Friday Jul 12, 2013

My 15 Year Journey to The Truth

Editorial by Rick Beers


Rick Beers is Senior Director of Product Management for Oracle Fusion Middleware. Prior to joining Oracle, Rick held a variety of executive operational positions at Corning, Inc. and Bausch & Lomb. With a professional background that includes senior management positions in manufacturing, supply chain and information technology, Rick brings a unique set of experiences to cover the impact that technology can have on business models, processes and organizations. Rick will be hosting the IT Leader Editorial on a regular basis.

Yogi Berra, the great New York Yankee catcher and prognosticator once uttered: “You can observe a lot by watching”; a wisdom that can easily be adapted to “You can hear a lot by listening”. I was reminded of that during a recent CVC with an Oracle customer, a leading global information and communications technology (ICT) solutions provider. For those not familiar with CVC’s, an abbreviation of ‘'Customer Visitor Center’, they are executive level sharing sessions between Oracle and individual customers. They are ideal opportunities for us to not only present Oracle’s vision, strategy and direction but also to sit back and listen to our customers’ perspectives and learn from them. And at times, pick up some insights we may have forgotten that can still be of value, which I was soon to learn.

The focus of this particular CVC was on Supply Chain Management, and it brought me back to my roots, before my career took an unexpected and welcome shift towards IT. I did a bit of research on this particular customer before the CVC and noticed that they were members of the Supply Chain Council, a global nonprofit organization whose ‘framework, improvement methodology, training, certification and benchmarking tools help member organizations make dramatic, rapid, and sustainable improvements in supply chain performance”. Organized in 1996 by Pittiglio Rabin Todd & McGrath (PRTM) and AMR Research, the SCC initially included 69 voluntary member companies, and I was fortunate to be among them as the SCC took shape. The SCC developed, and still maintains, the Supply Chain Operations Reference (SCOR) model, which describes the business activities associated with all phases of satisfying a customer’s demand.

SCOR consists of 5 supply chain steps: Plan, Source, Make, Deliver and Return. The model itself is organized around primary supply chain management processes, and public and enterprises use the model as a foundation for global and site-specific supply chain process and technology projects, and for measuring their effectiveness.

Source: SCOR 10 Overview, Supply Chain Council

Which brings me back to the CVC. During my presentation I mentioned the SCOR model and I was asked my opinions of it. Not the type of question I had expected, given my current focus on Fusion Middleware as a transformational capability. But I listened, paused, dusted away the cobwebs and took a stab at it and in the process learned where I had been wrong 15 years ago.

I was a charter member of the SCC and had early input on SCOR’s ‘Plan, Source, Make and Deliver’ framework (‘Return’ wasn’t added until a later version). I had a fundamental disagreement which led to my eventual disinterest. I felt that Order Management’s front end processes were under-represented; that SCOR focused too heavily on the Fulfillment side and not enough on the Customer-Facing side (for example: the term ‘Deliver’). The response was that Supply Chain Management needed to focus on ‘execution’, not ‘customer management’. I thought this a big disconnect considering the way organizations were constructing their Order to Cash end to end processes through Enterprise Resourcing Planning systems (ERP), which were just beginning their proliferation in those days.

Within ERP, ‘Order to Cash’ encompassed both order management and order fulfillment (logistics). To illustrate, I found a logical reference model I created then to make my case:

In this view, customer facing processes such as Order Promising and Customer Response were part of Supply Chain Management; they simply had to be. Our direction at the time in creating tightly integrated end to end processes within ERP required it. There was no other way for these processes to be architected. This was short sided of course, as Tom Siebel would soon illustrate with Salesforce Automation and then CRM, but I didn’t realize it at the time.

The Supply Chain Council held firm though in their belief that the focus of SCOR should be on execution, and in the case of Order Management, only on those processes that lead to the creation and delivery of the product or service. I thought this wrong and essentially checked out of the SCOR creation process.

Well, I now see that the SCC was right on all levels. Customer facing activities should not be part of an end to end order management process; as we all found out, this creates an ‘inside out’ approach to customer management rather than ‘outside in’. Customer management became defined and limited by internal execution rather than by the need to develop and nurture healthy, sustaining customer relationships.

This condition gave rise to CRM in the late 1990’s. It was slow going for a while, since most of the enterprise systems industry was focused upon ERP’s broad-based roll-out in advance of Y2K. The next decade saw steadily increasing interest in CRM for relationship management as well as for customer marketing but there was one major flaw that prevented its practical usefulness within a supply chain fulfillment process: the lack of open integration through which processes could transact across CRM and ERP. Finally though, Service Oriented Architecture technology developed to the point where cross platform process transactions and information flows permitted the process rationalization of CRM and ERP’s order fulfillment processes.

Creating customer friendly and agile order management processes outside of ERP and integrating them in an orchestrated way into a single ERP system can be achieved by leveraging Oracle Service Oriented Architecture. But Oracle’s ERP (E-Business Suite, PeopleSoft, JDEdwards) customers have the opportunity to achieve their future state now, with ‘Distributed Order Orchestration’, a Fusion Application, integrated through Fusion Middleware into their Oracle ERP.

The Supply Chain Council was right all along, and it only took me 15 years to understand. And all I had to do was listen to a valued customer to know the reason.


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