White paper itelligence

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Le CXP copyright, 2014 1

SCM SOFTWARE: CAN THEY MATCH THE PRESENT DAY

CHALLENGES? Written by Dominique Dupuis

Research Director, le CXP

In partnership with

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SCM software: is it capable of meeting today's challenges?

CONTENTS

1 - INTRODUCTION

2 - OVERVIEW 3

3 - METHODOLOGY & PARTICIPANTS 4

4 - THE PARTICIPANTS' LOGISTICAL ACTIVITIES 5

Partial outsourcing of logistical activities 5

Largely international logistical activities 6

Significant e-commerce activities 6

Increasingly cross-channel logistics 7

5 - DETAILED ANALYSIS 8

Challenges 8

The impact of changing consumption methods 11

Challenges relating to regulations 12

The Supply Chain Information System 13

Is the Information System equal to current requirements? 16

Collaboration 19

Investment projects 21

6 - CONCLUSION 25

1 - INTRODUCTION

In an ever-changing world, supply chains are constantly required to adapt and face new challenges. A

large number of factors are taken into consideration, both for logistical organisation decisions and

relating operational management: changes in supply sources, market volatility, changes in

consumption habits and consumer requirements, regulatory changes, etc.

Based on proven solutions available on the market, companies have built up an information system

now considered mature. Do current solutions meet the increasing need for change and do they allow

for sufficient flexibility? In a nutshell, are they capable of meeting the challenges faced by companies

nowadays?

This document presents the results of the study "Supply Chain Management software: is it capable of

meeting today's challenges?", conducted in 2014 by le CXP and Supply Chain Magazine.

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planning

digitalisation

SaaS

regulations

collaboration

BI solution

WMS

2 - OVERVIEW

1 IT CONTRIBUTION TO SC OBJECTIVES

For 83% of participants, it is important and

even essential

48% have increased their budget for the

deployment of new software

91% consider relevant for

collaborative solutions, 76% for TMS

2 BEING MORE FLEXIBLE IMPROVING COLLABORATION

83% are satisfied with their flow management and

monitoring solution

33% are fitted with a flow management solution

Twice as many participants fitted with collaborative

solutions are satisfied with the

3 REDUCING COSTS

It is a strategic choice for 53% of the participants

64% are fitted with a to measure them

4 OPTIMISING WAREHOUSES

It is an important and even strategic choice for 86% of the

participants

70% are fitted with a

67% are satisfied with the services provided by their WMS

5 TRACKING PRODUCTS

For 56% of the participants, at least one of the

following is important or strategic:

- the information provided to the end customer,

- the environmental labelling of consumer products,

- the REACH regulation.

6 SPECIFIC CHALLENGES

Industrial businesses: optimising thanks to enhanced

Distributors: facing the society's need for

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31

22

21

36

Fewer than 250

From 250 to 999

From 1,000 to 5,000

More than 5,000 employees

Distribution according to company size (n=110)

12

11

9

8

7

7

6

6

5

4

4

3

3

3

2

1

1

Multi-activity log. service …

Agri-foods

Retail

Other industrial business …

Wholesale

Mass distribution

Chemistry/Pharmaceuticals

Metalworking industry

Mechanical industry

Automotive industry

Other industries

Transport service provider

Services

Energy/Construction work

Warehouse service …

Textiles

High Tech

Business lines

3 - METHODOLOGY & PARTICIPANTS

The study "Supply Chain Management software: is it capable of meeting today's challenges?" was

conducted between April and May 2014 with the help of user companies, based on an online

questionnaire. The broached topics were the following:

Their activity's logistical characteristics: import/export flow management, e-commerce

logistics, outsourcing supply chain operations,

Challenges relating to Supply Chain Management,

Collaboration: types of collaboration implemented, satisfaction level, difficulties faced,

The Supply Chain Information System: components, satisfaction with the provided services,

Saas adoption and projects,

Changes regarding the budget and its components.

The questionnaire collected 110 validated responses after data cleansing.

Participating companies were of various sizes. For certain questions, their choices made it clear that answers varied greatly according to company size.

Numerous business lines are represented,

thus showing a wide variety of contexts.

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47

23

10

4

4

4

Logistics or SC Director

IT Director

General Manager

Purchasing Director

Industrial Director

Other

Departments

Internal60%

Subcontracted6%

Mixed35%

Logistical management methods (n=109)

Lastly, a large proportion of participants work in

Logistics or Supply Chain Management.

Professionals such as those working in

Purchasing, Industrial Management and

General Management represent a vast

majority.

4 - THE PARTICIPANTS' LOGISTICAL ACTIVITIES

In addition to extremely varied business lines,

each participant stated their role in the supply

chain. Industrial shippers are the most

represented but distributors and 3PL providers

are also present. The responses, analysed for

each role individually, show that these

stakeholders' vision and situation can

sometimes vary greatly.

PARTIAL OUTSOURCING OF LOGISTICAL ACTIVITIES

This chart shows that only very few companies

(6%) completely subcontracted their logistical

operations, and a large majority (60%) do not

subcontract at all. This is especially true for 3PL

providers, 74% of which manage all their

operations internally. On the other hand,

industrial businesses tend towards total or

partial subcontracting (47%).

- Industry: 53%, - Distribution: 62%, - 3PL: 74% - <250 employees: 80%

57

29

24

Industrial business/shipper

Trade / Distribution

Logictical service provider / Carrier

Distribution according to the participant's role (n=110)

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95% 90% 87%96%

76%88%

Industrial businesses (n=56)

Distributors (n=29) Logisticians for their customers (n=24)

International logistics: % of participants whose activity revolves around Import or Export

Import Export

19%

60%

30%

2%

7%

13%

Industrial businesses (n=57)

Distributors (n=30) Logisticians for their customers (n=23)

E-commerce activities according to the participants' role

Yes Pending

15%

49%5%

2%

<1 000 (n=40) >1 000 (n=47)

E-commerce activity for industrial loaders ordistributors according to their size

Yes Pending

MOSTLY INTERNATIONAL LOGISTICAL ACTIVITIES

A very high proportion of participants

manage international logistical activities,

that relate either to import or export.

Even though they are less concerned than

industrial businesses, over three quarters

(76%) of distributors stated that they

managed export activities.

SIGNIFICANT E-COMMERCE ACTIVITIES

E-commerce is of course mostly covered by

distributors (60% of them have an e-

commerce activity) but 19% of industrial

participants are also concerned. As for 3PL

providers, 30% of them manage e-

commerce logistical flows for their

customers and 13% of them have launched

projects in this field, thus proving their

customers' desire to support them during

this change.

This e-commerce activity within our panel is

much more developed for bigger companies

that count more than 1,000 employees

(49% compared to 15%).

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Entirelypooled

38%

Partiallypooled

44%

Separated18%

Logistical pooling of multi-channel sales activities (n=50)

INCREASINGLY CROSS-CHANNEL LOGISTICS

Companies that manage several sales

channels were asked how these activities'

various logistical operations were

managed. We can see here that a small

proportion of participants (18%) manage

these operations separately. Conversely,

38% of the participants resort to the

complete pooling of these operations,

more so for distributors (62%) and

companies that count fewer than 1,000

employees (55%), whereas fewer industrial

businesses and companies that count more

than 1,000 employees completely pool

these types of operations. Pooling thus

appears to be widely used, especially when

each channel's volumes do not reach the

required critical mass.

- Industry: 20%, - Distribution: 62%, - <1,000 employees: 55%

- >1 000 employees: 25%

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5 - DETAILED ANALYSIS

CHALLENGES

Four challenges have been identified as important from a strategic point of view by over 80% of

the participants, regardless of their role within the supply chain. Two of them are "standard" and

will no doubt carry on in the future: warehouse optimisation (strategic for 71% of 3PL providers)

and cost reduction (strategic for 69% of distributors). The importance granted to the other two is

more recent: Supply Chain flexibility (important for 89% of the participants) and reduced product

availability deadlines for end customers.

Depending on the participants' role, the challenges faced are also quite varied. Industrial

businesses have pointed out the issue of scheduling in order to optimise operations. Distributors

have identified the need to ensure economic performances, as well as face the increasing

digitalisation of society. Lastly, 3PL providers face the issue of operational performance and

customer requirements.

Based on a list of suggested challenges, each participant stated the level of importance granted by

their company, on a scale from 0 to 3:

0: not important

1: not very important

2: important

3: is a strategic focus point for our company.

In the table below, and for each role, the flag is used to identify the challenges that were

considered strategic by over 50% of the participants, whereas the symbol identifies the

challenges that were declared important or strategic by over 80% of the participants (and strategic

by less than 50% of the participants).

We can see that the first four challenges that concern all three roles are the following:

In addition, each role has its own specific challenges:

- industrial businesses: optimising demand planning,

- distributors: reducing stock-outs and developing consumption methods,

- 3PL providers: optimising transport operations and developing regulations.

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More specifically, the figures that represent the first four challenges in this table are as follows:

Industrial

businesses Distributors 3PL providers Overall

Imp. /Strat. Imp. /Strat. Imp. /Strat. Imp. /Strat.

Optimising warehouse management 54%/29% 43%/50% 21%/71% 43%/43%

Reducing Supply Chain costs 33%/50% 31%/69% 42%/42% 35%/53%

Supply Chain flexibility 56%/29% 68%/25% 36%/59% 55% + 34% =

89%

Reducing product availability deadlines for end customers

36%/46% 38%/55% 42%/46% 37%/49%

These four challenges concern all three roles even though each role also has its own personal

challenges. These four challenges are "standard" and will no doubt carry on in the future: warehouse

optimisation and cost reduction, as well as more recent challenges (in terms of the important

granted to them by numerous stakeholders): flexibility and reduced deadlines.

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If we look at each role, the top 4 most strategic challenges include two of these four common

challenges.

For industrial businesses, optimising demand planning comes in first, ahead of

reduced stock-outs,

reduced Supply Chain costs,

reduced product availability deadlines for end customers.

Grouping the optimisation of demand planning with the three other items is quite interesting here:

demand planning is obviously not an objective as such and these results help us make the connection

and consider that the objective resulting from the optimisation of demand planning concerns stocks

and costs, which is in fact logical. Should this connection be extended to reducing deadlines?

For distributors, stock-out reduction comes in first, ahead of

reduced Supply Chain costs,

responding to the development of consumption/distribution methods,

reduced product availability deadlines for end customers.

For distributors, two sub-groups can be distinguished. The first concerns the Supply Chain's economic

performance and the second marks the impact of the enhanced need for digitalisation, which of

course affects distributors more than anyone. This digitalisation entails a change in consumption

methods - via websites and mobile applications - and leads to speedier operations, or more

specifically requirements for reduced time between the desire to purchase a product and its

availability. Amazon has even announced its project to send packages before the purchaser has even

confirmed the order. This announcement, even if it is only a publicity stunt, says a great deal about

the market's current challenges.

For logistical service providers, warehouse management optimisation comes in first

Supply Chain flexibility,

transport operation optimisation,

compliance with regulations.

Supply Chain management is at the heart of a logistical service provider's activities, thus giving it all

its importance. Operational performance comes in first, with its various components including

flexibility which is becoming a more and more recurring requirement on behalf of purchasers. The

4th challenge is compliance with regulations, which was a topical concern during the eco-tax project

for heavy goods vehicles in France.

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THE IMPACT OF CHANGING CONSUMPTION METHODS

The most important consequence - the development of customer relations - concerns at least 60%

of the participants in each of the Supply Chain's roles. Other consequences include the

development of e-commerce activities (58% of distributors) and cross-channel activities (52% of

distributors), and lastly the increased launch frequency of new products (60% of industrial

businesses and 52% of distributors). These elements naturally lead to deep-set organisational

changes in companies.

Digitalisation within our society especially concerns consumption methods, which are now multi-

channel and increasingly mobile. Facing these changes is a true challenge that was described as

strategic by 59% of the distributor participants. Our questionnaire made it possible to detail this

point by analysing the consequences for the Supply Chain.

The chart below shows that these consequences are mostly shared by all roles, even though the

intensity of the impact is not always identical. Therefore, the most important consequence that

transpires here - the development of customer relations - concerns all three roles but proportionally-

speaking industrial businesses were most concerned. Distributors are the most deeply affected but

may have already adapted their organisation so the challenge is less cumbersome. All these elements

are central to 3PL providers, which undoubtedly reflects their panel of customers made up of

distributors and industrial businesses. They were the ones who noticed a change in customer

relations most, either because their customers seemed to face a real challenge or because they are

now directly concerned?

80%

20%

60%

18%

29%

47%

4%

5%

61%

58%

52%

52%

35%

13%

10%

3%

83%

43%

52%

35%

30%

35%

4%

9%

Development of customer relationsto respond to customer requirements

Enhanced e-commerce

Increased launch frequencyfor new products

Enhanced cross-channel commerce

Increasing the use of promotions

Increased product customisation

Enhanced mobile commerce

The development of consumption methodshas no effect on our Supply Chain

Main consequences of the development of consumption methods Strategic challenge for 59% of distributors

(n=57 industrial businesses, 31 distributors and 23 logisticians)

Industrial businesses

Distributors

Logisticians

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The second element for distributors is the development of e-commerce activities, which naturally

does not concern industrial businesses as much, although 20% of them were in fact affected (see

above "Significant e-commerce activities"). Elements concerning the development of cross-channel

commerce are fairly similar.

The second element for industrial businesses is the increased launch frequency of new products,

which was also identified by +50% of distributors. It is associated with product customisation and is

an important consequence that, just like for the development of e-commerce activities, entails deep-

set organisational changes in companies. The digital transformation of companies, that affects the

products and services provided, as well as the rise of Internet orders will undoubtedly reinforce this

point in the years to come.

CHALLENGES RELATING TO REGULATIONS

No doubt influenced by the news at the time of the study, the eco-tax clearly appears to be the

regulation that poses the most important challenge. The perception of all other regulations

depends on the participants' role, but it can be noted that regulations that require product

traceability throughout the Supply Chain process are considered as important or strategic by over

half the participants (56%): the information provided to the end customer, environmental labelling

for consumer products or the REACH regulation.

As our study was conducted in April 2014, the eco-tax for heavy goods vehicles in France was a

topical subject, which no doubt influenced the results (declaration of the minister for ecology on 3

April to the parliamentary committee on 30 April). It is therefore not surprising that the eco-tax was

identified as being an important and even strategic challenge by most participants.

Another topical subject - not as recent but more dramatic - can be associated to the second

regulation identified in this study: the information provided to the end customer. Indeed, in April

2013 a building in Bangladesh collapsed, causing the death of over 1,000 workers, thus highlighting

the working conditions of those who manufactured the products consumed by Western countries.

Also in 2013, the horse meat scandal highlighted the lack of information in the agri-food sector.

Therefore, whether in response to regulation or to market requirements, consumer information

concerning the manufacturing conditions of the products they purchase has become a challenge for

everyone.

51%

51%

35%

49%

20%

68%

46%

48%

23%

32%

61%

29%

11%

26%

24%

Eco-tax for heavy goods vehicles

Information provided to the end customer

Environmental labelling of consumer products

REACH regulation

WEEE regulation

Challenges relating to regulationsPriority challenge for 54% of logisticians

(n=51 industrial businesses, 28 distributors and 23 logisticians)


Distributors

Logisticians

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As a commitment to the environmental french government initiative on raising consumer awareness

to the products' environmental impact, the environmental labelling of consumer products appears in

3rd position, showing us how difficult it has been for companies to implement it.

The last two elements in the ranking are regulations in force that of course require the necessary

provisions. However, the REACH regulation has not yet been fully implemented as it is scheduled

until 2018 and its goal of substituting the most dangerous chemical products is still a real challenge

for the industrial businesses concerned. This challenge also concerns distributors - although indirectly

- as they must be capable of informing consumers of the substances used in their products.

Result analyses also showed that for over half of the participants (56%), at least one of these three

elements were considered important or strategic for their company: end consumer information,

environmental labelling for consumer products or the REACH regulation. Their common feature is the

"product" traceability requirement throughout the supply chain process, from the first supplier to

the end consumer.

THE SUPPLY CHAIN INFORMATION SYSTEM

The Supply Chain Information System's contribution is well-perceived by the participants, as 83%

consider it to be important or even essential. Its components namely include ERP, widely used by

industrial businesses for their logistical operations. However, WMS appears to be the most

deployed Supply Chain management software package, with a possession rate of 85% for

distributors and 3PL providers. On the other hand, TMS is well-established with 3PL providers but

has only been able to convince a small number of distributors and industrial businesses. Decision-

making tools (BI) are also frequently used by 65% of the participants.

One of the general questions dealt with how the Information System's contribution was perceived

when it came to reaching the company's Supply Chain objectives. The answers below clearly show

the importance of the Information System, deemed essential by 64% of the participants: 55% of CIOs

and 66% of non-CIOs!

64%

20%

10%

6%

The contribution is essential

The contribution is important

There is a connectionbetween the IS and the Supply Chain's

objectives

There is no connectionbetween the IS and the Supply Chain's

objectives

IS's contribution to the completion of SC objectives (n=96)

83%

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A detailed analysis of these results shows that IT contribution is mostly perceived as important or

essential in the biggest companies and by 3PL providers. Is this indicative of the importance of the

Supply Chain, at the heart of a 3PL provider's activity but less important for an industrial business

which is more focused on its manufacturing activities?

Companies were also required to list the software packages used for Supply Chain management

purposes. Below are the most used software packages as listed by the participating companies, as

well as a 2nd chart that represents less deployed software packages.

21%

19%

50%

69%

Fewer than 250

employees

More than 250

employees

IS contribution (n=28 "fewer than 250 employees" and 68 "more than 250")

Important Essential

18%

27%

14%

53%

65%

86%


Distributors

Logisticians

IS contribution (n = 49 industrial businesses, 26 distributors and 21

logisticians)

Important Essential

55%

82%

61%59%

49%

64%

85%

65%70%

42%

21%

8%

85%

42%

65%

20%

50%

31%

WMS ERP BI Forecasts Collaboration portal

Planning

Possession rate according to the participant's role - part I (n= 41 industrial businesses, 25 distributors and 18 logisticians)

Industrial businesses Distributors Logisticians

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ERPs seem to be the most used software packages for Supply Chain management, particularly for

industrial businesses. Industrial businesses are in fact those who use WMSs (Warehouse

Management System) the least for the management of their warehouses. In all likelihood, this is

because for most industrial businesses, warehouses are quite simply organised and ERP warehouse

management modules suffice.

Conversely, WMS possession rate for distributors and 3PL providers is high - 85% - and is clearly the

most used software package for Supply Chain management. On the other hand, TMS is well-

established with 3PL providers but has not always been able to convince distributors and industrial

businesses.

Decision-making tools (BI) are also frequently used by all participants, thus showing that the

development of these solutions in companies over the last few years also concerns Supply Chain

processes.

For other software package families, it can be noted that industrial businesses often use forecast and

planning solutions (that include APS modules), whereas distributors use them much less. However,

they also need forecasts in order to plan their orders and reduce the amount of unsold items and

stock-outs as much as possible.

As for flow management and monitoring solutions, they have recently attracted a great deal of

media coverage and a third of all participants claim they have one. They can either complement or

compete against forecast/planning solutions and are based on the fact that even the best forecasts

can be flawed and that executive operations must thus be managed and resources must be available

to react quickly to events that are not necessarily malfunctions.

Lastly, concerning collaboration, only very few distributors are equipped with appropriate software

solutions. Is that because they are at the end of the chain? The purpose of these collaboration

solutions is however to manage coordination between stakeholders - from suppliers anywhere in the

world right up to the point of sale - by sharing forecast data and/or sharing information concerning

logistical execution operations, with a view to improving each stakeholder's responsiveness and thus

Supply Chain flexibility, which was one of the main challenges listed above.

24%29%

40%

22%18%

28%32%

5%

32%

5%

78%

39%

0% 0%

21%

TMS Flow management S&OP Customer behaviour analysis

"Many to many"collaboration

Possession rate according to the participant's role - part II(n= 41 industrial businesses, 25 distributors and 18 logisticians)

Industrial businesses Distributors Logisticians

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62%

57%

54%

43%

36%

17%

The amount of investment requiredfor the Information System

Resistance to change

Lack of internalskills

Lack of recognition ofthe Supply Chain by the GM

Insufficient budget

Available software packagesare irrelevant

The main difficulties faced concerning future Supply Chain processes (n=95)

IS THE INFORMATION SYSTEM EQUAL TO CURRENT REQUIREMENTS?

An initial response was provided directly by the participants, only 17% of which selected "The

Supply Chain Management software packages available on the market are not appropriate".

However, it can also be noted that 62% selected "The amount of investment required for the

Information System" as a difficulty.

In addition, data analysis for various questions concerning the 4 main challenges earlier identified

helped us conclude on the following.

- A large majority (85%) of participants for whom warehouse optimisation was an important

challenge are equipped with a WMS and about two thirds (67%) are satisfied with the services

it provides.

- Fewer of the participants (64%) who consider cost reduction to be an important challenge -

meaning these costs needs to be measured and analysed - are equipped with a BI tool, and

about two thirds (68%) are satisfied with the services provided by their BI solution.

- Amongst the participants who consider Supply Chain flexibility to be an important challenge,

one third is equipped with a flow management and monitoring solution, with a good

satisfaction rate of 83%. In addition, those for whom the challenge is strategic are 1.5 times

more equipped with "many to many" collaborative solutions and TMSs than the panel's

average, thus meaning the stakeholders equipped themselves so they could consider the

movement of goods in an extensive Supply Chain.

- The analysis shows that participants for whom reduced product availability deadlines is a

strategic challenge are more equipped with collaboration solutions: their possession rate is

25% higher than the panel's average and their satisfaction rate regarding the services provided

is 75%.

In an attempt to answer the question "Is the Information System equal to current

requirements", several answers collected during this study can be considered. Challenges, equipment

choices and satisfaction levels declared by the participants regarding the services provided by the

software packages, or even the main difficulties faced concerning future Supply Chain processes.

Regarding this last point, it can be

noted that only 17% of the

participants selected "The Supply

Chain Management software

packages available on the market

are not appropriate". Conversely,

the main difficulty faced does in fact

concern our topic at hand: "The

amount of investment required for

the Information System" was

identified by 62% of the participants

as being an important difficulty.

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If we now turn to warehouse management optimisation, one of the four challenges that concern all

three roles (see above, section on challenges), it can be noted that:

- It is an important or strategic challenge for 86% of the participants

• 93% of distributors

• 92% of 3PL providers (strategic for 71%)

• 83% of industrial businesses

- 84% of them consider IT contribution to be essential or important (63% essential)

- 70% of them are fitted with a WMS (Warehouse Management System) and 14% intend to

purchase one

- Among the latter, 67% are satisfied and even highly satisfied with the services provided by

their WMS

Thanks to this information, it can be said that:

- The need for a warehouse management software package for optimised warehouse

management is shared by a vast majority of the participants. The 15% who do not currently

have a WMS and do not intend to purchase one are the only ones who do not share this

point of view. These participants, opposed to the use of a WMS, however consider that IT

contribution is essential but do not yet seem to have found a viable solution given the

market's available software packages.

- A two-thirds majority of users are satisfied with the services provided by their WMS, which

can also be read the other way round: one third of all users are dissatisfied, which is not a

very good score even though none were highly dissatisfied

Concerning the reduction of Supply Chain costs, it can be noted that:


• 100% of distributors! (strategic for 69%)

• 84% of 3PL providers



- 64% of them are fitted with a reporting/Business Intelligence tool and 16% intend to

purchase one


their reporting/Business Intelligence tool

Thanks to this information, it can be said that:

- The need for a reporting tool - that makes cost indicators available thus allowing for cost

reduction - is shared by a large majority. The 20% of participants who do not currently have

one and do not intend to purchase one are the only ones who do not share this point of

view. They however consider that IT contribution is essential. They no doubt use another

type of IT solution to measure costs, either in Excel, using an operational software package or

thanks to specific developments.

- The satisfaction level is similar to WMSs and entailed the same comments.

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We associated Supply Chain flexibility with the flow management and monitoring system. Here are

the elements:


• 95% of 3PL providers (strategic for 59%)




- 33% of them are fitted with a flow management and monitoring system and 11% intend to

purchase one


their flow management and monitoring system

This profile is rather different to the previous two, with a possession rate that is almost halved (33%)

but with a much higher satisfaction rate (more than 4/5 compared to 2/3 previously). It can also be

noted that only one participant equipped with this type of solution considers that IT contribution to

the SC's objectives is neither essential nor important. In addition, an analysis of the equipment

owned by participants for whom this challenge is strategic shows that they are significantly more

equipped than the others with "many to many" collaborative solutions and TMSs (possession rate is

1.5 times higher), thus showing stakeholders who are prepared to consider the movement of goods

in an extensive Supply Chain.

Lastly, reducing product availability deadlines for end customers is an objective that, even more so

than flexibility, results more from the search for alternative organisational conditions than from the

optimisation of current organisational processes. Connections with the various types of equipment

are however not obvious. The analysis shows that the participants for whom this challenge was

strategic are more equipped with collaboration solutions. Their possession rate is in fact 25% higher.

The following data is thus obtained:

It is a strategic challenge for 49% of the participants


• 46% of 3PL providers



- 53% of them are already equipped with a collaboration portal with their partners (42% of all

participants) and 20% have subscribed to a "many to many" collaboration platform (16% of

all participants).


their collaboration portal and by the "many to many" platform.

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4%

42%

43%

11%

8%

39%

49%

4%

highly dissatisfying

rather dissatisfying

satisfying

highly satisfying

Satisfaction level regarding collaboration throughout the supply chain process

(n=104 and 100)

External

Internal

COLLABORATION

With Supply Chains rising to an increasingly international level, and with the development of multi-

channel activities, stakeholder coordination and thus collaboration are becoming true focus points.

Satisfaction levels regarding this subject are average, with just over half the participants having

declared being satisfied or highly satisfied: 53% for external collaboration and 54% for internal

collaboration.

An analysis of the results shows that those equipped with collaborative solutions are twice as

satisfied as participants who are not equipped with this kind of solution. In addition, fewer of the

equipped participants identified difficulties and namely the most important difficulty: that of

sharing information.

Moreover, the existence or quality of available collaborative solutions was not identified as a

difficulty by the participants. Therefore, although their benefits can be measured namely thanks to

an improved satisfaction rate, it seems that the potential advantages of collaborative solutions are

not yet clear to companies.

Collaboration is an important topic, namely because of the large number of stakeholders that need

to be coordinated throughout the supply chain. Here are a few figures, drawn from this study, that

illustrate this constraint:

- 35% of the participants partly subcontract their logistical activities

• This particularly applies to large companies that count over 250 employees (42%) and

industrial businesses (44%)

• It is only entirely subcontracted by 6% of the participants

- Close to 90% of the participants manage international flows

• Industrial businesses in particular (+95%) but also distributors (90% conduct import

activities and 76% carry out export sales)

- A third of the participants has an e-commerce activity

• 60% of distributors and 19% of industrial businesses

- The various channels' logistical activities are separated or partially pooled by 62% of the

participants

Therefore, flow internationalisation and

multi-channel commerce reinforced the

number of stakeholders in charge of the

Supply Chain, despite partial pooling.

And satisfaction with collaborative

processes, which are essential in this

context, is average as can be seen in this

chart: satisfied and highly satisfied rates

of 53% for external collaboration and

54% for internal collaboration.

3PL providers are the most satisfied, with

respectively 62% and 71%, whereas

distributors are the least satisfied with

rates of 34% and 33%.

54%

53%

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53%

63%

33%

54%

67%

35%

Overall

With a collaborative

solution

Without a collaborative

solution

Satisfaction rate regarding collaboration, according to the possession of

a software package (n=104 and 100)

External

Internal

65%

60%

37%

37%

31%

29%

28%

16%

12%

Sharing information

Contradicting objectives between stakeholders

Geographical scattering of stakeholders

Ill-adapted IT solutions

High number of stakeholders

Our ISs are not able to communicate

We do not have a collaborative solution

Language-related differences

No particular difficulties

Main difficulties - INTERNAL collaboration (n=98)

56%

45%

37%

37%

34%

25%

25%

20%

7%

Sharing information

High number of stakeholders

Contradicting objectives between stakeholders

We do not have a collaborative solution

Geographical scattering of stakeholders

Ill-adapted IT solutions

Our ISs are not able to communicate

Language-related differences

No particular difficulties

Main difficulties - EXTERNAL collaboration (n=96)

If we analyse the satisfaction of those

equipped with a collaborative portal and/or

who have subscribed to a collaboration

platform, a notable different can be

observed:

Therefore, distributors that are poorly equipped with collaborative software packages are also fairly

dissatisfied with the collaboration during the Supply Chain process, both internally and externally,

and vice versa with regard to the partner 3PL providers.

The main difficulties faced regarding collaboration (both internal and external) first included the

difficulty of sharing information - this point was particularly highlighted by distributors (85% for

internal collaboration) and much less by 3PL providers (47% for internal collaboration). And, just like

above, fewer of those equipped with a collaborative solution identified the difficulty of sharing

information as a difficulty (54% compared to 65% for the entire panel).

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2%

18%

49%

29%

2%

Strong decrease

Decrease

Stable

Increase

Strong increase

Overall development of the SC budget (n=91)

Another important difficulty regarding internal collaboration is the coexistence of sometimes

contradictory objectives between the various stakeholders, and this difference exists between

distributors and 3PL providers.

Moreover, the suggested difficulties concerning the Information System are only rarely identified by

the participants. The choices are "We have no collaborative IT solutions" (28% and 37%), which is

surprising as the above-mentioned possession rate is relatively low, as well as "The IT solutions used

by our company are not suitable" (37% and 25%) and "Our information systems are not able to

communicate" (29% and 25%).

It therefore seems that the collaborative solutions' potential advantages are unclear to companies,

despite the fact that users of this type of solution can see tangible benefits and there are significantly

more participants that are satisfied with their collaboration process.

INVESTMENT PROJECTS

About half the participants declared stable budgets, but budget increases were also declared,

particularly by 3PL providers (43% declared their overall budget had increased). For all participants,

this mostly concerns budgets dedicated to organisational projects and to the deployment of new IT

tools, which have gradually been increasing for over half the participants.

The application components most concerned by the investment projects are partly software

solutions that have already been implemented such as WMSs and BI solutions, which reinforce

their position regarding essential Supply Chain management solutions. Other families are selected

for intended projects, thus proving how much companies value them: TMSs which have held this

position for several years now, and S&OP planning and management solutions that help face

planning challenges and well as help with Supply Chain risk management and synchronisation

between its various stakeholders. Collaborative solutions are also mentioned. Participants

consider the latter to be the most relevant solutions for the SaaS mode, just like TMSs (for

respectively 91% and 76% of the participants).

Close to half the participants stated that

their Supply Chain budget was currently

stable, just under a third (31%) that it had

been increased and a fifth said it had

been decreased:

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29%

29%

27%

29%

2%

14%

18%

27%

18%

2%

4%

Overall

Logisticians

Distributors


Overall development of the SC budget (n=91)

Increase Strong increase Decrease Strong decrease

35%

32%

28%

16%

16%

1%8%

13%

17%

2%

1%

4%Organisational projects

Deployment of new IT tools

Deployment of mechanisation/automation

Developments in the composition of the Supply Chain budget (n=54 to 91)


31%

35%

17%

37%

17%

12%

21%

16%

13%

29%

21%

4%

1%

2%

Overall

Logisticians

Distributors


Development of the deployment budget for new IT tools


An analysis of the responses for each role

shows that for industrial businesses and

distributors, just as many of them have

increasing and decreasing budgets, and just

under half have kept a stable budget. The

situation seems to differ for 3PL providers, as

none of the participants declared their budget

had decreased and 43% declared their budget

had increased. In this chart, stable budgets

have not been shown:

The same question was asked for

several of the budget's components.

Similarly represented in this chart, we

can see that the budgets that most

frequently increase concern

organisational projects and projects for

the deployment of new IT tools. For

these two elements, a little less than

40% of the participants declared their

budget was stable and about half said it

had increased. The similarity between

these two lines supports the

observation that these two subjects - IT

and organisation - are closely linked

(only 5% of the participants whose IT

deployment budget has increased had a

decreasing organisation budget and vice

versa).

The analysis per role of the budget for the

deployment of new IT tools shows fewer

discrepancies, although budgets increased

less for distributors and decreased less for

industrial businesses.

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With a view to detailing the purpose of these investments, we can review the various software

packages possessed by the participants or which they intend to purchase in 2014.

In the chart below, we used the possession used detailed earlier, but this time focused on the

software packages with the highest purchase intention rates for 2014. We can now see that TMSs

generate the most investment potential. This situation seems to have lasted for several years now,

but the projects are rarely fully completed. WMS projects also show a great deal of purchase

intention, even as WMS possession rates are already high, thus reinforcing the essential and now

"commonplace" feature of this type of equipment. Decision-making tools are another category of

software packages that seem to have the same profile type and companies are right in thinking their

purchase is justified.

Flow management tools and "many to many" collaboration platforms are also listed in this table.

These solutions are more recent - although management solutions already existed under a different

name 15 years ago - and make the most of new technologies and of the expansion of the Internet

and Cloud systems. Considering the promises made regarding this type of solution, higher purchase

intentions were expected.

Lastly, S&OP planning and management solutions are well-ranked in this hit-list of purchase

intentions. A profile analysis of the participants equipped with this type of solution made it possible

to identify which challenges were declared as important or strategic. They are as follows:

- demand planning,

- Supply Chain risk management,

- synchronisation between the various stakeholders within the supply chain (specifically for

participants equipped with S&OP management solutions).

Moreover, the % of satisfied participants regarding the services provided by this type of software is

average: 56% for both families.

24%

55%

64%

40%

61%

29%

18%28%

85%

8%5%

70%

32%

5%

78%

85%

31%

65%

39%

21%

17%

16%15%

14%

13%

12%11%

TMS WMS Planning S&OP BI Flow management

"Many to many" collaboration

Equipment with the highest number of projects forecast(n= 41 industrial businesses, 25 distributors and 18 logisticians)

Industry Distribution 3PL % projects

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Lastly, the Cloud is a topical matter in logistics. It makes it possible to link stakeholders who work

together in sometimes temporary organisations, created according to logistical flows, and also helps

smaller stakeholders integrate the digital value chain without too much investment. However, as

shown in the chart below, not all Supply Chain management software packages are as relevant or

justifiable as each other when used in SaaS mode. Therefore, collaborative solutions and transport

management are the most expected for this type of communication. Opinions differ regarding other

software packages, and many participants have diverging views.

27%

29%

38%

36%

23%

15%

13%

14%

40%

68%

36%

32%

30%

11%

6%

22%

26%

18%

13%

3%

Planning projects

Warehouse management software packages

Flow monitoring software packages

Transport management software packages

Collaborative platforms

Software package(s) for which use in SaaS mode is relevant(n=66 to 70)

Quite relevant

Very relevant

Not particularly relevant

Irrelevant

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6 - CONCLUSION

The challenges faced by Supply Chain stakeholders are firstly to ensure operational performance and

secondly to respond to recent and upcoming developments. The subjects mentioned such as

traceability, collaboration or flexibility are not exactly recent and are the basis of research and

development work carried out by publishers over the last few years.

Even though the Information System is an essential contribution to the Supply Chain's objectives,

there seem to be fewer connections between a particular software solution and its possible benefits.

Lastly, we were surprised by the low investment levels for certain solutions, despite their

considerable potential benefits.

We now know that investment possibilities for TMSs have been rising for several years, a fact which

is proven in this study. A great deal of feedback was provided concerning the important benefits

measured in user companies, both by shippers and carriers. Nonetheless, TMS penetration in

companies has been very slow and is still today only significant for logistical service providers.

The other example quite clearly expressed in this study is that of collaboration. This subject has

gathered soft vendors’ forces for over 15 years - whether regarding the enhancement of forecasts by

having several departments within the company collaborate or by coordinating the activities of all

stakeholders who act in the supply chain. But just like for TMSs, the possession rate remains low and

investment possibilities are modest, even though they are not at their lowest. And yet, in the results

presented earlier, we can clearly see that user satisfaction with the services provided by these

solutions is good, generally better than for other software solutions and in fact twice as many users

declared they were satisfied or even highly satisfied.

In a complex and fast-developing environment, both in terms of customer requirements, regulations

and technologies, it is crucial to talk about uses and present feedback, so companies can identify the

missing link between their context and their needs.

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USER FEEDBACK:

Supported by itelligence, "La Poste, Pôle Colis" deploys SAP's TMS

As part of La Poste, this business unit is responsible for delivering packages within 48h all over France and has deployed a transport management software package which has partially replaced former developments that no longer complied with current challenges.

Feedback from a company

that uses a transport

management solution.

This statement highlights the

issue faced and the reasons

for choosing the software

package in the project's

context. A report was

established regarding the

benefits observed and the

project's next steps.

It was gathered directly by le

CXP from the Finance IT

Director, David Bizien.

Overview of "La Poste, Pôle Colis":

"La Poste, Pôle Colis" is a

business unit in charge of

transporting and delivering

packages all over France

within 48h.

"La Poste, Pôle Colis" is no.1

in France and no.2 in

Europe in home delivery.

Key Figures:

- 800,000 transport links

managed yearly

- About 270 million objects

managed per year, i.e. an

average of one million

packages processed daily.

THE PROJECT

ISSUE: Choosing a transport management solution that responds to

complexity and flexibility issues.

CHOSEN SOLUTION: SAP Transportation Management 9.0, launched in January 2014.

MAIN BENEFITS TODAY: Administrative time spent managing transport invoices is significantly

reduced.

Communication between transport managers is improved.

IMPACT OF GENERAL CHALLENGES: - Sustainable development is conveyed by an ambitious objective for

"La Poste, Pôle Colis": CO2-neutral deliveries. The implemented

solution will contribute to this objective but it was not what

triggered the investment, nor was it a decisive criterion when

choosing the solution.

- The development of consumption methods has strongly affected the

transport of packages.

o A relatively dynamic market (growth estimated at 3.5% per

year) thanks to the increase in e-commerce activities,

o More diverse delivery methods

o Enhanced competition and development of package collection

points (Amazon now sends more packages than La Redoute)

The connection with application choice criteria is very strong.

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Organisation transport with "La Poste, Pôle Colis"

Transport is at the heart of Pôle Colis' activity and is

organised according to three levels:

- National: links between package-sorting

platforms.

- Regional: links between package-sorting

platforms, Post platforms, delivery points,

shop pick-up points, etc.

- Last km for delivery to the end customer

"La Poste, Pôle Colis" has trailers for transporting

packages and charters trailers and lorries of various

sizes.

Challenges

The administrative time spent controlling transport

invoices had become too long. In addition, the

implementation of a more efficient system was also

required to make relations with transport providers

easier and ensure the best possible payment

deadlines.

In this current context, high volumes and complex

situations are also an issue:

- a large number of service providers,

including some that used Excel as a

management tool,

- 800,000 transport links to be managed

yearly,

- complicated regulations and transport

prices.

Lastly, "La Poste, Pôle Colis" used specific solutions

that were ill-adapted to the volume and to the

flexibility required for regional transport.

The implemented system

The solution implemented today concerns regional

transport in Ile-de-France and makes the processing

of transport invoices for the Package division

possible.

The selected principle consists in pre-invoicing based on the finalised transport plan and on the carrier's contractual prices. This pre-invoice is sent to the carrier who contacts the manager at "La Poste, Pôle Colis" in the event of a problem. Normally, the carrier then sends an invoice that corresponds to what is expected. Invoice alignment is carried

out between the invoice sent by the carrier and the purchase order generated in SAP based on the pre-invoice elements.

The other processes were not modified so that

users could keep their histories and points of

reference. Our objective is to gradually switch

over to SAP.

The application is deployed via servers virtualised

in "La Poste, Pôle Colis".

What the project has taught us

Modifying the process helped us make invoice

processing smoother, improve controls and

helped save a considerable amount of time when

calculating financial provisions. User feedback has

generally been very positive concerning the

implemented solution's reliability.

Moreover, sharing a common solution in a

network helps transport managers better

communicate with each other.

Lastly, the automatic follow-up of the transport

means used is a secondary benefit in line with the

sustainable development objective set by "La

Poste, Pôle Colis": CO2-neutral deliveries.

For a transport point of view, the system makes

their job easier and helps shorten payment

deadlines.

The project's next steps

Several areas of improvement are currently being

developed.

From a functional standpoint, managing lorry-free

weekend regulations, archiving the transport plan

or managing yard trailers will help extend the

solution.

From a technical standpoint, the implementation

of an event-monitoring system will help directly

track data linked to the completion of the

transport plan within the application or for each

import, namely regarding lorry departure and

arrival times or disputes with suppliers. This

development will therefore offer real-time

monitoring possibilities during the completion of

the transport plan.

Lastly, the geographical area must also be

extended so as to manage all regions throughout

France.

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itelligence NTT Data Business Solutions

- Address: itelligence AG Königsbreede 1 - 33605 Bielefeld

- Website: www.itelligencegroup.com

- CEO : Herbert Vogel

The company

itelligence is one of the leading international full-

service providers for SAP® solutions, employing

more than 3,800 highly qualified employees in

22 countries. Our SAP expertise is unrivalled and

has been developed over the last 25 years,

supplying specialized integrated business solutions

for over 5,000 customers worldwide and a

turnover of EUR 457.1 million in 2013.

Key information

Founded in 1989

SAP Gold Partner & SAP Global Partner

3 800 employees

2013 turnover: EUR 457.1 million

List of references

AHLSTROM ; ARMACELL ; CONCARDIS ; DEUTZ AG ; DEXXON GROUP E.ON RUHRGAS AG ; ED AG GROUP ; FRASER AND NEAVE ; GEBRÜDER WEISS HANSA-FLEX ; HAWE ; HENKEL ; HERBAPOL ; KEB ; KLÖCKNER & CO ; KRONE LEICA MICROSYSTEMS ; LEKKERLAND ; THE MENARINI GROUP ; MERCEDES-BENZ NOBILIA ; RANDSTAD ; REPOWER SYSTEMS SE ; RUAG ; TNS INFRATEST TORRES VOLKSWAGEN ; WACKER NEUSON SE.

Services

Our service portfolio includes SAP Strategy, SAP Licensing, Implementation and Process Consulting,

Outsourcing and Application Management Services. We are pioneers in the development of industry-specific

solutions and our experts work hand in hand with SAP on new scenarios and ground-breaking solutions for

business analytics, in-memory computing and SAP HANA®, cloud, and mobility. In 2013,

itelligence generated total sales of EUR 457.1 million.

Portfolio

SAP: licenses, consulting, implementation, and SAP Managed Services.

SAP innovations: In-memory computing and SAP HANA, analytics, cloud, and mobility

it.solutions: Tailor-made industry solutions for the midmarket (e.g. it.automotive, it.trade, it.manufacturing)

SAP Managed Services: Certified hosting services with data centers in Denmark, Germany, Malaysia, Poland, Switzerland and the US; remote services, application management services, 24 x 7 support and helpdesk

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