When thinking about creating a collaborative supply chain, imagine that you are a conductor for an orchestra and are raising your arms, preparing the group to begin.

But when they group begins to play, you can’t make sense of the tune because each member of the orchestra is playing from a different sheet of music.

In this scenario, we learn that you have to do more than pull a group together and signal them to begin. You need to be prepared and make sure everyone is on the same page.

This is also true when in the process of a supply chain collaborative system selection or when implementing a collaborative supply chain: Having accurate information that can be viewed by all parties is ideal for good collaboration.

And for many organizations, an IT system may be exactly what they need to achieve a collaborative supply chain.

However, as with any IT systems-supported initiative that involves multiple viewpoints, there are risks that should be realistically formulated before casting the visibility and collaboration net wide for all to take part.

Before we take a look at the risks, let’s run through some core elements of the collaborative supply chain:

• Forecasts – Sales forecasts at the stocking unit and stocking location are valuable information for suppliers providing materials or finished goods. Visibility into the sales forecast is a great place to start. Ultimately, and depending on your own forecasting capabilities, involvement with suppliers in collaborative forecast updates is sure to yield future improvements in forecast accuracy.
• Sales History – This information is similar to forecasts in its value to suppliers. Sales history provides a basis for understanding how forecasts are developed and insight into past activity, which can further secure the supplier’s commitment to your forecast. Sources for sales history may be detailed point-of-sale data or may be a refined version that supports the forecasting process.
• Inventory on Hand – Visibility into inventory on hand provides yet another validation point for suppliers in understanding where their inventory lies within your supply chain. Understanding and managing inventory over time gives additional insight into typical product movement, which may not be evident in the sales forecast or sales history.
• Replenishment Needs – Communicating the replenishment needs to suppliers is central to any supply chain operation, and the need to collaborate in this area is ages old. Typically the transmission of the PO and the acknowledgement from the supplier are the key elements. Email, fax and paper-based operations are the lowest common denominator for many organizations, and moving toward electronic systems is often met with resistance. The more advanced offering that supports collaborative replenishment involves real-time communication of replenishment needs based on the supplier’s order quantity capabilities, followed by a timely acknowledgement that includes any adjustments and later provides an advanced ship notification which represents the shipment(s) that will arrive at your doorstep.

One important factor in acceptance of the meaningful collaborative supply chain is that the relevant, available information is accessible to the appropriate parties involved.

As an example, sending a supplier your sales forecast to a production scheduler via email is a positive step toward collaboration.

However, making that forecast available on a single platform that can be viewed by the supplier’s finance group, sales group, distribution center operations, and transportation providers ensures that they’re all referencing the same version and are planning or operating based on more than delayed or distilled information.

This type of open visibility and collaboration with the right channels is a tricky balance, but the downside of delayed point-to-point communications and related inaccuracies makes the more thoughtful balance worthwhile.

When opening up visibility to your suppliers and leveraging trading partners’ capabilities, there are also risks. These key risk factors include:

• Security of Information – Opening up to suppliers and logistics partners relies on IT systems that provide for data security. In addition, agreements to recognize the data as proprietary for parties involved in the collaborative process should be evaluated.
• Stability and Data Availability – Once the supply chain evolves into the collaborative model, reverting back to manual methods in the event of system downtime could be a considerable disruption. Ensuring system uptime and redundancy of processes is a must.
• Single Version of the Truth – Consolidating all of the elements of the collaborative relationship in a synchronized manner ensures suppliers and logistics partners are reading from the same sheet of music. The flip side of this in terms of multiple point-to-point communications can lead to chaos.

We’re interested in knowing your thoughts on these risks and benefits, as well as what you might be doing to further the collaborative supply chain. Looking forward to your input and comments.

- Matt

Photo credit: Monica Liu

What are the most disruptive elements to supply chain effectiveness? With up to 80% of supply chain tied to external forces, it is external trading partners’ activities that often leave you highly exposed. 

In order to meld your partner’s activities into your supply chain management practices, a hosted trading partner management platform may be the quickest answer. Of course, this doesn’t apply if all of your processes are synchronized and you have full visibility and control. But I know very few to whom that statement actually applies.

If you’ve been thinking about opening up supply chain communications with your trading partners, the marketplace has broad and robust supply chain IT solutions that provide a valuable platform for securely exchanging the following key information: 

• Forecast;
• Order management;
• Inbound transportation and import/export considerations;
• Domestic distribution practices;
• Transportation to customer; and
• Performance measurement and improvement.

Linking partners in the supply chain can yield the highest level of improvement. It can also highlight the elements of the supply chain that truly need to be improved. Transparency begets understanding; understanding begets improvement. There is nothing like a comprehensive exchange among all of your trading partners (and your internal processes) to gain transparency to where the pains lie and where improvements are needed.

What makes hosted solutions, or SaaS (software-as-a-service), attractive in general is that they offer a solution set to a broad base and limit deployment headaches. They also make simultaneous application updates to a broad population, insulating the user from system upgrade risks.

In addition, SaaS is particularly attractive to the supply chain because it allows for modular deployment of ERP updates and supply chain execution systems updates with minimal risk to trading partner and product flow. When applied to data exchange with trading partners, SaaS is extremely attractive because it typically offers a flexible set of data integration standards (including web form data entry for the less sophisticated).

With the diversity of partners involved and the constantly-evolving maturity of data synchronization capabilities, we believe SaaS is a solid play for supply chain partner integration.

Tis the season to explore your hosting options. Let us know what you think about hosted solutions.

Happy Holidays!

Matt Wilkerson

Photo Credit: izik

All right. We’re all a good way into the economic hiccup and gearing up for the recovery.

Budgets have been cut. Locating financing for new initiatives is like searching for the leprechaun at the end of the rainbow. Forecasts and actuals are way out of whack, and many of our plans have not reached what we’d expected a couple of years ago.

We’re seeing signs that we may soon be swamped with demands to achieve volumes and service levels that meet or exceed those that we were dealing with before the downturn.

As mentioned in the last post, there is no silver bullet for across-the-board, world-class, or best-in-class transformation. But, there are some well-understood steps that can make a major difference in preparing the organization to meet the demands of the recovery and achieving a market-dominating position, depending on your current situation.

There are moves that can be made today to demonstrate a clear, positive ROI, and you can build a business case that’s sure to gain the thumbs-up from the executive suite. What we want to explore here is what these look like based on where you are today.

First off, take a step back and look at the IT that’s currently in place and perform an assessment. What IT investments have you made that either satisfied your needs or wound up short of expectation? Are there improvements that can be made or additional components that can be added to bring more cohesiveness to you supply chain or a better basis for handling the rapid changes that are right around the corner?

Let’s begin the IT assessment by looking at two areas in the supply chain IT spectrum: (1) Supply Chain Management and Planning and (2) Global Trade Management and Supply Chain Visibility.

1. Supply Chain Planning and Management (SCP/SCM)

This is the area that most often sees the largest "bang-for-the-buck" in regards to IT investment. Key areas to address for your SCP/SCM business are:

• Manufacturing (either contract or in house) – Capabilities for managing order quantities and frequencies, lead times, and relationships with manufacturers based on market competitiveness
• Inventory – Determining the best levels and positioning, especially any that impact costs and handling processes in other areas of the organization
• Product Importance/Prioritization – Meeting service levels and the organization’s overall priorities

The implementation of solutions to address these issues very often falls at the lighter end of the scale when looking at the IT wallet, but it does require a good deal of organizational coordination and acceptance. Introduction of improved IT (or better configuration of existing supply chain technology) in the area of demand forecasting, sourcing and procurement, and distributed order management, often yields return on the investment in a major way.

For some, there is little investment required as the solutions may already be installed or available on your own shelf.

2. Global Trade Management (GTM) and Supply Chain Visibility

This is another area that sees a great deal of return in a short time-frame in terms of IT investment. A bit deeper coordination (internal and external) than the SCP/SCM elements is required, because it typically involves external trading partners and the broader segments of the supply chain network.

The positive here is that the focus is on linkage and visibility in meeting existing service goals can very often be the driving business case element, more so than establishing new goals for the entire organization. Key areas for assessment and improvement include:

• Supply Chain Visibility – Are you proactive or reactive in regards to disruptions?
• Other Systems – Are you linking your GTM system (either in-house or provided by freight forwarder) to other systems for better status updates on distribution labor and transportation resources?
• Performance Expectation – What steps do you need to take to ensure freight forwarders and other trading partners are performing as expected?
• Import and Export Management Functions – Are these functions siloed, or are they being communicated with meaningful updates to the rest or the organization?
• Cash Flow – Is the cash-out to cash-in cycle capable of being shortened by improving the ability to address adjustments and by increasing the visibility of progress to satisfy demand? (By the way, cash flow, of course, is a major motivating factor for adding more effective IT solutions to address these needs.)

Time to deploy, cost to deploy, and return on the investment for these two areas are receiving a lot of attention – and rightfully so. They are the areas that provide for the coordination to address the broad needs of supply chain flexibility and setting a new standard for speed-to-market and customer service levels.

These well-aligned supply chain IT updates set a new level of competitiveness and ability to take market share. All of this can be achieved with relatively little IT spend as compared with other major supply chain initiatives.

So, finding your leprechaun (in other words, finding financing for IT initiatives) may take a little more than luck; it takes a firm business case that’s built with a solid assessment.

But, feel free to hold your rabbit’s foot or horseshoe while you’re working on it.

We’re interested in knowing your thoughts. What are you doing to prepare for supply chain IT investments? And, what would you like to know more about in this area?

Ciao for now!

Matt

Photo credit: little_frank