Oracle eyes the supply chain

Oracle has turned its focus to providing end-to-end supply chain management (SCM) solutions as well as introducing a new pricing model to tap into companies with no IT department of their own capable of installing its enterprise software.

Speaking to journalists in Bangkok, Jasbir Singh, Oracle senior director for supply chain management in Asia Pacific, explained that the last major shakeup was the introduction of enterprise resource planning (ERP) systems which took place 10 years ago. Today, these companies are now looking more at supply chain management to orchestrate the extended supply chain, which spans hundreds, if not thousands of suppliers and logistics partners. He added that procurement is not longer a function that was optimised in isolation.

Singh spoke of the evolution of technology companies such as Texas Instruments and Motorola as a good example of how the world has changed. In the past, research and development from design to manufacturing, testing, packaging and shipping used to be 100 percent done by the company. However, today, design may be done by Motorola, but production is often done by Taiwan Semiconductor (TSMC). Another company will do the slicing and packaging of the chips, another will then ship them to the distributors or end customers.

One reason for the change is that logistics used to be an insignificant fraction of the finished product. With today's razor thin margins, however, that figure is now closer to 30 percent.

Today companies like Dell, Nokia, Cisco and Apple have no in-house manufacturing capabilities. When Apple designs a new iPod, for example, the message goes out to a contract manufacturer which then announces the needs for components to 400 or more sub-contractors. Many of these need to secure supplies from their own suppliers and many supply parts to one another.

Procurement needs to be automated as much as possible so that the contract manufacturer can focus only on the few suppliers that say that they cannot meet the required schedule and find alternatives. "It is no longer a supply chain, but a supply network," he said.

Oracle has recently acquired G-Log and Demantra and today claims to be the only software vendor that has an end-to-end SCM suite. Oracle claims that Demantra runs as well on SAP's Netweaver as it does on Fusion.

For the local market, ICE Solution is one of the major system integrator partners that will be preaching the SCM vision to local companies alongside the very popular warehouse management and transportation management solutions, which continue to be in demand.

Oracle says it is going to tap more Thai companies through new BPO (business process outsourcing) pricing. In the past, many system integrators and partners have offered Software as a Service (SaaS) type solutions by buying Oracle software outright and then billing their customers on a per use or per transaction basis. With the new BPO pricing, Oracle will charge the SI with bills settled each month. BPO pricing will start with Human Resources and Logistics software but with the door open for SCM.

One of the reasons for the popularity of hosted solutions is the acute shortage of IT personnel in the Thai market, according to Oracle.

Author: DON SAMBANDARAKSA @ www.bangkokpost.com