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1VISION http://yellurkar.ASCET.com Devdutt Yellurkar Successfully Managing Yantra Distributed Commerce

Companies are implementing collaborative supply chain assets. As a result, the enterprise is more tools in order to increase value. The ability to dispersed and extended than ever – causing manage cross-division and cross-enterprise processes is operations and processes to become dis- tributed not only across internal functional critical to the success of these initiatives. departments, but also across many inter- related external parties. Business leaders are looking outside the decade, these systems were never designed The distributed environment creates four walls of their enterprises in the search to manage commerce across today’s new strategic opportunities, but it can for increased value. Today, companies distributed processes. While inventory also be a huge barrier to supply chain speed are deploying sophisticated strategies levels have dropped consistently, and corporate efficiency. It creates two like multi-channel selling, outsourcing order-related costs have barely declined major challenges – complexity and manufacturing and distribution, vendor- in the last decade. In fact, order-related distance. In a distributed environment, managed inventory and collaborative costs are now the single largest cost in there are significantly more participants planning, , and replenishment. the supply chain, for up to 10 (touch points) required to conduct As a result, up to 60 percent of operational percent of revenue and up to 50 percent of commerce. In addition, the increased costs are affected by decisions that are total supply chain costs. But this is not distance between physical, informational, made outside the enterprise. simply a cost issue – revenue and customer and financial touch points creates gaps in Critical to the success of these initiatives satisfaction are also at risk. In today’s communication and visibility, which can is the ability to manage cross-division and ultra-competitive market, customer order slow the commerce process if not planned cross-enterprise business processes. At requests need to be met in real-time for and managed effectively. Yantra, we call this opportunity distributed and order fulfillment must be flawless. Order and inventory management is commerce. Central to distributed commerce While firms push ahead with transfor- probably the most distributed process in is aligning and coordinating complex order mational strategies, they still lack both a today’s extended enterprise, and thus a and inventory management processes clear vision and the ability to gain major barrier to efficiency. Internally, the across multiple divisions and companies. of distributed orders and inventory. To find order touches almost every function. The One company’s customer fulfillment the next source of increased value, compa- sales department needs access to sales process is a mirror of the buying company’s nies need a new generation of order and orders to work with customers. The cus- inbound supply process; it is the order that inventory management capabilities. They tomer service department needs to manage links the two and drives the process. The need to extend their processes to their trad- after the sale. The marketing department better integrated the two companies’ ing partners in real-time to coordinate and needs to evaluate total demand. The opera- processes, the greater the efficiencies that manage distributed commerce throughout tions and purchasing departments need can be realized. the entire lifecycle. access to sales and purchase orders to man- The opportunity is compelling. age fulfillment and supply. needs Companies that create real-time cross- Today’s Commerce Is to know what to invoice or to pay. division and cross-enterprise business Distributed Commerce Externally, customers need visibility and processes can have dramatic results: With the rise of global partnering, out- access to orders, availability, and status. revenue increases of up to 3 percent; order sourcing, joint ventures, and strategic sup- Suppliers need to collaborate on purchase and inventory operational savings of up to plier relationships, firms depend on tight orders. Outsourcing partners need to be inte- 35 percent; inventory reductions of up to 15 with others to drive value- grated. Financial services and value-added percent; improved supply chain velocity creation, satisfy customers, and optimize service providers must be incorporated. and business agility. Yet, Global 2000 com- panies are finding it difficult to do. Despite Devdutt Yellurkar founded Yantra in 1995. Under his guidance, the company has evolved into the significant investments made in ERP one of the emerging leaders in the application field. Yantra provides enterprise and supply chain management in the last software that gives companies control over distributed orders and inventory.

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Distributed Management Is capabilities to resolve a problem once The Real Benefits at the Core of Efficiency it is discovered? of Distributed Management According to AMR Research, distributed • Are they managing each order individ- True distributed order and inventory order management is the most strategic ually, or “managing by exception?” management systems provide the essential application in the supply chain today. It is • Is inventory sitting idle because the capabilities must have to as important to value creation as customer right people cannot “see” the appropri- gain control of extended commerce relationship management and supply chain ate orders or customer demand quickly processes and create new shareholder management, because it is the bridge enough? Can the company even “see” value. The benefits of distributed manage- between the two – it synchronizes supply its own inventory across divisions? ment include: and demand. More importantly, it is Despite huge IT investments, companies • Increased revenues of one to three also the bridge between you and your continue to struggle with these issues, percent, from increases in order fill customers, and you and your suppliers. because traditional enterprise order rates, cross-selling/up-selling across With a robust, enterprise-wide distrib- management systems were designed to all channels, order frequency, and uted order and inventory management manage pre-defined business processes order sizes platform, companies can present a single that generally existed within a single • Improved order and inventory face to customers and suppliers. All critical business entity. They were never built for operational costs from 30 to 35 per- participants gain access and visibility to orders and inventory, closing the Each time they needed to deal with a new process, information gaps inherent in distributed commerce environments. This enables a a new system or software was installed. As a step-change improvement in coordination, result, silos of disparate, disconnected information speed, and efficiency throughout the extended enterprise. exist throughout the enterprise. Consider the commerce capabilities that are described in Figure 1. Revenue is at risk, distributed commerce environments. This cent due to reductions in order error costs go up, and productivity is lost when is why so many companies use multiple rates and change orders, manual order the critical value chain participants don’t order management systems. Each time they allocation and sourcing, exceptions have real-time visibility and access to needed to deal with a new process, a new processing and delays, and fulfillment orders and inventory. system or software was installed. As a and inventory handling costs result, silos of disparate, disconnected • Reduced inventory from 10 to 15 percent Traditional Systems Aren’t Built order and inventory information exist • Increased business velocity and for Distributed Management throughout the enterprise. Even worse, key flexibility, from the improved ability New capabilities are needed to extend tra- customers, suppliers, and partners cannot to quickly add and remove new ditional order and inventory management interface with these companies to close product or service offerings, deploy systems into today’s distributed commerce obvious efficiency gaps. new business opportunities with environments. Most companies already Companies use a range of ERP or less risk, and to leverage brands have order and inventory management sys- custom-built systems to manage orders across channels tems – probably many of them. Many also and inventory. These systems were built In addition to these benefits, distributed have distributed order and inventory net- with two primary goals – streamline order and inventory management systems works in place. But, do they, their cus- processes within a business unit or division can increase the value of existing enterprise tomers, their suppliers, and their partners and serve as the system of record for resource planning and supply chain have control over the process? financial transactions. These are rigid applications. Because these systems extend • Are order and inventory processes systems that take a lot of time, money, existing enterprise applications – rather integrated with both customers and and people to configure and maintain. In than replace them – companies can build partners? many cases, the business must accept the on their existing infrastructure to quickly • Does everyone in the value chain have core process built into the system. In other enable the platform to develop new a single, real-time view? words, the system determines the business business strategies.

• Does every participant in more on the Web process instead of the desired the order process know being Unique Capabilities Are Read more about integrated instantly when, where, modeling in “Transportation E- enhanced by the system. As a Required to Realize Benefits and why there is a prob- Commerce Collaboration and result, the system drives strat- Global 2000 companies must have certain lem with orders or inven- Confusion” by Ted Prince in this egy instead of strategy driving capabilities to effectively manage the tory? Do they have the book and at prince.ASCET.com the system. complexity of distributed commerce:

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Bi-Directional Distributed have global inventory visibility and the power Integrated Business Order Management to manage, redirect, and replenish inventory Process Modeling Because all order processes involve a buyer across the distributed environment. Distributed commerce networks are by and seller, it is impossible to manage the definition many-to-many. To manage these total order process unless everyone can Supply Chain networks, tools must be available to model view the order from all sides. A truly dis- Event Management the many business processes and relation- tributed commerce platform manages all Complete SCEM functionality monitors ships. Scenario and workflow management order types – including distributed sales activities across the extended order and is required to model and test multiple busi- orders, purchase orders, service orders, and inventory network, providing managers and ness process with many touch points. returns orders. all critical participants with prioritized Roles-based participant management is needed to define network participants and manage issues such as security, access, and Commerce Capacity Critical Enabler the roles that each participant will have.

• Sell across multiple channels and partners • Centralized order aggregation across channels System of Process vs. • Fulfill products from multiple sources • Dynamic order allocation System of Record Traditional systems like ERP serve as the sys- • Service customers flawlessly after the sale • Reverse and service parts management tem of financial record for order and inven- • Collaborate with strategic suppliers on • Order and inventory access and visibility tory transactions, yet they lack the capabil- planned and firm orders ity to be configured and re-configured • Global vendor visibility of enterprise around many different, interrelated order • Outsource manufacturing, distribution, or inventory and inventory processes. Process manage- service ment is critical to unlocking the strategic • Deploy vendor-managed inventory (VMI) value possible in the order and inventory processes. The distributed commerce solu- Figure 1 The importance of seamless distributed order and inventory management to commerce capabilities. tion serves as the system of process for all critical order and inventory flows. In most cases, the distributed commerce system Traditional Order and Inventory Mgmt Distributed Order and Inventory Mgmt complements and extends these existing sys- tems of record, but it can also serve as the • Single division, single process • Multi-division, multi-enterprise, multi-process system of record itself, if deemed necessary. • Single-tier order fulfillment • Multi-tier order fulfillment High Interoperability • Rigid processes • Highly configurable processes Because a distributed order and inventory must “talk” to many • Manage order by order • Manage by exception other types of systems, including systems • Low interoperability with other systems • High interoperability owned by external partners, it must inte- grate easily across systems from many ven- • System of record • System of process or record dors. This requires an open architecture • One-to-many data model • Distributed, many-to-many data model that provides high interoperability with other critical enterprise systems, such as Figure 2 The different qualities of traditional and distributed order and inventory management. ERP, CRM, and SCM. Be wary of ERP-based solutions that claim to be distributed. A distributed order and inventory system Distributed Inventory real-time alerts about where, when, and why must work across a range of systems, usu- Management Integration a problem may be occurring – allowing ally from multiple ERP software vendors. The order and inventory processes are inex- management by exception. On its own, tricably linked together, but many companies SCEM provides visibility, but to be effective Distributed Technology Platform struggle to coordinate them. Most application in a distributed commerce environment, An effective distributed commerce platform suites today have been bolted together from SCEM must be integrated with distributed is built upon a distributed data model that various application vendors, making this order and inventory management. This supports n-tier, many-to-many relationships. tight integration very difficult. Every partici- gives managers the visibility and the tools to ERP systems lack this capability and can pant in a specific supply chain process must act on problems in real time. only support one-to-many relationships.

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Immediate Value Opportunities outsourcing partners such as contract Until now, companies have had to live with manufacturers or 3PLs the challenges of distributed commerce. • Inventory management programs Order and inventory costs remain high such as vendor-managed inventory because firms have not had a solution to the problems of today’s distributed Characteristics of some of the problems environment. Given that complexity and that could arise might be: distance are the primary barriers to value, • Poor customer or supplier satisfaction the biggest potential is usually within the • High manual involvement most distributed and typically the most • High inventory levels strategic order and inventory processes. • Poor visibility of orders, inventory and Depending on the industry, these order events (i.e., problems) processes may have the following charac- • High order cycle times teristics that epitomize the complexity of • Multiple, disparate systems required the modern business environment: to access order and inventory data • High volume sales order management across multiple channels, resellers, Key Questions to Ask and fulfillment sources It’s important to make sure that you ask the • High volume service orders and/or right questions before you begin. These returns orders questions include: • Highly complex sales or purchase • Can these processes be managed more orders (e.g., bundled offerings of efficiently and effectively? products fulfilled from many sources) • How tightly are the business processes • Multi-stage, multi-tier order processes linked to my customers and suppliers? – orders that must be fulfilled in • How dispersed is the critical order and stages, and potentially down several inventory data that is needed to drive tiers in the supply chain, such as in a critical decisions and activities? build-to-order environment • How can my company differentiate • Direct materials purchasing that itself from competitors? involves many suppliers and high lev- Finding the right answers to these questions els of collaboration and change orders is the first step to realizing value from the • Supply management that includes distributed management environment. I

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