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Caprice Murray, Tensoft, Inc

An In-Depth Look at ERP Integration to Supply Chain Vendors


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Tensoft recently had an opportunity to co-author an article for GSA Forum Magazine, the flagship publication of the Global Semiconductor Alliance. Entitled Anatomy of a Successful Supply Chain Integration, co-authors included William White, Tensoft CTO, one of our fabless semiconductor customers, and one of the industry’s leading assembly and test providers.  The article detailed a recent successful supply chain integration from each company’s perspective, and offered tips and tricks for readers to follow for their own successful integration.

After working in this industry for some time, we see that many semiconductor companies have become habituated to living with inadequate or nonexistent supply chain vendor integrations. In fact, these companies often have trouble envisioning the benefits that integration can bring.  We often hear “We already get our WIP data from our vendors.”  Well, my response to that comment is “You ain’t seen nothing yet!”

By definition, vendor integration means automating the process of getting vendor data into your enterprise resource planning (ERP)/supply chain management (SCM) system and automatically updating production transactions.  Smaller firms might be able to get away with doing this manually, but if you’re interesting in scaling for success, you’re asking for trouble.  In addition to getting more data through supplier integration, true vendor integration delivers significant benefits to the Operations, Finance, Production Procurement and Customer Service teams, as well as faster data access for the entire company . . . all the way up to the executive level.

These benefits can be grouped into three key benefits: productivity, information velocity, and visibility:

  • PRODUCTIVITY - Without an automated integration to your vendors, you need to manually enter the data that can tell you the true state of your manufacturing process: (where inventory is; whether it’s OK for accounting to pay it: and when inventory value and ownership changes occur.   With Tensoft FSM’s Supplier Gateway service, you can choose to have that data streamed in, so that it can be reviewed, accepted, and automatically entered into the ERP/SCM system.  The business case for when this is needed is simple - just compare the cost of manual entry (in terms of both data entry time and also the time needed to re-interpret data) to the cost of adding a system that can automate this process.   For anyone with significant transaction volume, this is pretty much a no-brainer.
  • INFORMATION VELOCITY - Without an automated integration to your vendors, continual, highly vigilant communication is needed to make sure that things happen when they should.  In this scenario, data moves slowly across your organization.   With a system like Tensoft FSM Supplier Gateway, you can simply log in, review and accept transactions that have been triggered by your supplier’s actions. The data then moves through the system much more quickly because your system is being triggered by the process itself rather than waiting for someone to manually enter the required data.   This kind of increased velocity of information has a positive impact on your entire company, right up to the executive level.
  • VISIBILITY - Integration gives you greater insight into your supply chain processes, allowing you to take corrective action more quickly, when necessary.  This can greatly benefit the quality of your company’s customer service.  The WIP or in-process updates pushed out by suppliers tell you the production out-date, so that you can more readily anticipate answers like: Are things going to slip? What is the impact on my plan? When do I need to call the vendor or more directly engage to resolve issues?     Integrating this information into your ERP/SCM provides a strong benefit for your operations, production procurement and customer service teams.

A successful vendor integration eliminates guesswork and it answers key questions, so you’re not operating in the dark. What is the vendor promising? Have they changed their promise date, and when?  How often do they change it?  Do they hit it on-time when they ship?  This is information that would be very difficult to collect manually, and with it, you now have hard data that you can use as a platform for vendor conversations to improve their execution and performance.

The ability to dig deep and see this process helps both in terms of monitoring and providing access to data that you can analyze and use for vendor performance, cycle time and yield, vendor change in terms of how long processes are taking, etc.  You’ll also be able to collect attribute or production information about the product – a very challenging and error-prone activity if done manually.  Many customers of our Tensoft FSM product use the FSM Supplier Gateway service to collect production statistics from each vendor and include that data in their product genealogy -- a vital facility that would be nearly impossible to do manually, and one that helps to clarify and quantify vendor discussions.

As you can see in detail in the GSA Forum article that I mentioned earlier, the benefits of total supply chain integration are innumerable.  If your supply chain management system is integrated with outsourced vendors, as it is for Tensoft FSM customers using the FSM Supplier Gateway service, this is an entirely automated, accurate and pain-free process. If you do not yet have this capability, then maybe it’s time to give us a call.

By Bob Scarborough, President & CEO, Tensoft Inc.

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