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December 6, 2009

Minimizing the Bull Whip Effect in the IT Supply Chain

In his world famous book ' The Fifth Discipline: The Art and Practice of the Learning Organization', Peter Senge talks about the bull whip effect which essentially is how small ripples in demand create bigger ripples on the supply side. The Beer Game is a classic example of this bull whip effect and this applies to the IT industry as well.

Typically companies have forecasted demand and according ramped up the manpower supply. And one fine day recession crops in, your demand pipeline does not result in firm orders and you have surplus manpower on your rolls. And with the changing mindset of doing more with less, IT industry needs to plan their manpower really well.

In the past companies have maintained a certain percentage as reserve manpower so that whenever there is a big order coming in, they can cater to that demand. And typical forecasting methods have been linear where the required manpower was a linear function of the revenue projection. Not any more. With innovative pricing models coming in, companies need to move to a non-linear model to plan the manpower needs.

Secondly, there has to be more co-ordination between the field force and the delivery unit to minimize the information assymmetry. It is imperative that the sales force provide a realistic picture of the demand pipeline to avoid the problem of surplus manpower. The probability of the deal coming in needs to be factored in the regression equation to have a realistic manpower number.

Thirdly instead of a person being tied to one domain/technology, we need to have multi-skilled workforce to offset the order cancellations in a particular technology/domain. After all, no education goes waste (Remember how Steve Jobs' training in calligraphy helped him design the fonts for his Mac)

December 4, 2009

OTM Out-of-Box Integration with Oracle WMS

In the OTM world, there is a common misperception among OTM Consultants and Customers that OTM is not integrated with Oracle WMS. But the fact is OTM is integrated with Oracle WMS and leverages the same Out-of-Box OTM integration that exists with EBS for other modules like Oracle Purchasing, Order Management, Accounts Payable & Accounts Receivable. In R12.1, Oracle has further enhanced OTM by including Warehouse Dock Door and Dock Schedule Information in the integration footprint.  From the warehousing perspective, the current integration means that one can perform warehouse tasks based on the transportation plan. In other words one can release lines for picking prior to dock appointment and staging the products to the dock door where the dock appointment has been made.
From a WMS perspective there are two interested integration points:
·         Shipping Itinerary Integration
·         Dock Door Appointments Integration

Shipping Itinerary Integration
The most interested integration from the warehouse perspective is “Delivery trip interface with OTM”. This is a very trickier integration, since by necessity it has to be a two way integration. EBS sends the Order information to OTM for planning and OTM sends the shipping itinerary back to EBS based on transportation constraints and goals. EBS then executes the pick, pack and ship process and resends the information back to OTM for rerating if required.
EBS concurrent program “Shipping Transportation Outbound Interface” creates Order Release in OTM from EBS Delivery.  So, as you probably guessed, deliveries in EBS are a pre-requisite for using this integration. Once the OTM transportation plan is finalized, OTM triggers planned shipment interface concurrent request to create a trip in EBS.            

Dock Door Appointments Integration
If the OTM dock appointments are used, then there is a brand new interface point introduced in R12.1. The “Dock Door Appointments Interface” is applicable for WMS only. This interface synchronizes the dock doors defined in WMS to OTM. This model assumes that WMS is the source for dock door definitions. R12.1 has “Synchronize Dock Door with Transportation Management” concurrent request for dock door synchronization.

The current OTM-WMS integration is robust and works as described. However, the integration may require tweaking in case of more complex needs and/or operating a very dynamic logistics environment. There are few ‘missing links’ that needs to be addressed, that can help customers in designing a more efficient fulfillment operation.

Acknowledgements: Lakshmana Murthy Kodukula

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