Where do you rate in supply chain visibility? 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 the food and beverage industry.
In today’s high-velocity logistics environment, end-to-end visibility throughout the supply chain is emerging as an essential capability. Visibility to suppliers’ production rates and shipment lead times, in-house inventory historic data, and customer sales projections versus actual sales and shipments across the supply chain can help reduce network-wide inventory levels, maximize customer satisfaction, and respond dynamically to events that occur during the execution process.
As might be expected for an emerging capability with such an important impact on operational excellence and customer satisfaction, the food and beverage companies responding to a recent survey exhibited a wide range of current visibility capabilities (see Figure 1). Although 54 percent of respondents rated their current visibility as a 7 or better on a scale of 1 to 10, 26 percent rated their current capabilities as no better than a 4.
While improving visibility is an important goal for food and beverage companies, many barriers exist to achieving this goal (see Figure 2). Survey respondents cited “integration costs/challenges” as the most highly ranked barrier, followed closely by “technology limitations of trading partners/service providers.” This makes perfect sense because it is the lack of technical sophistication or capabilities of trading partners that often drives the challenges of integration. On a positive note, “lack of company investment/focus” was ranked as the lowest barrier to improved visibility, indicating that most food and beverage companies understand the value of improved visibility and are willing to make the appropriate technology and integration investments to achieve it.
Respondents cited improved order fulfillment as the most powerful benefit of improved visibility (see Figure 3), followed closely 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 objects (inventory, shipments) and powerful event management technology to provide exception detection and proactive alerts. Lowering pipeline inventories also scored high.
In today’s digitally connected world, food and beverage 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 digital 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 occur that impact their decision processes. Since these will normally be exception events (e.g., the truck will be late, 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 digital logistics, 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 affect 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. This is especially important in the food and beverage industry, where 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 such as XML are reducing those barriers. Leading food and beverage companies are investing in systems integration to gain competitive advantage through the ability to see and act upon supply chain information.
Food and beverage companies should not overlook opportunities for short-term, highly dependable payback while pursuing higher-level supply chain visibility strategies. Tompkins Associates can help you exploit these opportunities with the following services:
Vendor solutions to supply chain visibility are not clearly defined. Therefore, a company needs to carefully understand what supply chain visibility means to them and what the real ROI/business 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, all 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 (919) 855-5461 to request information.
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