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Software for global supply chains

Software applications should evolve to be ready for an inevitable tsunami called global supply chains, says Paddy Srinivasan

“Do or do not—there is no try,” says the Yoda but “doing” software to address the new world order of global supply chains is an inexact science at best! It doesn’t take a visionary to understand that globalisation is changing the two ends of supply chains—the demand and the supply side. Funny guy this Jedi master but it does seem like we have time travelled over the last five years when the world was shrunk, supply chains were flattened and businesses were exposed to the realities of a global resource pool. This article examines how software applications should evolve to be ready for this inevitable tsunami called the global supply chains (GSC).

GSCs are a result of offshoring, outsourcing and a renewed focus on exploiting the untapped emerging market consumers. Thomas Friedman in his latest book “The World is Flat” writes about how the playing field has been levelled and how supply chain for almost every business has become global.

The effect of the GSCs can be summed up into the following three categories:

• Supply chain entities are becoming globally distributed
• Supply chain entities are becoming increasingly autonomous
• Global supply chains have resulted in renewed focus on selling to emerging economies

Global supply chains have impacted almost every vertical industry such as healthcare, legal, financial services and manufacturing. Radiologists are receiving instant secondary diagnostics from qualified doctors in India, professionals in South Africa are preparing tax returns for their European customers and analysts in Philippines are crunching numbers for their investment banking counterparts in Wall Street, NY. Predator drones flown in central Iraq are controlled by the air base in Las Vegas and monitored by the central command in Qatar! So how does this global supply chain impact the software that is delivered in these respective industries? There are three areas in which software has to evolve to address these challenges—collaboration capabilities, software interoperability and emerging market imperatives.

Let’s take each one of these topics and dive a little deeper into what is driving the shifts and how software companies should respond.

Collaboration capabilities

For people and processes in distributed supply chains to work together, the software driving the respective businesses should collaborate and enable seamless communication. Collaboration-enabled software should have the following elements:

Team collaboration

Enterprise software should bring together people, the tasks they have to carry out and the data that is required to accomplish them. For example, when a physician is working with a patient’s diagnosis, he should be able to collaborate with a specialist with the relevant records and information in a secure way and receive feedback either in real time or asynchronously all without having to leave the context of the application.

Unified communication

Integrated communication that brings text, voice and graphics together is also becoming a requirement in many vertical solutions. In the above example, if the specialist wanted to give his opinion through a sound file, it should be received and attached to the patient’s record in the same way that an e-mail or a document would be.

Workflow

In a Product Lifecycle Management (PLM ) solution that is being used by a Tier-1 manufacturer for Boeing, chances are that their designers and engineers are probably working from many different countries and the lifecycle might span a few months of iterative design and development. This solution should have robust workflow capabilities to route, authenticate, authorise, audit, schedule and archive files, tasks and user information.

Software interoperability

Software interoperability is paramount in ensuring consistent data flow across the various entities of a supply chain. The days of monolithic ERP software are over now as companies outsource various parts of their supply chain. For instance, when a consumer products company engages with UPS to take care of logistics and shipping, the inventory software of the distribution centre should be able to transact seamlessly with the logistics company’s systems. Another example is where the general ledger module of an ERP system could be different in each of the subsidiaries but will have to roll up to the same consolidated chart of accounts.

Emerging market imperatives

In the never-ending quest to acquire new customers, companies are embarking upon a new kind of gold rush – the rush to the bottom of the pyramid. This thinking, promoted by Dr C K Prahalad of the Michigan School of business, has come to be widely accepted by strategy pundits as the next logical step for global companies. Catering to the under-served bottom 70 percent of the pyramid presents fundamental economic challenges to global companies in every industry vertical. Here are four of the necessary but not sufficient elements of software applications that can cater to the needs of getting to the bottom of the pyramid.

Low bandwidth requirements

Software serving emerging economies cannot assume high bandwidth connections. For example, a healthcare application that transmits high-resolution CT scans should also provide low bandwidth alternatives Emerging economies often have better overseas connectivity using under sea fibre optic cables and poor intra country connectivity.

Disconnected users

In emerging markets, ubiquitous connectivity is still an elixir that only a privileged few can afford making offline capabilities important. For example, in a CRM application, managing sales leads and opportunities can be done in an offline mode that can be synchronised with the server when the application connects to the network.

Security and compliance

Different countries have varying degrees of security and compliance requirements. In the US, the Sarbanes-Oxley act has made it imperative for most large corporations to ensure strict fiscal compliance. Software that caters to the requirements of a global enterprise should provide flexibility to raise or lower the bar on compliance and security.

Plug and play modules

Many a software module will be rewritten to cater to local business requirements. These range from minor modifications such as language and user interactions to major functional changes such as modifying the value added tax calculation engine of an ERP application or adding a compliance module to a healthcare application to adhere to local regulations.

To bring back this discussion into perspective, the rest of the business world has been impacted more than the software industry by the flattening of the supply chain for various reasons. One major reason is that the market for packaged software in emerging economies is an order of magnitude lower than that of developed economies. Studies show that while the market for shrinkwrapped software accounts for 45 percent of the overall software consumption in the US, it is only about 20 percent in the BRIC (Brazil, Russia, India and China) countries. This chasm will be crossed soon, the gap will be narrowed, and early signs of this change are already on the horizon with enterprises demanding that the software be “ready” to aid them in their forays into these emerging markets. The journey for software makers to cater to global supply chains has to be a short and a complete one as there are four billion people waiting to take advantage of any missteps!

The author is a Lead Program Manager in the Platform Strategy Group at Microsoft Corp in Seattle and he advises global software companies on future product and platform strategies. Paddy can be reached at paddys@microsoft.com