
provides. Many of the successful implementations are 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
the specific business process conditions that the enterprise faces, rather than on industrywide
mandates of the technology.
User Advice: The worst thing that happened to RFID was that it was conceptualized as the "next
bar code." This caused many enterprises to focus on established uses of bar codes and to
replace them with RFID. This embodies the worst elements of business-case construction,

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because, for the most part, the bar-coding process works, and RFID technology is unable to
match it in many ways. Where the business process is under the authoritative control of the
enterprise, bar coding is usually the better option, unless bar codes are not physically feasible (for
example, where there is a lack of line of sight or specific process conditions).
Gartner recommends that sensor-based, inventory-focused applications focus on supporting
inventory visibility, traceability and management in more-chaotic business processes that are
beyond the authoritative control of the enterprise, and where additional information is needed
beyond what a bar code traditionally supplies. For example, retail selling floors and hospitals are
relatively chaotic process environments, compared with a factory floor or a disciplined
warehouse. This is a key factor that determines whether inventory-based passive RFID projects
will be successful.
Business Impact: This technology offers organizations the opportunity to extend control over
business processes that were 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
difficult to access.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Check Point Software Technologies; IBM; Intermec; LXE; Motorola; Oracle;
SAP; TrueDemand Software

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 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 plans; is linked to
capable performance management technology, such as dashboards and scorecards; and is able
to support the process aspects of running an S&OP process. The reality is that what most users
implement as S&OP falls significantly short of this definition, and, as such, in this Hype Cycle we
are analyzing what has been adopted.
Position and Adoption Speed Justification: The concept of S&OP has been around for many
years, and is particularly well-known in manufacturing organizations. S&OP should harmonize
business strategies and operational plans. However, the strategic dimension is now mostly
missed, and S&OP is mainly focused on operational reconciliation using supply chain planning as
the basis. The strategic dimensions are starting to be incorporated into overlay capabilities to
S&OP — integrated business planning (IBP). Successful adoption of S&OP has been limited by
organizational issues, as well as the inability of technology solutions to support a truly cross-
functional processes with integrated what-if and execution capability. Supply chain planning
(SCP) and ERP vendors are focusing on providing some S&OP capability, as well as pure-play
S&OP solutions. Specific S&OP solutions (as opposed to using existing SCP applications) are
maturing, and some are starting to move their solutions toward providing basic IBP capabilities.
During the recent turbulent market conditions, we have seen a significant interest in S&OP. Users
are re-examining their S&OP processes and trying to figure out how to make them more effective.

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This increase in interest is driven by the need for better visibility and scenario management into
the supply chain, to help evaluate different potential outcomes and effects arising from increased
uncertainty on the supply side and the demand side.
User Advice: To support your S&OP initiatives, evaluate the S&OP tools on the market. Pay
attention to how these tools support the business processes of S&OP, not just the data
aggregation and representation requirements. Understand that demand planning, sales pipeline
planning solutions, or product and distribution planning that have been extended with S&OP
screens and reports will not necessarily support all the process requirements and financial impact
analyses of best-practice S&OP. Sources of S&OP functionality and data used in specific S&OP
tools include SCP applications, ERP suites, business intelligence suites and best-of-breed
applications.
Business Impact: These applications enable companies to make better use of resources by
helping to balance supply and demand. Additionally, they deliver improved collaboration
throughout the organization, as well as what-if and scenario management capabilities to help in
the evaluation of alternate operational options.
Benefit Rating: Moderate
Market Penetration: More than 50% of target audience
Maturity: Early mainstream
Sample Vendors: i2; IBM (Cognos); JDA Software; Logility; Oracle; SAP; Steelwedge Software
Recommended Reading: "MarketScope for Sales and Operations Planning, 2008"
"Assessing the Maturity of Your Sales and Operations Planning Process"

Multienterprise Supply Chain Collaboration


Analysis By: Andrew White; Tim Payne
Definition: Multienterprise supply chain collaboration supports the unique set of requirements
that come from:

• Multiple stakeholders that share a common objective (promotion, business plan, product
launch or development)

• A high degree of data integration (needed to synchronize stakeholder systems and


applications)

• A flexible, scalable and real-time business process that enables all stakeholders to
participate effectively (business process design, workflow, business activity monitoring,
business intelligence)
Multienterprise collaboration solutions are formulated business processes defined by a business
process management engine or represented by a business application. The applications are
sourced on business process networks (BPNs), business process hubs (BPHs) and the emerging
multienterprise business process platforms (ME-BPP). Such forms of collaboration are structured
and can use industry-specific data and/or process standards, such as collaborative planning,
forecasting and replenishment (CPFR), or follow other standards that generally follow industry
orientation. Other forms of collaboration exploit technology standards for data interchange,
although the business processes for which collaboration occurs are uniquely supported by
custom applications.

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Position and Adoption Speed Justification: Formalized enterprise-to-enterprise business
collaboration (which differs from multienterprise) has been available for more than 12 years, since
the original Voluntary Interindustry Commerce Solutions CPFR standard, but has rarely been
deployed outside channel master or brand owner efforts in a scalable, repeatable or sustainable
manner. However, this is far simpler than large-scale multienterprise collaboration.
Multienterprise collaboration is taking place in numerous industries, such as retail, consumer
goods, automotive, industrial, chemical, oil and gas, and utilities. Gartner continues to see
multienterprise collaboration evolve and re-emerge with newer related technologies — such as
master data management (to ensure data consistency in processes) and global data
synchronization (to synchronize data and ensure data semantics in the B2B sphere) — to remove
technical barriers to large-scale integration, which is a precursor to multienterprise collaboration.
The technology is slowly pulling itself out of the Trough of Disillusionment, but it is hard going.
Extensive collaboration takes place, often informally, between buyers and sellers, even to the
point where no formal structure and/or application is recognized as supporting the process. As
such, there is often the comment that "you never hear about CPFR" or "you don't see much
collaboration these days." The technology has a bad reputation, even if it is the users who fail to
organize properly for effective collaboration. The technology is not the barrier anymore.
User Advice: Look for business applications that embed collaboration technology in the business
process. Apply collaboration technology outside the business process and application as a last
resort. Focus collaboration programs on developing shared risk and reward measures for all
stakeholders.
Business Impact: This technology affects complex multienterprise business processes. It is a
source of competitive differentiation when enterprise-centric business processes can no longer be
squeezed for cost savings. It is common in initiatives such as distributed order fulfillment, CPFR
and vendor-managed inventory.
Benefit Rating: High
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Agentrics; E2open; Eqos; i2; JDA Software Group; Logility; Oracle (Syncra)
Recommended Reading: "Best Practices: Checklist for Issues to Consider in Multienterprise
Collaboration"
"The Emergence of the Multienterprise Business Process Platform"

Voice-Directed Picking in Warehouse Management


Analysis By: Dwight Klappich
Definition: Voice-directed picking in warehouse management involves the use of voice
recognition and speech synthesis technology to drive activity in warehouse operations. This
enables 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-
standards technology implementation of voice-directed picking. Typically, this is a third-party
subsystem, rather than an integral part of the warehouse management system (WMS).
The major consideration for this technology has been where to perform voice processing and
synthesis; however, this has been largely resolved, and the portable unit receives machine

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instructions that are translated into speech synthesis or recorded voice instructions to 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 worker's 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 centers, with return on investment (ROI)
for speech 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 put-away or
replenishment. Although high-speed picking applications are the most common use of this
technology, additional implementations of the same model include convenience stores (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 can be used for only the
operations or inputs that require eyes-free and hands-free operations, where other processes can
be 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.
Initial uses were grocery-oriented, because the systems were so complicated and training
requirements were 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.
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 radio frequency 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 WMSs 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 with radio frequency 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: 1% to 5% of target audience

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Maturity: Early mainstream
Sample Vendors: Aldata; Inther; Vocollect; Voxware
Recommended Reading: "Magic Quadrant for Warehouse Management Systems, 2007"

Integration as a Service
Analysis By: Benoit Lheureux; Paolo Malinverno
Definition: There is a market for business-to-business (B2B) integration capabilities that are
hosted in a multitenant environment and delivered as a service, rather than as software (see
"Taxonomy and Definitions for the Multienterprise/B2B Infrastructure Market"). Traditionally
known as electronic data interchange (EDI) value-added networks (VANs), we now refer to these
hosted offerings as integration as a service (IaaS), and we call the vendors that offer such
services (usually in one role relative to other roles) integration service providers.
IaaS involves the combination of several categories of functionality:

• Communication services — Multiprotocol support with EDI, FTP, Applicability Statement


2 (AS2), RosettaNet and Web services; the ability to connect to cloud-computing
application programming interfaces (APIs), such as those from salesforce.com or
Google.

• Community management services — At one time, these consisted largely of online


electronic transaction tracking and reporting tools; however, they now increasingly
include collaboration tools to facilitate the collection of community member profile
information, the provisioning of electronic connections and managing certificates for
security.

• Integration and interoperability services — In-line translation and back-end system


integration; online development tools for implementing services-based choreography
and data translation; governance mechanisms to define and manage distributed service
policies; and dashboards and reporting mechanisms for monitoring B2B connections,
messages and transactions, etc.

• Optional application services — These include order visibility, data validation and
compliance management. Such functionality is delivered as software as a service
(SaaS) and ranges from lightweight ERP capabilities (such as order management for
small suppliers), which is tightly integrated with an IaaS offering, to more full-featured
forms of e-commerce SaaS (such as vendor management inventory), which are sold
separately from (but often enabled by) IaaS.
In many cases, IaaS is only one component of a vendor's overall IT solution portfolio. Thus,
rather than simply categorizing all such vendors as integration service providers, it is more
accurate to say that many vendors offer IaaS in one role, while offering other IT products and
services (such as SaaS) in another. To qualify as an IaaS provider, according to this definition, a
vendor must market and support IaaS as a stand-alone offering, which is separate from its other
IT products and services. Vendors that bundle hosted integration services into their overall IT
portfolios may be offering IaaS and doing what they need to do to address their customers' B2B
integration requirements, but Gartner does not consider them direct competitors in the IaaS
market segment.
Position and Adoption Speed Justification: Many IaaS providers that were primarily
supporting only EDI mailbox-based B2B projects have substantially expanded their services
during the past five years, and new IaaS providers have entered the market. For example, in

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addition to their continued support for more-traditional approaches to B2B — such as EDI, FTP
(still widely used), and async and bisync dial-up (which are still being used, but are in decline) —
the more well-established providers of IaaS (such as GXS, Sterling Commerce and Inovis) now
support modern B2B data formats and protocols, such as XML, AS2, Web services, RosettaNet
and new forms of multienterprise collaboration, as well as near-real-time multienterprise process
and compliance monitoring. Meanwhile, new IaaS providers (such as Boomi, Cast Iron and
Pervasive Software) have entered the market, primarily targeting cloud-computing/SaaS
integration scenarios.
There are two sectors in the B2B market. One is focused on traditional e-commerce, and the
other involves cloud-computing/SaaS integration. They are highly segregated; however, we
already see users implementing projects that blend these B2B project scenarios. For example,
companies implementing CRM functionality on salesforce.com are increasingly integrating sales
orders with on-premises order management applications and related e-commerce projects (see
"SaaS Integration: How to Choose the Best Approach").
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 will help 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, ranging 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 traveling up the slope to the
Plateau of Productivity slowly. Vendors continue to expand and refine their IaaS offerings to
incorporate new capabilities, including more-programmatic APIs to access IaaS services and
support automated provisioning. 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 support 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:

• Companies that don't want to unilaterally manage their own B2B infrastructures should
consider IaaS.

• Multinational IaaS capabilities are maturing, but prospects should always verify whether
a potential IaaS provider can meet their particular country-by-country requirements,
including local-language support and in-country IaaS network points of presence (see
"The Status of B2B in Europe, 1Q09").

• 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 "Gartner Magic Quadrant for Integration Service Providers" and "Who's
Who in Cloud-Computing/SaaS Integration, Volume 1" to gain an understanding of the
highly diversified IaaS vendor landscape.

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• 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 project 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 2008, it
generated more than $1 billion in IT revenue worldwide (see "Forecast: Sizing the Cloud;
Understanding the Opportunities in Cloud Services"). 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 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: Advanced Data Exchange; Bluewolf; Boomi; BT Group; Cast Iron Systems;
CrossGate; DIcentral; E2open; EasyLink Services International; Elemica; GXS; Hubspan;
Informatica; Inovis; Liaison Technologies; Mincom; nuBridges; Perfect Commerce; Pervasive
Software; Railinc; RedTail Solutions; Seeburger; SPS Commerce; Sterling Commerce; T-
Systems; TietoEnator; True Commerce
Recommended Reading: "Taxonomy and Definitions for the Multienterprise/B2B Infrastructure
Market"
"Forecast: Sizing the Cloud; Understanding the Opportunities in Cloud Services"
"Magic Quadrant for Integration Service Providers"
"Market Update for Integration Service Providers"
"SaaS Integration: How to Choose the Best Approach"

Supply Chain Analytics


Analysis By: Dwight Klappich

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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, industry templates and business activity monitoring
solutions.
Position and Adoption Speed Justification: Supply chain analytics are the tools needed to
support supply chain performance management (SCPM) at a departmental or functional level,
and 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, because 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 supply-chain-oriented performance management will likely replace it with a
more end-to-end view of supply chain management (SCM) and product performance
management.
User Advice: Enterprises should look first at analytic solutions that are seamlessly integrated
with their core SCM applications. Consider stand-alone systems only if:

• You have extreme SCM application heterogeneity, then focus on the SCPM solutions.

• You are looking for a consolidated view of SCM metrics where underlying data may
reside in multiple applications, then, 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 and 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: i2 Technologies; IBM Cognos; Informatica; JDA Software; 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"
"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"

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Business Process Hubs
Analysis By: Andrew White; Debbie Wilson
Definition: A business process hub (BPH) is a process-specific instance of multienterprise
applications 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. 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 and sourcing between trading
partners. Many BPHs leverage an integrated business process network (BPN) to provide
detailed, transaction-level integration. The multienterprise 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; or proprietary specifications. The BPH also often supports community management
services, where it provides technical and user help desk services to all participants (running
campaigns to enroll business partners).
From the multienterprise 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. Many BPHs
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 will become marginalized and become more niche and more focused — therefore,
less relevant.
Position and Adoption Speed Justification: Historically known as "e-marketplaces," BPHs
never created their expected value, because many focused on business processes that were not
founded on how enterprises behaved or were willing to behave. For the most part, those 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 analytics, as well as multienterprise
collaboration. Some BPHs are reinvesting in e-marketplace functionality, particularly in support of
excess inventory liquidation 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, looking more like BPNs as they strengthen and, in some cases (such as Elemica), even
emphasize the value of their hosted integration services (BPN capability) relative to their hosted
application services.
User Advice: Source business applications, analytics and services according to criteria that
measure process complexity and value to the business. Consider BPHs that function in your
industry as strong candidates for procurement applications and supplier 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 multienterprise applications that are often 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 them.

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Benefit Rating: Moderate
Market Penetration: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Agentrics; Ariba; cc-Hubwoo; E2open; Elemica; Enporion; Exostar; Liaison
Technologies; Mitrix; One Network Enterprises; Quadrem; Wesupply
Recommended Reading: "The Role of Procurement Networks in EIPP"
"The Emergence of the Multienterprise Business Process Platform"
"A Tectonic Shift in the Business Process Center of Gravity"

Warehouse Labor Management Systems


Analysis By: Dwight Klappich
Definition: In this system, the best work patterns are employed to 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
that it takes to reach the top shelf of a warehouse rack is incorporated versus what is required at
eye level. One of the most important components of this system is the incorporation of travel
times into the goal time. Thus, 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). This is 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.
These systems are being extended to labor-scheduling systems, so that the activities of the
warehouse can be projected over a time frame, and labor requirements can be more-accurately
forecast and scheduled. Some of these systems advertise the ability to calculate gross pay and,
potentially, to obviate the need for third-party, time-and-attendance systems.
Position and Adoption Speed Justification: This technology has been used primarily in large
grocery facilities, because they require fewer tasks than other types of warehouses. However, the
technology and engineering standards have expanded during the past three to five years. This
has made the technology and labor management processes applicable to most warehouse
facilities. The LMS commercial offerings from some vendors are somewhat antiquated and are
undergoing technical modernization as the focus on the system expands to more users. They
once were specialized systems, but, with general use, there's more emphasis on the technical fit
and finish of the systems.

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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., and are 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.
User Advice: Most users in the U.S. should be evaluating or implementing 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: 5% to 20% of target audience
Maturity: Early mainstream
Sample Vendors: Catalyst International; CyberShift; HighJump Software; Infor (Workbrain);
Kronos; 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"

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Service Parts Planning
Analysis By: Dwight Klappich
Definition: Service parts planning (SPP) applications optimize the forecasting, stock-locating and
replenishment-planning of service parts, and balance 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.
Position and Adoption Speed Justification: Core SPP, which includes parts forecasting and
basic inventory and replenishment planning, is a mature application category, and there is
minimal innovation in core SPP functionality. Innovation continues in multiechelon inventory
optimization (MEIO) and other specialized capabilities, but these 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,
who are looking for very advanced applications, and less-demanding enterprises that lack the
understanding of 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, and so competition in this market segment
across suite and best-of-breed vendors is high. With ERP vendors adding some SPP into their
suites, this will further legitimize SPP for the less-sophisticated user, and shift 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 where their level of sophistication warrants more-advanced capabilities, but the prime
driver 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 small and midsize business (SMB) market is less likely to
value or exploit the more sophisticated and specialized SPP offerings.
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, and they can 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, and 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; Click Commerce (Xelus); Logility; MCA Solutions;
Oracle; SAP; SAS; Servigistics; Syncron; ToolsGroup

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© 2009 Gartner, Inc. and/or its Affiliates. All Rights Reserved.
Recommended Reading: "MarketScope for Service Parts Planning, 4Q07"
"Supply Chain Planning Market Is Bifurcating Into Process Automation and Process Innovation
Markets"

Entering the Plateau


Supply Chain Planning for Process Automation
Analysis By: Tim Payne
Definition: Users focused on supply chain planning (SCP) for process automation are more
interested in "doing SCP" more efficiently than "how they do SCP." To that end, a focus on supply
chain efficiency, best practices (repeatable and standardized) and competitive parity
characterizes SCP for process automation. This contrasts with process innovation, which
includes areas such as inventory strategy optimization, multienterprise collaboration, causal
forecasting, and service parts planning, and where the focus is on the effectiveness of the supply
chain, and using it for competitive advantage.
SCP refers to applications that optimize the delivery of goods and services, balancing supply and
demand. An SCP suite integrates with a transaction system to provide planning and analysis of
"what if" scenarios. We have seen a split in the SCP market between SCP for process
automation and SCP for process innovation. SCP for process automation is where more users
and vendors are focusing their efforts and solutions. The core features of SCP for process
automation 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 are focused on SCP for process
automation, as are most vendors in terms of the solutions they provide to the market, because
this is the biggest part of the SCP market. Products are now more robust and scalable, and 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 return on investment.
User Advice: When supply chains are 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, as well as 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 by using business activity monitoring to identify anomalies
in demand/supply conditions.
Benefit Rating: Moderate
Market Penetration: More than 50% of target audience
Maturity: Mature mainstream
Sample Vendors: Infor; JDA Software; 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"

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Appendixes
Figure 3. Hype Cycle for Supply Chain Management, 2008

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visibility
Inventory Strategy Optimization
Network-Based Inventory and Supply Chain Management
Dock Scheduling and Carrier Appointment Management
Business Process Networks Master Data Management of Product Data, Formerly
B2B Project Outsourcing Product Information Management
Integrated Demand and Mobile (Wireless) Supply Chain Management
Replenishment Planning
Direct-POS Analytics Applications
SCM Process and
Innovation Templates
SOA-Enabled Order Management Warehouse Labor
Carbon-Sensitive Management Systems
Planning and Execution TMS Multimodal/Domestic
Service Parts Planning Supply Chain Planning
Mobile Asset Optimization for Process Automation
Integration as a Service
Supply Chain and Supply Chain
Planning (SaaS) Business Process Hubs
Product Performance Supply Chain Analytics
Management
Voice-Directed Picking in Warehouse Management
Sales and Operations Planning
Segmented Supply Multienterprise Supply Chain Collaboration
Chain Response Capable-to-Promise Systems
Integrated Business Planning RFID and Sensor-Based Inventory Management
Multienterprise Business Process Platform Global Data Synchronization
Gen 2 Class 3 Sensor-Based RFID
As of August 2008
Peak of
Technology Trough of Plateau of
Inflated Slope of Enlightenment
Trigger Disillusionment Productivity
Expectations
time
Years to mainstream adoption:
obsolete
less than 2 years 2 to 5 years 5 to 10 years more than 10 years before plateau
Source: Gartner (August 2008)

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Hype Cycle Phases, Benefit Ratings and Maturity Levels
Table 1. Hype Cycle Phases
Phase Definition
Technology Trigger A breakthrough, public demonstration, product
launch or other event generates significant press
and industry interest.
Peak of Inflated Expectations During this phase of overenthusiasm and unrealistic
projections, a flurry of well-publicized activity by
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 Disillusionment Because the technology does not live up to its
overinflated expectations, it rapidly becomes
unfashionable. Media interest wanes, except for a
few cautionary tales.
Slope of Enlightenment Focused experimentation and solid hard work by an
increasingly diverse range of organizations lead 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 Productivity The real-world benefits of the technology are
demonstrated and accepted. Tools and
methodologies 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 Mainstream Adoption The time required for the technology to reach the
Plateau of Productivity.
Source: Gartner (July 2009)

Table 2. Benefit Ratings


Benefit Rating Definition
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

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Benefit Rating Definition
Low Slightly improves processes (for example, improved
user experience) that will be difficult to translate into
increased revenue or cost savings
Source: Gartner (July 2009)

Table 3. Maturity Levels


Maturity Level Status Products/Vendors
Embryonic • In labs • None
Emerging • Commercialization by • First generation
vendors • High price
• Pilots and deployments by • Much customization
industry leaders
Adolescent • Maturing technology • Second generation
capabilities and process • Less customization
understanding
• Uptake beyond early
adopters
Early mainstream • Proven technology • Third generation
• Vendors, technology and • More out of box
adoption rapidly evolving • Methodologies
Mature mainstream • Robust technology • Several dominant vendors
• Not much evolution in
vendors or technology
Legacy • Not appropriate for new • Maintenance revenue focus
developments
• Cost of migration constrains
replacement
Obsolete • Rarely used • Used/resale market only
Source: Gartner (July 2009)

RECOMMENDED READING

"Understanding Gartner's Hype Cycles, 2009"


"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"
"Roundup of Supply Chain Execution Research, 2008"
"Supply Chain Management Vendor Guide, 2008"
"Gartner’s SCM Scenario: Post-Lean Supply Chain, 2008 and Beyond"
"Supply Chain Management Glossary 2.0, 2008"

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"Top Seven Supply Chain Planning Processes, 2009 to 2014"
"Top 7 Supply Chain Execution Processes, 2009 to 2014"

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