Monitoring the supply chain becomes critical as ERP extends beyond the enterprise

Now that ERP systems are extending beyond the enterprise with the development of collaborative applications across the value chain, the ability to determine the performance and effectiveness of business partners has become critical.

"When companies seek to automate the supply chain there is always a danger of losing sight of supplier performance until it is too late," says Andrew Connold, managing director, Synergy Computing, the business intelligence (BI) solutions specialist and the largest Cognos partner in SA.

"Unfortunately, many of these extended systems do not incorporate the breadth of BI necessary to provide companies with the analyses and easy access to data they need to track vendor performance accurately."

To address this shortfall, Synergy and manufacturing specialist, Eigenon Consulting, have developed a BI system designed specifically to help manufacturers improve efficiencies across the supply chain.

"There are significant bottom line benefits to be gleaned from such efficiency improvements. Knowing that your supplier will deliver the goods when you need them, not only means you avoid costly production delays and re-schedules, but you can also reduce inventories substantially," he adds.

The Synergy/Eigenon system has been developed using Cognos BI technology to provide comprehensive vendor management system that proactively monitors key vendor performance indicators against predetermined measures and targets. It provides managers with more control over key cost drivers enabling them to improve their organisation's competitiveness, ensure reliable delivery, improve vendor relations and enhance organisational return on net assets.

Also, because the system is based on Cognos BI technology, it is totally Web-enabled. This facilitates access to critical analytical information across the enterprise using a Web browser from any desktop and allows analyses to be shared with the entire supply chain.

"With a large array of pre-packaged reports and measurements, executives and managers are able to make faster and more informed business decisions and be in a better position to leverage their extended ERP investments," says Andrew Brown, director, Eigenon Consulting.

"They'll also be in a position to incentivise the supply chain. Having access to key vendor performance indicators means you can set targets for factors such as quality, delivery, order accuracy or whatever. If the vendor meets these agreed targets then a quarterly or annual bonus can be paid."

With manufacturers now moving increasingly towards a "virtual manufacturing" model whereby they are outsourcing non-core functions such as sub-assembly work, logistics, and transportation, management attention is becoming more focused on managing contracts, risk, relationships, strategy and their outsource partners.

"Although they might be non-core functions, being able to monitor your non-core business partners' performance is just as important. If your logistics company isn't delivering to your customers timeously, is just as damaging to your business as your supplier not getting the goods into your stores in time," concludes Brown.