Survey and comparison of supplier chain management …

Advances in Energy and Environmental Science and Engineering

Survey and comparison of supplier chain management softwares

LORENZO DAMIANI, ROBERTO REVETRIA, IVAN ANDROVSKI, PIETRO GIRIBONE

DIME University of Genoa Via Montallegro 1 16145 Genoa

ITALY Lorenzo.Damiani@unige.it; Roberto.Revetria@unige.it; Giribone@itim.unige.it

Abstract: - This paper presents a survey and comparison of a series of supply chain management softwares used by companies in order to evaluate the best software tools based on chosen features. The evaluation was carried out through the well known Analytic Hierarchy Process (AHP) method. After a brief description of the features required by a project management tool and after a brief description of the software tools in exam, the authors applied the AHP method to the softwares cross-evaluating each of their features.

Key-Words: - SCM, Software, AHP.

1 Introduction

Supply Chain Management (SCM) [1-15] is a concept that is gaining in popularity and importance. From a practitioner point of view, an Accenture report (in co-operation with Stanford and Insead) states that SCM is critically important or very important to 89% of the surveyed executives. Furthermore, SCM is increasing in importance as 51% of the executives stated that their investments in SCM have increased significantly over the last three years (Accenture 2010). SCM has also been frequently discussed and researched by practitioners and academics over the last two decades. Stock and Boyer describe how the number of SCM articles continues to grow on a yearly basis after the "rapid surge" that started in the middle of the 1990s. Additionally, the number of academic dissertations dealing with SCM-related topics has steadily increased since the early 1990s (Ibid.).

One reason for the increased interest in SCM is that organizations progressively find themselves reliant upon having effective supply chains, or networks, to successfully compete in the global market economy (Lambert 2008). In the competitive global environment, performance can no longer solely be determined by the decisions and actions that occur within a firm as the execution of all members involved contributes to the overall results of the supply chain. Similarly, Wen et al. (2007) mean that competition has changed from being between individual enterprises to increasingly being

between supply chains. As organizations form global alliances, it is imperative that they understand how SCM can be successfully applied (Halldorsson et al. 2008); especially as organiz ations face challenges including mitigating risks and disruptions in the supply chain (Neureuther, 2009). For these reasons, there is a need for companies to manage not only their own organizations but also their relationships with other companies in the same supply chain (Croxton et al. 2001; Stock et al. 2010).

Naturally, another reason for the increased interest is the potential benefits of SCM. Benefits include improvement in returns on investments (ROI) and returns on assets (ROA)."Ultimately, the goal of SCM is to achieve greater profitability by adding value and creating efficiencies, thereby increasing customer satisfaction" (Stock and Boyer 2009,p.703). Ideally, improvement of the supply chain translates to Journal of Management Policy and Practice vol. 11(4) 2010 11 benefits for all supply chain members. Costs decrease as a result of reduced redundancies, lower inventory levels, shorter lead time and lessened demand uncertainties. Improved process performance result in enhanced product quality, customer service, market responsiveness, and target market access (Fisher 1997; Lambert et al. 2005; Lee et al. 1997; McCarthy and Golicic 2002; Sabath and Fontanella 2002; Stank et al. 2001; Tan et al. 2002; Tummala et al. 2006). Performance is thus improved through

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better use of internal and external capabilities creating a seamlessly coordinated supply chain, elevating inter-company competition to inter-supply chain competition (Burgess et al. 2006; Lummus and Vokurka 1998; Mentzer 2004; Lambert 2008).

The Council of Logistics Management (CLM) defines Supply Chain Management as the strategic coordination of the core functions and tactics across these functions within a specific organization and across its partners within the supply chain for the purposes of improving the longterm performance of the individual organizations and the supply chain as a whole.`Supply Chain Management has been defined to explicitly recognise the strategic nature of coordination between trading partners and to explain the dual purpose of Supply Chain Management: to improve the performance of an individual organization and to improve the performance of the whole supply chain' (Li et al, 2006).On the other hand,SC constituent by two pipelines, information and materials flow. These require operational strategies,which can integrate and complement the individual characteristics of both pipelines (Mason Jones and Towill, 1999).However,Stock et al (2000) define the most significant performance factors,Channel Governance, Geographic Dispersion and Logistics Integration.

2 Research methodology

In order to compare the softwares is used the analytic hierarchy process (AHP), developed by Thomas L. Saaty in the 1970s. AHP is a multicriteria technique for decision support which allows to compare more alternatives in relation to a plurality of criteria, of qualitative or quantitative type, and derive a global evaluation for each of them. This allows to:

order the alternatives according to a preference axis;

individuate the best alternative; assign the alternatives to predefined sub-

groups. AHP provides a distinction between the subjective component of the evaluation and the objective data. The decider individuates an ensemble of evaluation criteria of the n decisional alternatives and assigns to each criterion a weight in percentage; after that, he assigns a score which is the impact of the criterion on the decision. The score of each decisional alternative is the weighted average of the scores of each criterion on the decision for the weight assigned to each criterion.

The criteria are compared in couples, assigning a score of relative importance one the other. The sum of the weights must be 100%. The score of each criterion is obtained summing what is obtained with respect to all the others. The scores obtained are usually normalized, subtracting the average and dividing each weight for the standard deviation.

Comparing tools is not a simple operation. Each tool is designed to fulfill a particular function and may not compare exactly with another. Therefore, anyone who wants to compare different packages must first create a rubric by which tools can be measured. While the criteria may change slightly for each manager's search, it is possible to speak to enough of them to create a generic scheme that can be helpful to all.

Rather than prescribing a "correct" decision, the AHP will help the companies to find one that best suits their project and their needs. It provides a comprehensive and rational framework for structuring a decision problem, for representing and quantifying its elements, for relating those elements to overall goals, and for evaluating alternative solutions.

In our research we will define the areas the elements' relative meaning and importance and will discuss their importance for achieving a successful project management. We are going to make survey on 13 project management softwares used by engineering and construction companies.

Once the hierarchy is built, the decision will be made by systematically evaluating its various elements by comparing them to one another two at a time, with respect to their impact on an element above them in the hierarchy. It is the essence of the AHP that human judgments, and not just the underlying information, can be used in performing the evaluations.

The AHP converts these evaluations to numerical values that can be processed and compared over the entire range of the problem. A numerical weight or priority is derived for each element of the hierarchy, allowing diverse and often incommensurable elements to be compared to one another in a rational and consistent way. This capability distinguishes the AHP from other decision making techniques.

In the final step of the process, numerical priorities are calculated for each of the decision alternatives. In this research is used a web base AHP Calculator. These numbers represent the alternatives' relative ability to achieve the decision goal, so they allow a straightforward consideration of the various courses of action.

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3 The softwares analyzed

Warehouse Management Software As supplies move through the warehouse/distribution center, managers must track inventory and ensure that products are picked and put away in a productive and expedient manner. Warehouse management systems (WMS) help users improve the efficiency of these inventory control operations. Warehouse inventory software should provide managers with the tools they need to analyze stock and makes plans for inventory movement or replenishment. Used alongside a transportation management system, WMS systems serve as a critical part of an overall supply chain management system. The core functionality of most warehouse management systems help warehouse managers and workers guide inventory through receiving, putaway, picking, packing and shipping.

Transportation Management Software Transportation management solutions (or TMS) help users plan and execute deliveries across the supply chain. Efficient deliveries depend on informed route planning, freight consolidation and enhanced visibility. By providing managers with appropriate tools like route optimization, load building and track and trace, the right TMS can improve fleet performance and reduce supply chain expenditures. Along with warehousing solutions and fleet management systems, TMS solutions constitute the logistics side of an overall supply chain management system

Logistics Management Software Logistic software is designed to provide logistics providers the necessary tools to support them in the execution and management of their product delivery business. There are basically two sides to this kind of software: Supply chain management. These are the features that manage the execution of the freight pick-up, tracking and delivery. SCM entails managing all the inventory and transportation details to get the product to its final destination. Brokerage and bidding. Since most logistics operators serve third parties on a contract basis, freight brokerage software needs to manage the business aspect, too. Freight broker software can

include bid and contract management, CRM, accounting and other essential business functions. Because some businesses focus solely on this freight brokerage aspect, there are also specific software solutions, often labeled freight broker or freight forwarder software, which cater directly to these types of operations.

Fleet Management Software Fleet management solutions help users track assets and inventory, optimize delivery routes and schedules and reduce risk factors associated with fleet management. Ultimately, this can lead to reduced operational costs. In contrast to fleet maintenance software, which is focused on tracking the materials, parts and labor used for vehicle repair, management is a broader system meant to keep the overall fleet operating smoothly.

Contract Lifecycle Management Software Contract management lifecycle (CLM) software organizes the complex and detailed contractual negotiation process between buyers and suppliers. These solutions typically manage the entire lifecycle of contracts, from initial request for proposal (RFP) to eventual re-negotiations. Gaining full control of the contractual process allows users to not only reduce supplier risk, but also gain increased insight into contracts--creating strategic negotiation opportunities and improved cash flow. These software systems range from applications that exclusively manage vendor contracts to robust suites that also include sourcing, bidding and procurement functionality. Many of these solutions often integrate with other supply chain, accounting and enterprise resourcing planning (ERP) systems.

Demand Planning and Forecasting Software Demand planning software allows organizations to minimize waste by tracking trends that will affect future demand. This type of system accomplishes the task by improving forecasting governance in order to eliminate errors or biases in the data and also by reducing data latency, which makes realtime demand planning possible. In addition to procurement software and strategic sourcing software, demand planning systems are an important, cost-cutting element of supply chain management software.

Order Fulfillment Software

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An order fulfillment system automates the order fulfillment process, ensuring that a production order is completed with the highest level of accuracy and least amount of lead time necessary. It promises high quote accuracy, fulfillment efficiency and billing management tools to maximize billing and order effectiveness. It is often combined with transportation management software and warehouse management software to create a supply chain execution system that promises real-time visibility.

Product Lifecycle Managment Software PLM software can be thought of as an application designed to help users track all information around product design, production and consumption. It integrates all technology and systems throughout the product lifecycle, from design and simulation technology to procurement and manufacturing solutions.

Procurement Software Procurement software (labeled as RFQ software or purchasing management software by some vendors) manages the purchasing processes within a supply chain. After using sourcing software to analyze current spending and potential vendor performance, these applications take over to finalize deals and initiate monetary transactions. As an important element of supply chain management systems, these systems help organizations efficiently manage their purchasing cycle times and maximize profit on every purchase order (PO).

Strategic Sourcing Software Strategic sourcing supports the informationgathering process that takes place before actual purchases are made. Whereas procurement software is more traditionally associated with the actual monetary transactions of purchasing, sourcing software is concerned with accumulating the data necessary to make smart and informed purchases. Sourcing provides buyers with access into a vast system of supplier databases, which makes it easier to pre-screen supplier data and analyze suppliers' past successes and failures. Along with procurement and demand planning solutions, sourcing systems help organizations make intelligent decisions and is therefore a key element of supply chain management systems.

Supply Chain Planning and Optimization Software

Supply chain planning software helps organizations manage and replenish their inventory

through sales and demand forecasting. As part of an SCM system, planning solutions like sales & operations planning (S&OP) serve an important function in the ongoing effort to reduce waste and increase profitability.

By offering a tool like demand planning software or S&OP, SCM software providers give organizations the ability to take a glimpse into a number of possible futures. Based on an analysis of historical market trends and an awareness of the organization's upcoming promotions and product rollouts, demand planning systems allow organizations to simulate potential demand and adjust their incoming inventories accordingly.

Supplier Relationship Management (SRM) Software

A contract between a supplier and its customer goes through many stages through its lifecycle. In order to remain competitive, organizations have to take special care in maintaining efficient and costeffective partnerships with their partners. The only way to be certain that suppliers are holding up their end of the bargain is to consistently evaluate their performance, a difficult task made easier by SRM software. SRM systems help users keep suppliers on their toes by monitoring their operations and revealing poor performance.

Managed Inventory Software Vendor managed inventory software, or supplier assisted inventory management (SAIM), allows the supplier to assume many of the duties related to maintaining the buyer's inventory. Rather than place all of the responsibilities of the supply chain planning system onto the customer, vendor managed inventory agreements establish a collaborative relationship between vendors and manufacturers or retailers. In this case, the buyer uses the software to keep the supplier aware of how much inventory should be available at the buyer's location at all times, and the supplier uses the software to monitor that inventory and replenish it when necessary, which makes VMI software a particularly useful addition to any supply chain management system.

In the following, a list of the softwares analyzed in this evaluation.

Descartes System Group GTNexus Kewill Systems Hight Jump Software Quintiq

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Unit4 Totvs Inspur Genersoft Logility Kinaxis

4 Comparison AHP

The Analytic Hierarchy Process(AHP), introduced by Thomas Saaty (1980), is an effective tool for dealing with complex decision making, and may aid the decision maker to set priorities and make the best decision. By reducing complex decisions to a series of pairwise comparisons, and then synthesizing the results, the AHP helps to capture both subjective and objective aspects of a decision. In addition, the AHP incorporates a useful technique for checking the consistency of the decision maker's evaluations, thus reducing the bias in the decision making process.

The AHP considers a set of evaluation criteria, and a set of alternative options among which the best decision is to be made. It is important tonote that, since some ofthe criteria could be contrasting, it is not true in general that the best option is the one which optimizes each single criterion, rather the one which achieves the most suitable trade-off among the different criteria.

The AHP generates a weight for each evaluation criterion according to the decision maker's pairwise comparisons of the criteria. The higher the weight, the more important the corresponding criterion. Next, for a fixed criterion, the AHP assigns a score to each option according to the decision maker's pairwise comparisons of the options based on that criterion. The higher the score, the better the performance of the option with respect to the considered criterion. Finally, the AHP combines the criteria weights and the options scores, thus determining a global score for each option, and a consequent ranking. The global score for a given option is a weighted sum of the scores it obtained with respect to all the criteria.

Software TMS Logistics FM

Descartes System Group Yes Yes Yes

GTNexus

Yes Yes No

Kewill Systems Yes Yes No

Hight Jump Software Yes Yes Yes

Quintiq

Yes Yes Yes

Unit4

No Yes No

Totvs

Yes Yes No

Inspur Genersoft No No No

Logility

Yes Yes No

Kinaxis

No No No

CLM Demand Planning Order Fulfillment PLM Procurment SystemsStrategicSourcing SCP SRM VMI

Yes

No

No

No

No

Yes

No Yes Yes

No

Yes

No

Yes

Yes

Yes

Yes Yes Yes

No

No

Yes

Yes

No

No

No No Yes

Yes

No

Yes

No

No

Yes

No Yes Yes

Yes

Yes

No

Yes

Yes

No

Yes Yes Yes

No

No

Yes

Yes

No

No

No Yes Yes

No

Yes

Yes

No

Yes

No

Yes No No

No

Yes

No

No

Yes

No

Yes No Yes

No

Yes

No

No

Yes

No

Yes No Yes

No

Yes

No

No

Yes

Yes

Yes Yes Yes

These are the resulting weights for the criteria based on pairwise comparisons

Category

Priority Rank

1

Warhouse Management 12.5% 4

2

Transportation Management 14.0% 3

3

Logistics 15.5% 2

4

Fleet Management 7.6% 7

5 Contract Lifecycle Management 8.9% 6

6

Demand Planning 3.9% 8

7

Order Fulfillment 3.2% 9

8 Product Lifecycle Management 1.3% 13

9

Procurment Systems 9.1% 5

10

Strategic Sourcing 1.7% 12

11

Supply Chain Planning 17.8% 1

12

Supplier Relationship Management

2.4%

10

13

Vendor Managed Inventory 2.1% 11

The resulting weights are based on the principal eigenvector of the decision matrix.

1 2 3 4 5 6 7 8 9 10 1 1 1.00 1.00 1.00 1.00 9.00 1.00 9.00 1.00 9.00 2 1.00 1 1.00 1.00 1.00 9.00 1.00 9.00 1.00 9.00 3 1.00 1.00 1 1.00 1.00 9.00 1.00 9.00 1.00 9.00 4 1.00 1.00 1.00 1 1.00 9.00 1.00 9.00 1.00 9.00 5 1.00 1.00 1.00 1.00 1 9.00 1.00 9.00 1.00 9.00 6 0.11 0.11 0.11 0.11 0.11 1 0.11 1.00 0.11 1.00 7 1.00 1.00 1.00 1.00 1.00 9.00 1 9.00 1.00 9.00

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