Oracle Gives JDE More Supply Chain Planning Brains
August 18, 2009 Alex Woodie
Oracle announced last week that its complete set of supply chain planning solutions, called the Value Chain Planning suite, can now be hooked up to JD Edwards EnterpriseOne through a new automated integration mechanism. The VCP suite, which runs on Windows or Linux and require the Oracle database, is aimed at helping manufacturers and distributors to optimize various facets of supply chain activities, including demand planning, inventory management, production scheduling, and sourcing.
In an ideal world, manufacturers and distributors would make or buy as much product as they could, and worry about moving it later. But, of course, we don’t live in an ideal world, and taking that approach today would quickly result in bankruptcy. Smart companies today aim to align their production and purchasing with actual demand and market fluctuations. It’s as much art as it is science, and the target is constantly moving. But without a well-defined and repeatable method for measuring and determining demand, a company doesn’t have much of a shot of hitting its mark on an ongoing basis.
This is the realm of supply chain planning (SCP), a growing segment in the enterprise software space. According to Lenley Hensarling, Oracle’s general manager of JD Edwards and Applications Unlimited and a group vice president, the software can help a manufacturer or distributor move from a “push” strategy to a “pull” strategy.
“The whole point of deploying any of this planning software is you get closer and closer to the ups and downs of the market,” Hensarling says in an interview with IT Jungle. “If you can pull information towards you, and if you can manufacture and build based on demand signals, rather than the old model, which was ‘make as much as I can and then figure out how to sell it,’ . . . [then] you get closer and closer to being right on those curves, and that’s what driving the uptake of the model in general.”
This approach has been difficult in the current economic climate. “The thing about this downturn, it’s been jagged if you will,” Hensarling says. “It tends to spike up and go back down again, and a company has to follow those twists and turns and stay aligned with the demand signals if they expect to maintain their profitability.”
Value Chain Planning
The VCP suite is a collection of SCP products that has been cobbled together over the years. The software is composed of the Demantra products, Advanced Planning Command Center, Advanced Supply Chain Planning, Collaborative Planning, Demand Signal Repository, Global Order Promising, Inventory Optimization, Production Scheduling, Service Parts Planning, and Strategic Network Optimization.
A key benefit of using the VCP suite, Hensarling says, is “de-sensitizing your supply chain to risk, like what happens if we get back to $120 barrel oil.” It’s also about being able to shape demand for profitability, such as understanding who a company’s most profitable customers are and how to serve them. “It’s making sure you don’t over manufacture, or over-acquire if you’re a distributor. It’s really getting alignment between the demand signals coming in from your field, from the market place, and tying that back into your whole supply chain.”
Of course, SCP software isn’t new to JD Edwards customers. Back in 1999, when SCP was the next big thing, the JD Edwards company went out and bought a SCP software company called Numetrix for $80 million. That Numetrix software continues to be used by JD Edwards EnterpriseOne customers to this day, and, in fact, some Numetrix code and functionality has also been incorporated into the VCP suite. There’s also the Demantra demand planning software that Oracle obtained in 2006 and made available to EnterpriseOne two years ago.
In terms of net new functionality that JD Edwards EnterpriseOne shops didn’t have access to previously, according to Hensarling, the new integration with the VCP suite brings access to the following VCP components: Inventory Optimization; Advanced Supply Chain Planning; Collaborative Planning; and Advanced Planning Command Center.
Making the Move to VCP
Oracle isn’t forcing JD Edwards customers to move to VCP. EnterpriseOne shops can continue to use the old Numetrix software, such as Production and Distribution Planning (PDP), if they want to. The products will be supported going forward, and customers can use Numetrix products with the VCP products.
But Oracle thinks EnterpriseOne shops will be better served by making the move to the VCP suite, largely because of the new integration mechanism the company has developed, and the time and money it says customers will save when upgrading to additional components of the suite.
Previously, integrations between Oracle’s ERP and SCP or other complementary enterprise solutions were done on a point-to-point basis. Now, with the introduction of the new Process Integration Pack (PIP) for connecting VCP and EnterpriseOne, Oracle is using the Oracle Data Integration tool (a Fusion middleware component) to create repeatable integration models that should make it easier for users to adopt additional VCP components down the road.
“We used to have a point integration for Demantra, a point integration for the PDP, and a point integration for any of the other things,” Hensarling says. “Now what we have is a common extract behind all of that [with ODI]. We did a lot of work making sure the underlying data models behind VCP are rationalized, and that led to a simpler integration using ODI. Once the customer puts this integration in, they have access to a broad range of planning solutions. They can start anywhere [in the VDP suite] and decide to go anywhere else based on business need. They get to leverage that initial work.”
Hensarling thinks the big draw, functionality-wise, will be the Advanced Planning Command Center. “It’s a set of dashboards that fit across the whole spectrum of VCP products to provide a top-level console to look at your supply chain from the perspective of demand, network model, inventory, etc.,” he says. “Having that dashboard or command and control center over the top is really compelling . . . for your overall supply chain.”
Only customers running EnterpriseOne version 9.0, released last year, will have access to the additional VCP components and the PIP for streamlined integration. Oracle may make the software available for customers running the older EnterpriseOne 8.12 release if there’s enough customer demand. For more information, visit www.oracle.com.