Infosys’ blog on industry solutions, trends, business process transformation and global implementation in Oracle.

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July 31, 2008

What is the Right Product Structure for the High Tech Sector?

To give a text bookish definition, Product structure is a hierarchical decomposition of a product, typically know as the BOM (Bills of Material). The High Tech Sector typically has a Model BOM with Option Classes and Options. With so many variants offered by competitors, the industry has no other way but to offer a better customer experience to garner market share. And one way of offering a better customer experience is to give as many choices as possible to the customer to choose from. For example, giving various ranges of RAM to the customer to choose from gives a feeling of contentment to the customer.

 

 Typically, High Tech industry uses the ATO (Assemble to Order) Model BOM structure with nested ATO Model BOMs. The advantage with ATO Model is that it is invoiceable, shippable and can be planned in the ERP System. Typically the entire manufacturing is done by the Contract Manufacturer, who then ships it to the Original Equipment Manufacturer (OEM). The customer chooses the configuration and books the order. The Build information is sent by the OEM to the Contract Manufacturer through a B2B signal. The OEM creates a Work Order in his system and completes the Work Order Cycle. The Contract Manufacturer maintains a parallel system at his premises. There is duplication of transactions in this case. The Planning Parameter is maintained as ‘Make’ though the entire product is bought by the OEM. Since there are no Purchase Orders created in the system, there has to be a customized payment process. PTO (Pick to Order) may be the other alternative but typically OEMs like to have the top model as invoiceable, shippable and planned. The current ERP systems do not support these. Also there are further impacts on Install Base (Field Replaceable Units) and leads to mismatch in physical and system count.

There are other variants like mix of ATO and PTO but that further complicates things to a greater extent.

Given this scenario, it makes sense to book the Order and then create a Purchase Order for the Configured Item. Standard ERP packages do not explode the BOM details in the Purchase Order. Hence a custom solution needs to be built here with further tweaking in the Payment process to accommodate the listing of chosen components.

This brings us to the debate on whether we should change our Business process to accommodate the standard ERP Packages. ERP Packages are built keeping in mind the best practices but cannot address 100% of a company’s business processes. It is always advisable to keep the business process intact and tweak the ERP system if the business process gives a strategic advantage to the company. After all no two companies can have exactly the same business process.

Please post your comments and/or send an e-mail to sandeep_chatterjee@infosys.com.

 

Posted by Sandeep Chatterjee at 06:45 PM | | Comments (0) | TrackBacks (0)

July 30, 2008

Fusion Middleware – Not Just a Middleware

We have always known a Middleware as a software program that integrates two or more disparate applications. Anyone having first encounters with Oracle Fusion Middleware (OFM) will tend to reckon it as a collection of middleware products. The fact is it is not just a middleware; it is much more than that.

Oracle Fusion, the next generation Oracle’s best of breed product is being built using OFM components. The products under OFM span across developer tools, business intelligence, integration services, rich user interfaces, collaboration, and content management which are offering wider solutions than just core integrations.

So why is it named as middleware if it is beyond that?

Apparently Oracle Fusion Middleware is a re-branding of Oracle's products placed collectively under a new umbrella to segregate them from Oracle’s core service offerings which are databases and enterprise applications. OFM offers a “hot pluggable architecture” that enables organizations to leverage current investments in their IT infrastructure by delivering unparalleled interoperability between varied systems. OFM is based on open standards such as BPEL, SOAP, XML and JMS and  by and large it has been designed to support development, deployment, and management of Service-Oriented Architecture. Calling it a middleware pack does make sense but it is just one slice of a huge cake. There are many more pieces to it.

 

Look at the bevy of products that form part of Oracle Fusion Middleware family

Application Server
Business Integration
Business Intelligence
Business Process Management
Collaboration Suite
Content Management
Data Integrator
Coherence In-Memory Data Grid   
Developer Tools
EDA Suite
Identity Management
Middleware for fast growing companies
Portal
SOA Suite
Web Center
Service Delivery Platform

 

           

 

 

Many organizations today having heterogeneous systems have adopted Fusion Middleware SOA Suite to integrate the systems seamlessly. But the capabilities of fusion middleware do not end here. Organizations today are using products of OFM family for their needs to

 

·         Build Enterprise Portals for employees or for customers

·         Make BI applications for business information analysis

·         Move your applications to Web 2.0 standards like wikis and blogs

·         Make Rich UI interfaces that are easy and quick to deploy

·         Monitor your business process using real time dashboards

·         Manage multi-site sophisticated web content

·         Manage end to end lifecycle of user identities across all resources

 

It will not be inappropriate to acknowledge the fact that Fusion Middleware products can be used to take care of most of the IT needs of an enterprise to ensure its growth, insight and control on business. Organizations that are using Oracle as their core ERP can find a strong synergy with Fusion Middleware products. 

So next time when someone talks to you about Oracle Fusion middleware, remember it is more than merely a middleware stack.

I would be glad to hear any views on this further.

Posted by Gaurav Sharma at 11:46 AM | | Comments (1) | TrackBacks (0)

July 21, 2008

High Tech Industry’s Logistics Woes: Oracle Transportation Management may be the answer

Gone is the era when customers would queue to your factory gate to buy the goods produced by you. Remember Bajaj scooter in the 80s when we had a waiting time of up to 10 years. Not any more. With breakthrough advancement in science and technology, we are in a situation where the market place is cluttered with supply surpassing demand. More so in the high tech sector where changes happen in split seconds. Given the current situation, the winner is surely the one who will be able to provide a better buying experience to the customer and yet charge reasonably for providing the service. This includes both choice of products and/or services and delivering it to the customer at a reasonable price.

 

High Tech Industry works in a way where the bulk of the manufacturing is outsourced to the Contract Manufacturer. Typically there is a rate negotiation on a quarterly basis. The procurement of components is done by the Contract Manufacturer though the OEM negotiates the rates with these Level 2 suppliers (Level 1 supplier is the Contract Manufacturer). Once the Sales Order is booked, a build notification is sent to the Contract Manufacturer who after the assembly ships the assembled product to the OEM’s Order Consolidation Centre. The distribution of the products from the OEMs Consolidation Centre is handled by the Third Party Logistics Provider who in turn after delivering the goods sends a notification to the OEM. Our Primary focus here is on the ‘Place’ aspect of Philip Kotler’s 4 Ps of marketing.

Some of the challenges faced by the High Tech Industry in the logistics function are Track and Trace, real time integration among the OEM, Contract Manufacturer and Third Party Logistics Provider in terms of data flow, Generation of Shipping documents, freight settlement and Cost allocation to line items. Because of lack of a standard ERP solution in this space, most of the High Tech companies have built custom solutions around these functionalities. This becomes difficult to maintain as the volume of data increases and becomes an overhead. The biggest challenge comes when the ERP system has to be upgraded as these have to be upgraded manually.

Oracle’s acquisition of G-Log, the Transportation Management solution may finally end the Logistics woes of the High Tech Industry. This product rechristened Oracle Transportation Management has robust BPEL integration capabilities. All disparate systems (Contract Manufacturer, Third Party Logistics Provider) can be integrated with the central Oracle E-Business Suite addressing the data synchronization issues within various systems. In fact integration with FBAP provider’s system eliminates the additional task of sending the activity report to OEM for Verification and Payment purposes.

Currently the product is loosely coupled with other modules of the core ERP application but we foresee more and more tight coupling in near future.

So if you have built a heavily customized solution for the Logistics function and want to get rid of it, this is a product to watch out for!

Do post your comments and/or send me an e-mail at Sandeep_chatterjee@infosys.com

 

Posted by Sandeep Chatterjee at 10:59 PM | | Comments (1) | TrackBacks (0)

July 19, 2008

Collaboration: The way forward for High Tech Industry

In his classic best-seller ‘The Goal’, Eliyahu M. Goldratt discusses about the three fundamental ways of making money for a going concern namely,

  1. Increase throughput (the rate at which the system generates money through sales)  
  2. Reduce Inventory (all the money that system has invested in purchasing things which it intends to sells)
  3. Reduce Operational expenses (all the money the system spends in order to turn inventory into throughput)

     

With changes happening at such a fast pace, more so in the high tech industry where change is the hygiene factor, (remember Alvin Toffler’s ‘Future Shock’ where he talks about the shattering stress and disorientation that we induce in individuals by subjecting them to too much change in too short a time), companies are increasingly finding it tough to address Goldratt’s basic principles in remaining competitive. Given the current circumstances, the high tech industry is looking at increased collaboration with suppliers, customers, freight carriers to cater to the fast paced changing needs of the market.

Think of a situation 100 years ago where players in this industry started right from procuring the raw material, building the product and then selling it to the customer. Slowly the trend started in the direction where companies started partnering with external partners to handle some part of the supply chain. And right now we are in a situation where the entire manufacturing is handled by contract manufacturers and the distribution is done by third party logistics providers.

Now comes the question of does it make sense to do so? Are we not exposing our skill set to external parties who can be potential competitors? The answer is you don’t have a choice. You have to change at a pace which you cannot do alone. Secondly with the economy in such turmoil, you have to find ways of reducing your inventory and operational expenses. Why not have somebody handle the entire manufacturing so that you don’t have inventory of components in your books. And of course you have the classic cost factor. It makes perfect business sense to produce at the least cost. So we see many of the contract manufacturers setting shop in the lower cost Asia-Pacific region.

But how do the OEMs ensure that they thwart potential competition from the contract manufacturers who can move up the value chain? Well, the contract manufacturers work on a technology which is prevalent in the industry. There is no trade secret as such. For example, while the Contract Manufacturer will print the labels which are affixed on the cartons but the Label Printing rules are controlled at the OEM’s premises. And another classic way is patent it. So let people copy it and you make money out of it.

And innovation is the key. While OEMs try to stay ahead of the market through their innovative technologies, the partners work on the more established technologies. It reminds us of the era before Taylorism when it was believed that managers do the thinking while workers carry out the routine job.

 To put this in a different way, Gary Hamel and Prahalad wrote about the concept of Core Competency - Those things that define what is special about an organization, what sets it apart from other organizations. High tech companies are increasingly doing that where they focus on the innovation while the other processes in the value chain are being handled by their partners. The increased emergence of Web 2.0 technologies has brought about breakthrough changes in ways of collaboration.

 Coming back to the Game Theory principles, it is only strategic collaborative interactions among the stakeholders in the high tech industry, which can lead to Nash equilibrium. So the mantra is ‘Collaborate or Perish!’

 

 

Please post your comments. For more insights, please contact me at Sandeep_chatterjee@infosys.com

 

Posted by Sandeep Chatterjee at 06:05 AM | | Comments (1) | TrackBacks (0)

July 11, 2008

Upgrading to Oracle R12? Keep Fusion in mind

R12 is a milestone in Journey to Fusion

Oracle’s E-Business Suite Release 12 is Oracle’s latest version of their business applications with an upgrade path to Oracle Fusion Application. The technology stack is upgraded to Fusion Middleware, the backbone of Fusion Applications.

It is about 60% Java based, compared to its predecessor, Release 11i, which is only 40% Java based. Release 12 already has incorporated some of the Fusion Middleware products that are available today. Unlike Release 11i, Release 12 makes extensive use of XML.

There are various packs/flavors of the applications surrounding the existing core ERP functionality will be released. At Infosys, we are already seeing the early version of AIA -Foundation packs that have been released that are incorporating the pre-packaged canonicals. Oracle’s strategy is to slowly incorporate the new generation technology in to their Applications and hence there would not be a big bang major release of Fusion Applications
Also the functionality of ERP would be released in phases and in terms of pillars like CRM pillar, SCM pillar, etc. so with these kind of functionality being rolled out we should assume that the stabilized version of complete fusion applications is 4-5 years from now.
Recommendations for R12 upgrade and preparing for Fusion
R12 upgrades can be approached in many ways, each with its own set of opportunities and benefits. A typical technology upgrade of ERP Application require for
  • Upgrade of the Infrastructure. The R12 upgrade process involves replacing 11i Tech stack (9iAS & 806) to Fusion Middleware (10g Application Server)
  • Upgrade the integration strategy from Point-to-point to Service Oriented Architecture
  • Upgrade the Reporting Strategy by bringing together stovepipe applications by ERP revitalization and creating a virtual composite application.
  • Make better business decisions with Oracle Business Intelligence Applications and create Executive dashboard for Real time Business Activity monitoring.
Upgrade to R12 as the point from where you want to Jump to Fusion Applications.
Evaluate and document the customizations. Convert customizations to Fusion technology-based solutions where decommission is not possible. As an example, since we know that Workflow will be replaced by BPEL for the Fusion Applications, now is the time to learn BPEL. Any existing workflow customizations – or new ones should be written using BPEL.
Start Leveraging available Fusion Tools. Fusion is already here! Fusion tools that can be used with the E-Business Suite include XML (BI) Publisher, the SOA Suite and Web Center, and Business Intelligence tools like OBIEE or DBI and Discoverer 10g.

Please contact Rizwan_mk@infosys.com  or Malay Kumar (malay_kumar@infosys.com ) if you need any help to discussR12 upgrade strategy using Oracle Fusion.

Posted by Malay Kumar at 03:03 PM | | Comments (1) | TrackBacks (0)

July 10, 2008

Retailing in a Down Economy, any different from a Boom?

An economic downturn affects everyone, some more than others. The overall effect tends to lower consumer confidence and this has a direct impact on consumer spending. Or does it? 

Does it merely take the spending form one segment to another segment, for example instead of shopping at a upscale apparel retailer, do people shop at a discounted retailer? Take the worlds top retailers, how are they coping up with these challenging times, here are my thoughts on some of the key operational aspects of selling in a down economy

1. Product Mix - Higher stress on product line/item level profitability analysis

This leads retailers in identifying the right mix of stock to carry in their stores. In a tougher economony, this analysis is key to offering better discounts, carrying a better product mix resulting in a stronger financial health.

The key in this parameter is to shift the spending towards those items which give a better overall profitability for the retailer.

2. Store Opening/Closing

Most retailers would take a good look at the profitability of the individual stores and cut down on opening of new stores and in fact close down some existing laggards as well. This is a common mechanism of cutting spending drastically and boosting the bottomline

3. Open Alternate Sales Channels

Buying online is a hot concept in retailing today, and buy online and pick up at the store goes beyond the online world to combine the best of both the online and brick and mortar store. For example you could buy fast selling items online without standing in a line outside the physical store. And yet pick up the actual merchandise in a store nearby. This cuts eliminates the shipping charges and offers a tremendous opportunity of reducing stock out situations.

 I am sure the list is a long one, what do you think are some of the key themes that retailers are employing in this tough economy? Do post your comments below!

Posted by Venu Kotamraju at 03:32 AM | | Comments (3) | TrackBacks (0)