Supply Chain Synchronization

Moving forward with reverse logistics - complexity made simple

Last month at the Reverse Logistics Association Conference Evavi participated on a panel discussion about creating a customer-centric reverse supply chain strategy; gave a presentation about optimal solutions for complex multi-party, multi-channel, and multi-program returns; and unveiled our Synchronized Reverse Logistics Solution.

Evavi's solution for reverse logistics is the first that is Internet-native and architected from the core to handle the most challenging multi-dimensional reverse logistics requirements through simple user-based configurations. Evavi's new solution enables clients to onboard new customers, channels, and programs in hours. Amazingly simple and cost-effective.

Research shows that while most companies are so focused on getting everything exactly right with their outbound logistics (because that's the area supporting new revenue generation), many companies overlook the importance of their reverse logistics.

There are some good reasons for this, not the least of which is that for every 1 step required to process inventory in forward logistics, it takes 12 steps to process back through reverse logistics according to AMR Research. This added complexity is not accommodated by traditional WMS and ERP packages, and is, therefore, often set aside to be dealt with "later."

Leading companies are now realizing that "later" needs to be now.

Gartner has estimated that "Broken returns processes can erode net profits by 30 percent and more".

Accenture has also weighed in with studies showing that it costs "4 to 5 times more to process the reverse logistics of a returned item as it does to process the original sale through forward logistics."

The result all this is that in many industries stranded returns can represent 6% to 35% of top-line revenue.

What to do?

Most companies would benefit from starting with a few essential questions to gain deeper insights into what is going on within their reverse logistics:

• Why does profit erosion occur?
• Where are the increased costs?
• Why does the process take so long?
• Why is inventory stranded?
• Why does the customer experience suffer?
• Why is there a lack of end-to-end visibility?
• Why is compliance so challenging?

These are just a few example questions that start to get at the fundamental challenges and underlying opportunity to fix the reverse logistics process.

AMR Research conducted a survey recently on reverse logistics. They published some interesting findings, including:

1. Of the 32 companies [AMR Research] spoke with, only 1 manages these enterprise [returns] processes in a single system. Because of the geographic, product, and process complexities, the remaining 31 companies had multiple systems to manage returns.
   
   
2. One of the obstacles in managing returns is data. Too few companies have clean and timely data to drive decisions. In [AMR's] interviews, only 3 of the 32 companies had a single point of contact that could provide a complete data set for all of their returns. The remaining 29 companies required, on average, three to four respondents to get the data.

For those interested in deploying a reverse logistics solution to overcome these two challenges and many others, it is important to identify a solution that offers the following capabilities:

• Synchronize end-to-end returns processes
• Rapidly configure business processes & rules
• Compress time to asset recovery
• Reduce labor & technology costs
• Provide real-time visibility
• Improve customer service experience
• Enhance controls and compliance

If you would be interested in viewing a short video demonstration of Evavi's reverse logistics solution, please let me know and I will arrange a personalized viewing for you.

Cutting IT costs and complexity by aligning enterprise-wide requirements

CIOs are in a difficult position. As a recent article by Janaki Akella, Helge Buckow, and Stéphane Rey points out, "IT represents an important part of total spending—5 percent or more in some industries—and its direct contribution to revenues and profits is often difficult to assess."

The authors recommend IT leaders find significant additional reductions and efficiencies by "taking a broader look at the way they manage the IT architecture as a whole. The key to these economies is bringing business and IT leaders together in a combined effort to rationalize not only business applications and processes but also the core IT infrastructure and operations."

As anyone who has been intimately involved in IT understands, the reality is that short-term business wants and needs of individuals, divisions, and units are often addressed without full consideration to the larger requirements of the organization. While IT may design a long-term blueprint, the operational reality is that decisions often get made by divisions and business units with "relatively little regard for the impact on a company’s overall IT architecture" or the business processes than move beyond their division or unit.

The authors write: "CIOs at the corporate or division level generally do have substantial control over the core IT infrastructure components: servers, storage systems, and the associated infrastructure software. But the business applications, processes, and business model sitting atop the IT infrastructure often reflect the wants of the leaders of business units and functions, who understandably focus more on their own needs than on overall IT efficiency. Across a global company, the result is often an unwieldy, heterogeneous IT environment where incompatible (and often duplicative) hardware, applications, and processes sprout year by year, in every corner of the organization, in response to specific near-term needs....

"These patchwork systems require substantially more time and money for development, support, and maintenance—at the expense of budgets, new IT capabilities, and business innovation. At large companies, eliminating these duplications and inefficiencies can reduce IT spending by tens or hundreds of millions of dollars while improving the quality of the IT operation and the satisfaction of those who rely on it. The CIO alone, however, cannot reduce these costs; business leaders too must sponsor and participate in the transformation."

In their discussion about reducing costs and complextity, the authors mention two areas that my partners and I have also found to be of particular importance. The first is the need to develop an integrated data model (in our case, we have a common data model since our entire Supply Chain Synchronization suite is built on one data model rather than several that have been disconnected and then, later, integrated -- there are many benefits to the common data model approach). "[N]onintegrated databases greatly raise costs and result in inefficient processes, duplicative development efforts, longer times to market, business errors, and missed opportunities."

The other area of particular importance is the need to reduce interface complexity. "An IT staff can spend as much as 30 percent of its development time on applications making all of their interfaces work, largely because customized applications have so many point-to-point interfaces. Standardized interfaces, such as the enterprise service bus (ESB), can greatly ease the burden of system integration and minimize the chore of dealing with local changes." (Again, in our case we've developed our solution using SOA architecture and web services to the highest levels of cost savings while maintaining the flexibility to handle rapid change in the supply chain.)

When we talk with consultants and clients, they are often focused on the issue of customizations. My partners and I share the view articulated by Akella, Buckow, and Rey. They recommend that the focus on software customization should be in those areas that provide meaningful competitive advantage. They point out that rarely do functions like HR, finance, and accounting provide a competitive advantage in direct competition with other companies. Functions such as sales, product development, and supply chain are much better candidates for tailoring solutions that will create differentiation in the market. It should be noted that while it is very costly and time-consuming to customize most legacy ERP applications, some newer software in the supply chain and sales domains are specifically designed to overcome this limitation. Software such as our Evavi Supply Chain Synchronization Suite is designed for rapid tailoring and configuration, and enables companies to achieve market differentiation in the areas that matter.

Emerging technologies support new ways of gathering, managing, processing, and sharing information. In order to obtain the greatest benefits across the enterprise, legacy IT barriers must be removed and replaced with technologies that share common data models, provide easy data integration, and seamlessly enable planning and execution across business processes.  With an architecture in place that supports these capabilities, companies can then shape their future.

Evavi Fabric delivers the flexibility required for dynamic supply chains

During the past several weeks I've had the opportunity to take a deep dive with one of our clients into Evavi Fabric™. This client has been evaluating the difference between rigid packaged applications and custom software development to meet some supply chain needs.

Fabric is the planning and execution platform that the technology team at Evavi developed to power every Evavi solution. It includes common data models to enable the highest levels of synchronization and optimization across an extended supply chain.

Supply chain-centric businesses often need to support customer-specific processes that can not be supported by cookie-cutter ‘standard’ software applications. The attempts to customize one-size-fits-all solutions often result in ballooning IT spend, long implementation cycles, and costly maintenance.

Evavi Fabric™ is at the leading edge of a new approach to solve these problems, and the ideal platform for building synchronized supply chain applications. Fabric™ is a multi-company, multi-tenant SOA-based platform that leverages extensible business models and is packaged with proven reusable patterns and software components essential for today’s supply chain applications. Core components include: configurable business process engine, dynamic rules engine, personalization-ready portal, framework for user-level and data-level security, meta-tags, bookmarks, pro-active alerts, data synchronization components, and more.

Fabric™ enables Evavi to help clients realize measurable value and implement solutions the right way – collaboratively define requirements that precisely meet the clients’ needs; translate and render these requirements using Evavi Fabric™ solution patterns; and use a spiral tailoring approach to
configure the required functionality. This ensures that the production solution precisely meets the needs of the client, while the underlying technology helps protect their ongoing investment and reduces the total cost of ownership.

Driving down total cost of ownership while increasing flexibility

Many times traditional supply chain solutions are obsolete on the day they go-live because the deployed solutions are built on rigid technology platforms resulting in functionality that is frozen in time. The reality is that in the supply chain space collaborative business processes must regularly and rapidly adapt to meet changing demands of trading partners.

For true cost competitiveness, the supply chain space requires software that is inherently flexible and configurable and can accommodate the dynamically changing needs of markets, trading partners and the extended enterprise – as opposed to traditional ERP applications that are rigidly packaged to support one-size-fit-all practices, primarily function within the four walls of an enterprise, and do not need to be regularly modified to accommodate needs dictated by others.

Many companies have found that packaged solutions are simply too rigid to either accommodate what is unique about their supply chain or too inflexible to rapidly model changes required by trading partners. As such, they have often built their own systems – an approach that is often costly, time-consuming, and risky. For several years now software companies specializing in supply chain solutions have been trying to find the right balance between out-of-the-box functionality and a custom development.

To meet the unique needs of the supply chain space, my partners at Evavi have developed solution patterns within Evavi Fabric™. These solution patterns let companies rapidly deploy the underlying essential functionality required by most enterprises while allowing for the precise tailoring of the final solution in a cost-effective manner all within the core Evavi Fabric. This approach reduces costs and protects the investments of our clients.

The 'Right' Supply Chain

When people ask us why we started Evavi, one of the things my partners and I point to is the increasing complexity of supply chains and the inability of legacy software solutions to keep up with the pace of change. One of the main stumbling blocks to effective supply chain management has been the historic disconnect between planning and execution. When these functions are disconnected, as they are in legacy solutions, the supply chain is exposed to unnecessary risks caused by lack of visibility, lack of synchronization, and lack of optimization.

In regard to the difficulty of integrating processes and aligning incentives, the article Avoiding the Cost of Inefficiency: Coordination and Collaboration in Supply Chain Management quotes Marin Gjaja of BCG: "My suspicion is that the complexity of product-based companies where supply chain is relevant is expanding at a faster rate than information technology can keep up with. By that, I mean that the number of products and different options and customers is expanding -- say it's 100 products times 100 customers times 100 different ways of getting there. You can see that you get this multiplied effect of complexity. The tools you have to deal with it can only evolve so quickly. It will always be a very difficult challenge -- it's one of those perennial issues in management, one of those evergreen topics that you just have to stay one step ahead of."

My partners, who include the founding technologists at i2, started Evavi for this very reason. They were frustrated by the requirement to pull legacy code forward while the pace at which Internet-native technologies were maturing was exploding. They realized that these new technologies would fundamentally change the way supply chain processes would be modeled, and that the best way to influence the future was to help create it from a fresh code base capable of operating in real-time across the extended enterprise.

Our Supply Chain Synchronization suite is helping to deliver on what BCG’s Matthesen believes is the optimum answer solution: "to design a supply chain that is based on a sound strategy, ensure all parts of your supply chain -- both internally and externally -- have access to good and consistent data, and empower people to make decisions quickly. Build a supply chain that is comfortable with uncertainty and quick to react by taking down the barriers that prevent success." 

Supply Chain Excellence Is All About Providing "Transformed Solutions"

I've been working with my partners on a global supply chain solution for a company that is going through significant changes in its business. A recent interview with professor Hau L. Lee in Knowledge@Singapore Management University captured many of the ideas that we've been discussing with this client. The article helps to illustrate the importance of developing and delivering customized solutions that are responsive to the different needs of their clients. The focus is to be agile enough to rapidly meet new or unforeseen needs, and then to transform these solutions to reach out to markets that could not previously be served with legacy applications.

In the interview Lee correctly points out that "Emerging economies tend to have more inefficiencies. ... You can start building a business simply because you are able to do things faster and on a less costly basis. Down the road, the best way to defend the business is to transform it into a company that sources for and provides customised solutions." Therefore, "the more mature companies will go down the path of providing more complete solutions. As start-ups, most companies have a single product and they will want to make that well and efficiently. But mature companies must evolve for that is the way to create intimacy and stickiness with the customer, making it harder for them to switch loyalties. Once companies provide complete solutions, for example by helping customers design and manage projects, it is harder for customers to make that switch."

Lee concludes the interview by emphasizing the need to have knowledge workers who are able to use information smartly. When asked to name a future trend in the supply chain business, Lee responds, "It is not definitive but I think it needs more knowledge workers. If I can predict the trend, the knowledge worker will be important, particularly knowledge workers who are able to use information smartly. It is not just about passing information quickly. It is not just differentiation. Supply chain professionals will be knowledge workers. They will know how to design the supply chain, adapt it and see to changing needs. We need that additional layer of professionals to coordinate the process and have a macro view of things."

Supply chains require continuous transformation. To meaningfully engage in this continuous transformation requires knowledge workers, supply chain architects, agile solutions, and scalable technologies. While some legacy supply chain solutions helped to provide efficiency gains, the transformative change that Lee articulates requires a new breed of technologies that can enable entirely new business processes across the extended enterprise in real-time. This is exactly the vision that caused us to start Evavi and develop our Supply Chain Synchronization suite.

Right-sized, not Super-sized

The enterprise software market has been characterized by super-sized applications. These legacy applications are rigid and complex behemoths  -- the cost to evaluate, implement, run, and maintain is enormous. These are highly complex applications for users and technologists alike, and are not well-suited for the mid-market.

Some innovative companies like Dave Duffield’s new company Workday and Marc Benioff's Salesforce.com have set out to transform various segments of the software industry. Salesforce.com has had strong success in the CRM space, especially with small and mid-sized companies. Workday is just now getting launched with a hosted Human Capital Management solution to be followed soon by hosted Financial Management, Resource Management and Revenue Management.

Evavi is a part of this next wave of software companies working to offer “right-sized” solutions for the enterprise. With Salesforce.com focusing on CRM, and Workday focusing on HR and Financials, we are focusing on Supply Chain Synchronization. Having now built-out and deployed a complete Supply Chain Synchronization suite, we are expanding our engagements with business leaders and enterprises who have experienced first-hand the rigidity, complexity, and high costs of legacy enterprise software providers.

Evavi End-User Innovations

Personalization
Every end-user can personalize their workspace to meet their distinct work habits without requiring additional software.

Exception and Alert Management
Every user has the ability to publish, subscribe, and manage exceptions and alerts as an integrated capability of their personalized workspace.

Performance Measurement
Every user is presented with actionable information and meaningful reports in their personalized workspace without requiring bolt-on business intelligence software.

Role-based Workflows
Every user has workflows that are designed for their specific role rather than one-size-fits-all workflows.

Usability
All users, not just those with deep experience operating back office applications, can readily leverage the system.

Evavi Technology Innovations

Planning and Execution Platform
The solution unifies planning and execution business processes that traverse traditional functional boundaries, and provides real-time information by eliminating legacy data silos.

Common Data Models
Comprehensive set of meta-data models that enable real-time sharing of information between business processes.

Flexible & Extensible Models
The solution is built on models that are flexible enough to capture those elements that differentiate your business and can accommodate rapidly changing business needs.

Configurable Business Processes
Integral business process engine to configure your business workflows requirements without requiring changes to the code.

Rapid Extensibility
You can rapidly configure and extend the solution to fit your unique requirements without incurring punitive costs or risks.

Open Integration
The solution easily connects to legacy and other disparate data sources within your four walls and throughout the extended enterprise.

Evavi Innovation

Overview
We set out with an audacious vision – to reinvent enterprise supply chain management. We have built from scratch a synchronized enterprise supply chain suite that uses only the best internet-native technologies and leverages the knowledge gained from the evolution of supply chain management since the late ‘80s.

The solutions we are delivering are based on more than six years of development by some of the most creative minds in the supply chain business. Members of this team helped define the supply chain software industry in the late ‘80s and early ’90s with their pioneering work in the areas of in-memory optimization and planning. The supply chain software they architected during that time generated over $800 million in sales, generated billions in supply chain value, and launched the industry.

Supply Chain Software Reinvented
Evavi’s Supply Chain Synchronization solutions are the first to be entirely developed and delivered with Internet-native technologies. Built into the entire solution suite from the core are a planning and execution platform, flexible models, rapid extensibility, open integration, performance measurement, exception and alert management, role-based workflows, and consumer-Web usability with personalization at the fingertips of each end-user.