The software-as-a-service model continued to cast its shadow across traditional enterprise software solutions Monday with the announcement from JRG that it is launching the first on-demand supply chain planning service.
The first iteration of the service is targeted specifically at the consumer packaged goods industry where, according to JRG officials, more than 90 percent of the manufacturers still use individual Excel spreadsheets for planning, scheduling, and forecasting.
The supply chain service will consist of three parts: a factory scheduler, an enterprise planner, and a forecasting component that bases its forecasts on daily, weekly, and monthly demand.
The factory scheduler, a graphical production scheduling system, will give supply chain managers the ability to replan production multiple times per day in order to adjust to changing conditions on the factory floor and changes from the retailer. Excel scheduling models are breaking down, said George Roumeliotis, CTO at JRG. He said ,the task of integrating a half dozen or more individual spreadsheets to create a production schedule can take days.
"Monthly shipping cycles are no longer acceptable. The retailers have the power and they are demanding that manufacturers act," said Roumeliotis.
However, for many midsize manufacturers turning to an application solution from a major ERP vendor is not a cost-effective alternative.
One JRG customer, Wise Foods Inc., a US$400 million-sized manufacturer, said that they could not afford the cost of traditional ERP.
"We looked at all the major ERP vendors and JRG was about one-sixth the price," said Mike Kopetski, director of supply chain at Wise Foods.
The big retailers are one of the big drivers behind suppliers turning to more automated systems rather than relying on spreadsheets which are cumbersome and time-consuming.
"Retailers are demanding a consumption-based delivery model," said Roumeliotis.
Rather than shipping on a weekly basis, the retailers are allowing suppliers to view product levels as they come off the shelf. "The manufacturer"s job is to replenish," said Roumeliotis.
Some JRG customers are already integrated into the Wal-Mart Stores Inc. system so that the manufacturer is able to enter its own replenishment orders.
The Enterprise Planner component of the JRG on-demand solution will give manufacturers the ability to plan supply and demand dynamically across their network of manufacturing, packaging, and distribution plants.
According to Dwight Klappich, vice president for technology research at Meta Group Inc., the idea of the new demand-driven manufacturing is to increase the throughput through the manufacturing operation.
"Manufacturers want to compress the time it takes from when they buy the raw materials to when their product is sitting on the retailer"s shelf," said Klappich.
The JRG on-demand solution is available now at a flat, monthly fee.