Competitive Edge Magazine

Improve Supply Chain Visibility for Government Support

Through visibility, organizations come to understand their roles in a supply chain and are aware of the other links. Real-time supply chain visibility, combined with proactive event and exception management systems, has emerged as a key element of next generation supply chain excellence.

In today’s high-velocity logistics environment, end-to-end visibility throughout the supply chain, including suppliers’ production rates and shipment lead times, in-house inventory historic data, customer sales projections versus actual sales, and shipments across the supply chain is emerging as an essential capability to reduce network-wide inventory levels, maximize customer satisfaction, and respond dynamically to events that occur during the execution process.

As expected for an emerging capability with such an important impact on operational excellence and customer satisfaction, a supply chain management survey found a wide range of current visibility capabilities among companies surveyed. On a scale of 1 to 10, 54 percent of respondents rated their current visibility as a 7 or higher. Twenty-six percent rated their current capabilities as no better than a 4 (see Figure 1).

 

While improving visibility is an important goal for government, many barriers exist to achieving this goal. According to the supply chain management survey, the highest ranked barrier is “integration costs/challenges,” followed closely by “technology limitations of trading partners/service providers.” This makes perfect sense since it is the lack of technical sophistication or capabilities of trading partners that often drive the challenges of integration. On a positive note, “lack of company investment/focus” was ranked as the lowest barrier to improved visibility, indicating that government understands the value of improved visibility and is willing to make the appropriate technology and integration investments to achieve it (see Figure 2).

Improved order fulfillment, is the most powerful benefit of improved visibility, according to the survey. Followed by the ability to respond faster to issues and events as they occur in the supply chain. This demonstrates the growing link between visibility of key supply chain elements such as inventory, and shipments. In addition, powerful event management technology provides exception, detection and proactive alerts. Lowering pipeline inventories also scored high on the survey (see Figure 3).

Strategic Recommendation: Make Supply Chain Visibility a Strategic Priority

In today’s digitally connected world, companies must create a digital logistics nervous system as a platform for enterprise and supply chain-wide visibility. Achieving end-to-end visibility has become a key strategic initiative and imperative, driving benefits through increased efficiency, lower inventories and improved fulfillment, while setting the stage for additional value through next-generation command and control.

Traditionally, supply chain execution systems, primarily warehouse management systems, have been limited to inventory within the four walls of a single distribution center. Higher level, aggregate inventory information has been left to ERP or other management systems.

However, the level of supply chain visibility achieved through ERP has often proved inadequate to meet a company’s supply chain needs due to the way ERP has been deployed, the level of information detail, and the inability of ERP to easily integrate with other systems.

Achieving real-time global visibility is a powerful value-creator that can reduce inventory (working capital), decrease execution costs (operating expense) and increase the responsiveness of customer order fulfillment (order-to-cash, revenue growth). It also supports increased network flexibility and overall supply chain velocity.

A best-in-class visibility solution will also support real-time order status, integrating the visibility engine with sell-side web sites that allow customers to obtain on-line order status information, a weakness in many current e-commerce applications.

Visibility systems must also include powerful event-management capabilities that can notify the appropriate individuals when events that impact their decision processes occur. Since these will normally be exception events (e.g., the truck will be late or there is an inventory shortage), users must have the flexibility to set event triggers and communication methods (pager, e-mail, etc.) according to their specific needs. With the right solution, this information flow will be intelligent, flexible and delivered in near real-time.

Companies must also be able to act upon the visibility information to effect action across the enterprise and extended supply chain. This requires a new generation of enterprise command and control applications that provide enhanced levels of logistics efficiency and support new roles and responsibilities. Visibility combined with command and control can enable centralized QA management, product recall, and other capabilities that reduce inventories, extend shelf life and support brand protection.

Survey respondents identified barriers to visibility, especially those related to the capabilities of trading partners and the time and cost of systems integration, but the Internet and new integration technologies are reducing those barriers. Government is investing in systems integration to gain competitive advantage through the ability to see and act upon supply chain information.

Exploit Opportunities While Pursuing Visibility

Government needs to carefully understand what supply chain visibility means to them and what the real ROI/benefit will be before starting to look at software vendors. Our goal is to create world-class supply chains for our customers. Tompkins is uniquely qualified to support customers in achieving this goal because Supply Chain Operations is our core business. Our business model provides comprehensive services to assist our clients from conceptual strategy through implementation while minimizing risks.

To learn more about how Tompkins Associates can help you use your supply chain as a competitive advantage, visit www.tompkinsinc.com or call 800-789-1257 to request information.

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