Tolerance for error fades fast in supply chain management, says Oracle

TOLERANCE for errors is fading fast in logistics as even small mistakes can turn a shipper's profit into catastrophic loss, the California-based Oracle, a Nasdaq-listed supply chain management software company, told a Hong Kong media briefing last week.

Oracle, the winner of the "Best Asia Pacific Supply Chain Software Solution Provider" title at the SCMLogistics World 2007 Supply Chain Excellence Awards in Singapore, provides a wide range of just-in-time product handling to shippers worldwide.

Just-in-time means just that, Oracle senior director Jasbir Singh told the Hong Kong media last week. Failure to meet a Wal-Mart delivery window means sending goods back at the shipper's cost for another day's try.

"Wal-Mart marks up products at three per cent," said the Kuala Lumpur executive. "Suppliers may get two per cent. Any mistake, like missing a delivery window, blows away what little profit there is. Margins are that tight these days."

Keith Ip, Oracle's Greater China applications director, told the group that the shipping world has become dominated by a supply chain management focus that encompasses everything from the conception of a new piece of technology to the point when it exits the market.

For example, he said, a new product is often created from information garnered from electronic data interchange bar code. Readings are sent back to supplier from the point of sale. Information on the sale of similar devices, show the most popular aspects of two or three of them, which can then be combined into an entirely new product which is soon on the drawing board, said Mr Singh.

In the cradle-to-grave lifespan of iPods and cell phones, profit or loss is based on efficiency and know-how, he said. "Companies like Nokia and Texas Instruments don't make things anymore. They are chiefly concerned with sales and marketing."

What supply chain management does, he said, is take care of everything from the time the product is conceived, manufactured, "orchestrating" the multiplicity of suppliers needed to provide components that make up new gadgets, For example, knowing how much lead and silver content they contain is becoming vital simply to comply with ever-more stringent environmental regulations.

For Norway's Kvaerner, Oracle said it reduced the engineering company's order processing time by 83 per cent. For Arizona's Intertel, a provider of voice and data communications, Oracle claims to have reduced online order errors by 90 per cent.

For LG Philips LCD, a Seoul-based producer of computer components, Oracle said it reduced shipment costs by US$2.9 million. Mr Singh said Oracle increased on-time shipments 18 per cent for McData, a Colorado-based data infrastructure provider, and for Toll, the Australian transport giant, it increased freight under its management by 400 per cent.

As to the future, Mr Singh saw an early end to software which is restricted by proprietary limitations. "Proprietary platforms are going down and down. Open software is what is demanded now. Universities train people on open software - its all plug and play today. Anyone who sticks with proprietary software is living in a smaller and smaller world - just when the world is getting so much bigger," he said.