How can better visibility help organizations improve performance and cut costs in their supply chain? We’ll elaborate on the importance of visibility in the supply chain and major pain points for organizations.
In today’s global world, your supply chain is no longer isolated to your own organization. Instead, today’s supply chains encompass a spider-web of partners and dependencies, whether you want it to or not. Materials in an agency’s supply chain may make stops in multiple warehouses, ride a global transportation network, or sit for months or years before suddenly being needed in a matter of hours or days in the event of an emergency. The complexity and unpredictability of requirements makes the supply chains for departments such as the Federal Emergency Management Agency or the military, among the most difficult to manage.
One proven way to increase the reliability and responsiveness of supply chains is to increase visibility into everyday supply chain functions. Better information can reduce bottlenecks, identify process improvement opportunities, and make government supply chains function better and at a lower cost.
So, what does “visibility” mean in the 21st century supply chain?
Visibility means more than just awareness of where materials are at a given point in time or the amount of goods in a warehouse. Instead, visibility means a window into a wider range of data, supply chain processes, events, and patterns that enable automation, dynamic responses, and predictability. Great visibility into a complex, 21st century supply chain not only answers the basic questions of what is the current state, but it also helps answer questions like: how are we in this state; why are we in this state; and what will the state look like in the future?
If you have followed my writing at all, you already know I am the great advocate of Supply Chain Control Towers. Why, because they provide such great VISIBILITY into the whole supply chain. That easily translates into reduced supply chain costs. Let’s see how! In Part 1, we examined Supply Chain Visibility: A Critical Strategy to Optimize Cost and Service
I have found some good ideas on how visibility can cut supply chain costs from consultant John Berry.
There are plenty of sophisticated methods and algorithms out there to help calculate safety stock levels. However without good supply chain data, it’s almost impossible to implement any kind of rigorous inventory management process.:
- The unfortunate reality is that organizations frequently don’t have precise information about on-hand inventory counts. This could be caused by a less-than-reliable ERP or WMS implementation. Data latency is another common culprit for inventory blindness. Often inventory data is processed in batches. In a high velocity distribution center operation, even a 15 minute batch window can cause huge distortion on on-hand inventory counts. In fact it’s common to see daily, weekly or even monthly inventory reconciliations. Often organizations outsource fulfillment operations to 3PLs without properly thinking through data integration. And often, inventory visibility is completely based on an emailed spreadsheet! Keeping safety stock to offset bad processes is completely wasteful.
Read more: http://ec-bp.com/index.php/advisors/ec-bps-bloggers/10583-supply-chain-intelligence-using-your-visibility-to-reduce-supply-chain-costs-part-2#ixzz35dzRa3vx
If you have followed my writing at all, you already know I am the great advocate of Supply Chain Control Towers. Why, because they provide such great VISIBILITY into the whole supply chain. That easily translates into reduced supply chain costs. Let’s see how!
Supply Chain Visibility: A Critical Strategy to Optimize Cost and Service is a great report from Aberdeen by Bob Heaney and posted by GS1. A survey of global companies shows that Supply Chain Visibility (SCV) is a high priority for improvement and a critical strategy. Supply chain execution and responsiveness require the tight synchronization of supply and demand, as well control of the three flows of commerce (movement of goods, information and funds) across a large number of logistic and trading partners in a wide geographic area.
It requires supply chain visibility which they define as “The awareness of, and control over, specific information related to product orders and physical shipments, including transport and logistics activities, and the status of events and milestones that occur prior to and in-transit.”
Visibility means more than just track and trace. It begs a control tower approach which covers everything from raw material to the delivery to the end customer. A global supply chain can be huge and every member must be in synch. This approach is defined as “A set of integrated processes and technologies that support a seamless flow of product from source to end customer, regardless of global complexity, or sales and logistics preferences of customers.”
It is a given that to manage our supply chain, we have to have as much visibility as possible. Our SCM Control Tower is hooked up with logistics providers, parts suppliers, customers, manufacturing, procurement…did I forget anybody? Yup. The electronic commerce people who move this data all around for us: the Services Hub.
Yes, we are getting good info from these other sources, but our Services Hub could add value too.
Leveraging the Services Hub for Supply Chain Visibility is just one example of what services vendors are capable of. The approach to better visibility is combining existing IT technology with some more unique tools.They have explained the language of supply chain visibility, measuring the value of visibility, and building a solution with a step-by-step strategy.
Now we could look at all the current definitions of “Supply Chain Visibility” and write a book (gee, what a great idea for my spare time)! Let’s use the following definition for now: Visibility gives you the information you need, when you need it and in the right context to make business decisions. It finds root causes, which now makes it “actionable intelligence”.
We have been gathering a list of issues that need to to be resolved before building a Supply Chain Control Tower: SCM and IT partnership; Visibility; Strategy and expectations; Foundation for the tower; and Team-building. Here’s a recap of what we know, what we need, and where we might go.
SCM and IT partnership
The supply chain functional teams are expecting support from Information Technology. Up to now, many IT organizations have not been heavily involved with a lot of the supply chain; for example, the Procurement system could be a package that is supported directly by the vendor. How about bringing the teams together by emphasizing IT network management skills? IT manages complex wide-area networks using state-of-the-art applications. SCM will rapidly understand that IT brings real value to the party.
Scott Koegler wrote about “Combined Data and Visibility”. He pointed out that the number of systems or software applications that make up the supply chain within a single company is likely to be more than 1 and could easily be as many as 20. If that’s the case how is it possible to actually achieve what we’ve been calling visibility? He quickly dispelled the notion that all data for the SCM Control Tower can come in real time from the EDI system. So a conclusion is that the SCM Control Tower will need what is called “middleware”.
Below is a guest editorial from our friend Mike Martz
As a supply chain professional, you’re probably scratching your head about the whole Big Data thing, that is unless you’re an early adopter and have already reaped its benefits or suffered through start-up issues. I bet you’re questioning how and when you should stick your toe into the water.
In a previous article (read it HERE), I referenced ideas GXS’s Mark Morley expressed about leveraging Big Data for visibility, auto-replenishment, and preventive maintenance, but those are high level objectives that could require lots of planning and investment. What you should be asking at this point is whether Big Data is even needed to reach your goals.
With its massive datasets and the need to utilize special tools for analytic purposes, Big Data may well be overkill for much or all of your needs. But one real outcome of all the Big Data hype is the increasing expectation that solid information is the foundation of the best business decisions. The fact that Big Data is being so heavily discussed is in itself focusing attention on what’s required to turn data into usable information. You should think about your business needs and how to identify and obtain the data that can provide them.
Read more about what Mike has to say on Big Data:
In our article on “EDI Goes Deep”, we first encounter the concept of “regional” networks. These developed over the years, but now that everybody is going global, how has the auto industry adapted? Like instead of everybody having to join all these regional groups, how have they “gone global” How do we bring these regional centers together?
Everything starts with Industry Associations. The automotive industry has developed a number of industry associations. These associations provide standards for how automotive companies exchange information electronically with each other. With global expansion in recent years, the industry associations around the World now work closely with each other so that automotive companies can set up new plants and onboard new business partners as quickly as possible.
Read more: http://www.ec-bp.com/index.php/articles/industry-updates/10487-automotive-edi-tying-the-strings-together#ixzz2zsZxrtRb
A recent article in the Wall Street Journal says that “Supply chain management as a proving ground for senior leadership roles, including CEO, is increasingly evident, with high profile examples that include Apple Inc. CEO Tim Cook and Intel Corp. CEO Brian Krzanich. One reason for this phenomenon is that supply chain leaders typically have integrated experience across very different and key functions in purchasing, manufacturing, engineering, strategy and logistics and often oversee new product launches and customer service. This unique set of functional skills is increasingly important to corporate competitiveness.”
It didn’t use to be that way in my earlier business career. Traditional path to the top varied. Finance was a great path (Reg Jones at General Electric). An engineer, Alfred P.Sloan, was a famous CEO at General Motors. Probably the best known CEO with a manufacturing background was Henry Ford. Lots of marketing / sales folks became CEO, such as Dave Whitwam at Whirlpool. Sometimes even lawyers rose to CEO, like Bob Wright at NBC.
Read more on Supply Chain Expertise is Expanding
Ever get billed by your bank for car insurance when you don’t own a car? Does your cell phone provider fail to send you a bill, yet keeps asking you for your address? Sounds like they both have a Master Data Management problem. The recent emphasis on regulatory compliance, Service-Oriented Architecture (SOA) and mergers/acquisitions has made the creating and maintaining of accurate and complete master data a business must-do.
Most software systems have lists of data that are shared and used by several of the applications that make up the system. For example, a typical ERP system as a minimum will have a Customer Master, an Item Master, and an Account Master. This master data is often one of the key assets of a company. It’s not unusual for a company to be acquired primarily for access to its Customer Master data.
A comment to us from a large supply chain “hub”: “The GXS mess shows how fragile everything is in the supply chain. Stakeholders (suppliers, manufacturers, distributors) do not control their own destiny if they are using an EDI Provider”.
There is an imbalance of power: end users should have control over the supply chain. Is it time for them to move to their own inside system which they control? What can stakeholders do? They don’t want to support everything (re-invent the Internet or something counter-productive like that). Yes, they have an alternative to run everything over an AS2 setup. They just don’t want outsourcers making the rules.
One view of the current state of affairs is that interconnects are too “black box,” and that VANs “grudgingly cooperate” instead of proactively advancing the science.
Some of the possible steps to correct this mess include: