Can You See Me?

Visibility in your supply chain minimizes surprises

By Chris York, Principal, Tompkins Associates

For several years you have heard that the market is evolving to one of supply chain vs. supply chain. It's true-companies can no longer afford to operate in their sole interest at the expense of their supply chain partners. But many companies remain reluctant to integrate with their supply chain partners listing security, privacy and competitive concerns as reasons for not integrating. In company after company, adversarial relationships with customers and suppliers and a culture of making decisions in the interest of the company, not the supply chain, has left many behind their competitors.

Relationships with suppliers have to change so they can better serve your needs. By allowing your supply chain partners and suppliers visibility into your forecasts, orders, inventory levels, and manufacturing schedules you will enable them to make better decisions about how they supply materials to you. Think about how much better you could support your customers if they allowed you visibility to these same pieces of information

The type of integration that enables visibility into your supply chain starts with your relationship-companies don't partner, people do. It takes many discussions to iron out a solid, trusting relationship between company management teams to agree on the specific level of visibility, the type of information shared, communication methods, and how often to conduct a review of the interface and develop changes required.

Employing Visibility–How to Get Started

True supply chain excellence requires everyone along the supply chain to work together. But this cannot be done if members of the supply chain cannot see one another. Before you can even consider making a significant technological investment, you must ensure that you have good relationships established with your supply chain partners. Simple vendor managed inventory programs, followed by a simple Excel spreadsheet of weekly order summaries (specific to the materials they supply), then allowing partners access to your ERP by extending your network and even having weekly meetings or conference calls to share appropriate information are good ways to start building that relationship and sharing information.

Adding technology, however, is the next step. Technology that enables visibility brings to light all links in the supply chain by providing trading partners access to information that will enable them to do their jobs better. Sharing production schedules, sales forecasts, shipment status and other supply chain information allows for better decision making and partner relationships. Visibility software such as that offered by Manhattan Associates, Logility, i2, Manugistics and others minimizes supply chain surprises by providing the information trading partners need to understand ongoing operations, reduce inventories, improve customer relationships and remain competitive in the marketplace.

By enabling visibility, organizations are able to understand their roles in a supply chain and are aware of the other links and their activities. Sharing information so that trading partners understand and have time to react to events such as order status updates, manufacturing schedules, advance shipping notices and shipment tracking numbers minimizes surprises because everyone is aware of critical information in real time. This requires commitment to the technology that makes internal information available not only within the company but also to select supply chain partners.

So, how can you enable visibility in your supply chain? The first step is to adopt an enterprise application integration (EAI) suite to tie together and capture all relevant data in disparate applications and databases such that they can be presented in a common format. Although this is a huge undertaking, it implements the infrastructure required to support the next two critical pieces of the puzzle for visibility: executive information system (EIS) and supply chain event management (SCEM).

An EIS (also called a dashboard) pulls together all key performance indicators (KPIs) and presents them via a browser in near real time, giving company management the information they need to make decisions quickly and effectively. SCEM provides trading partners (suppliers and customer) critical event notifications on order status, schedule changes, invoices, shipment tracking and many other areas to give them the most time to react to changes.

Visibility also requires specific types of software applications that execute, manage and plan with a focus on supply chain procurement, inventory replenishment and customer relationships, as well as integrate and interact seamlessly with the systems in place for focusing on your link of the entire supply chain.

Procurement Applications

Procurement applications are key in providing visibility because they allow you to see global spend, vendor performance, and changing employee needs. Public and private procurement exchanges are one example of this technology. These are usually focused within a vertical sector to optimize buying clout and expert knowledge of specific commodity groups. They are found in the various industries, including chemicals; industrial supplies; maintenance, repair and operating (MRO) supplies; aerospace and so forth. Initially, companies should use these exchanges to make purchases via the Internet with an open line of credit or procurement card. More sophisticated users should then integrate this functionality into an intranet hub for all employees with pre-approved suppliers and negotiated pricing contracts based on the company's consolidated spend.

Another procurement and sourcing application is Configuration Management Software. Its purpose is to eliminate incompatible component choices when building a product specification. These applications are most likely to be found in complex electronics industries that use an e-commerce site to select, for example, a model number of a product such as a handheld RF gun and then choose a monochrome or color screen. Based on the product selected, the software drives the selection of processor speed and memory, operating system and wireless protocol requirements and ensures that customers order valid configurations of products.

Replenishment Planning Applications

Replenishment planning applications consider the effects of inventory investment, service levels and current orders and commitments, seamlessly matching profitability to customer response. They can easily manage high volumes of SKU/location combinations, and they have strong distribution resource planning (DRP) features that provide multilevel insight into demand and inventory. Perhaps even more important, these DRP capabilities have been specially designed to enhance widespread collaboration, even in a complex distribution network.

Replenishment planning views inventory from a number of perspectives, including actual demand data, future distribution needs and replenishment commitments. It is also exception driven so that planners can quickly focus only on those situations where supply and demand are out of balance. As a result, planners can spend their time making informed decisions about resource allocation, expediting orders and customer service rather than tending to routine replenishment orders that replenishment planning can handle automatically.

Replenishment planning anticipates and averts problems such as stock outs and out-dated inventory. Minimizing obsolescence, the solution presents planners with economically sound options and pleased customers. Other benefits include quicker response to market demand, timely orders and deliveries and improved inventory turns.

Customer Relationship Management Applications

Customer relationship management applications traditionally include three primary modules: sales force automation, call center management and field service. Sales force automation tracks all opportunities from prospecting to closure, with extensive visibility into the pipeline. Call center management automates either phone- or Web-based order entry, product support call center activities that flow back into product development and text-based instant messaging with customers. Field service modules remove paper from the warranty support process, provide extensive Web-based status updates to customers and plan and coordinate service technicians' site repairs. Some allow Web-based appointment scheduling.

Other Ways to Achieve Visibility

The applications discussed above are vital for achieving visibility. However, certain auxiliary systems and applications can smooth planning, scheduling and event management so that they are transparent and seamless. These include:

Advanced Planning and Scheduling Systems—Advanced planning and scheduling (APS) software creates accurate, effective plans that meet service targets, as well as true least-cost, least-change, inventory limits and other related goals. These applications speed long-range capacity planning, tactical master production schedules, and even work center schedules at individual plants. From a "big picture" perspective, APS software can look across all facilities to attain minute-by-minute schedules for a single production line and accurate models of the production environment. They coordinate multiple component manufacturing plants into a single assembly plant so that they work much like the automotive assembly process.

Event Planning Applications—Event planning (sometimes called promotion planning) simulates the sales impact of alternative marketing programs. Neural-network models analyze multiple elements, such as price discounts, coupons, advertising and product placement, to predict consumer behavior. It features forecasting models for planning, tracking and analyzing the profitability of an entire promotion or the effectiveness of specific components. Forecasting models are also incorporated into a live "what-if" environment for testing and evaluation of promotional plans.

Labor Management Systems—Labor management systems (LMS) can set standard times for each discrete task required to receive, cutaway, pick, replenish, pack and ship product within a warehouse. Interfacing with a warehouse management system, the LMS will calculate a "standard" time for that total task assignment as each worker accepts it. When the workers have completed the task, the system will give them immediate feedback on their performance measured against the standard time. Management can use LMS reports to determine if times need adjustment or if specific workers need further training to improve productivity.

Inventory Slotting System—An Inventory Slotting System works in conjunction with a WMS to monitor demand continuously at the stock-keeping unit (SKU) and location level and adjusts the amount of product "slotted" in each location. Inventory slotting applications also optimize the specific slot each product should occupy to minimize travel distance and labor. Well-integrated systems create location moves within the WMS.

Yard Management Systems—Yard management systems (YMS) are designed for large distribution centers that manage multiple carriers and a large number of trucks each day. The YMS schedules carrier arrival and departure times for each dock door at receiving and shipping. A YMS will manage staged trailers that are pre-loaded to minimize wait times at the DC. They also measure compliance for any contractual issues.

Reverse Logistics—Automated/integrated reverse logistics applications are typically found in catalog or Web merchant businesses and automate the product returns process and capture real-time data that can be put back into the marketing and sales cycle. They not only control the product direction, but also the carton, pallet and shipment builds for efficient processing at the product destination. These applications decrease the chances of human error. Exception handling takes care of special requests based on such criteria as volume or serial number. Return materials authorization tracking, disposition by inspection and condition processing will return products to market, route them for "rebox," direct them for transport to a training and research division for further evaluation, or stage them for liquidation.

Perfect Vision

With the addition of an automated customs settlement system, these applications, systems and software create the visibility the supply chain needs so that a company can have a more integrated, nimble position against the competition. This requires developing a strategic visibility technology plan, integrating the technology and making sure it will contribute to later collaborative efforts.