Acacia Technologies says small and medium sized companies are drowning in the supply chain costs being forced on them by ever more demanding customers. Their salvation, claims the Chicago- based subsidiary of Computer Associates International Inc, are the enhanced Advanced Planning and Scheduling features in the latest versions of its AS/400-based PRMS enterprise resource planning, and BOSS warehouse automation packages.
According to Vincent Smyth, Acacia’s UK general manager, major players in the automotive, pharmaceutical, retail, and electronics sectors are increasingly using their market clout to reduce their fixed costs, by driving them down the supply chain to their materials and services suppliers. Effectively, Smyth says, these suppliers are being forced to take responsibility for the warehousing, inventory management, and even the repeat ordering of their customers.
From a systems point of view, Acacia argues that this trend means most supply change management systems in use at smaller companies are no longer appropriate. People tend to still talk about supply chains, but that’s looking at the industry from behind. We believe that businesses are driven by demand, not by supply. It is now all about managing the ‘demand’ chain he said.
To meet this changing requirement, Acacia has added new modules covering activities such as vendor managed inventory, consignment inventory, self-billing/evaluated receipts and consolidated invoicing to PRMS 9.0, the latest version of its core ERP product. It has also added new assembly management, proactive replenishment planning, resource reporting and activity tracking, and enhanced RF receiving capabilities to the new Warehouse BOSS 6.0 package.
Mike Deighton, an Acacia industry consultant, said the chief purpose of the new application modules is to help users move from a build what you haven’t got paradigm, to a build what customers want model. This is a clear contrast with established finite resource planning practices, such as Kan-Ban and JIT (just-in-time manufacturing), which prompt suppliers to produce more goods or materials as inventory falls below a prescribed level. These approaches leave suppliers vulnerable to errors, such as misdirected orders, breakages or theft, which may spark new production orders, regardless of whether they actually reflect real customer demand.
Acacia’s Smyth claims that the eradication of these kinds of wasteful practices is essential if small and medium sized suppliers wish to stay profitable, while still responding to customer demand. No pricing was released for the new packages, but Smyth said companies that seriously wanted to tackle demand chain/supply chain issues, should expect to budget around 1% of revenue for new systems, which is still cheaper than the cost of integrating advanced planning and scheduling with existing systems, he said.
