At the end of a long day last week, a colleague and I were discussing a scene on a TV sitcom that we had both seen recently. In the scene, a main character is being ridiculed by his family over his advanced degree in cartography.

This discussion got us thinking about paper maps versus GPS navigation and wondering if physical maps are really becoming irrelevant.

Much of the time I would believe so, but I do get an odd form of mild vertigo sometimes when following verbatim the instruction of the GPS unit - like I've given away control to the technology. And sometimes it’s a comfort and a relief to work from a paper map or even stop and ask for directions.

My colleague felt the same, which led me to examine this further from a business perspective. I began to think about whether or not some companies suffer from a similar affliction when it comes to supply chain IT integration.

If you are having issues deciding on the right direction for your supply chain IT integration, here’s an exercise that may provide some insight:

Begin by drawing a one-page diagram that depicts the flow of the following technologies that are relevant to your organization. Use arrows to show the way that you thinkthey should be connected.

 - ERP

 - Forecasting

 - Supplier integration

 - Customer integration

 - WMS/TMS

 - 3PL integration

 - Import/export management

 - Performance dashboard

Once you have your supply chain IT integration map created, ask the following:

-   Are the technologies connected in the real world the way you think they should be?

-   What information is involved?

-   Where are the weak or missing links?

-   What causes the most disruption or error?

-   Do all significant parties involved in the supply chain understand the map?

-   Would everyone draw the same map?

-   Is the map dictating your activity? Are you in control?

Maybe it's a good time for a short cartography exercise, and involving key folks in your supply chain could yield some interesting insights on the best way to getfrom point A to point B.

- Matt

Photo Credit: Jimmy_Joe

In many of the companies I deal with, the Global Trade Management (GTM) function is placed in the hands of either a small, very qualified team or in the hands of a trusted trading partner: the freight forwarder.

These parties are typically highly qualified to deal in the labyrinth of global logistics. However, the placement and structure of these groups, their relationship to supply chain effectiveness, and the specialized technology tools with limited meaningful integration often don’t work in concert with the overall needs of right product, right place, right time, right cost.

For many firms, now is the right time to evaluate global trade capabilities and achieve a competitive edge. In some cases, upon evaluation, making use of existing capabilities with a re-engineered integration and visibility model is the correct path forward.

More frequently, when this evaluation is coupled with a review of current software solutions, a new platform for GTM is the more effective way to proceed.

Global trade management technology has come a long way in the last few years. Several stable and committed solution providers have delivered on a globally connected vision of the supply chain, offering robust applications that rein in control of the global supply chain and provide broad accessibility.

Their focus has been on meeting the demands of constantly evolving trade regulations while also maintaining a commitment to improving trade financial management and providing meaningful visibility.

Because many of the solutions have their roots in Software-as-a-Service (SaaS), their maturity in stabilizing a low cost of ownership and in handling broader systems integration needs is greater than most other areas of supply chain information technology.

Look for solutions that offer the following:

Export and Import Compliance

Export and Import Classification

Trade Document Generation

Lead Time Assessment and Reduction

Reduction in Duties Paid and Non-compliance

Landed Cost/Origin Management and What-if Assessment

Trade Finance

Supplier Collaboration

Robust Integration with Accounting, ERP and SCM systems

The barrier to deploying GTM solutions is being lowered every day, and the path that yields substantial results continues to become clearer. Read the latest paper from Tompkins (and co-authored by yours truly) on Global Trade Management Technology to explore this topic further, and, as always, I’m interested in your thoughts.

- Matt

Photo credit: Mishel Churkin

Take a step back and look at your supply chain. What do you see? If you were to draw a diagram to represent communication internally and with your suppliers, what would it look like? Are your communication channels so haywire that drawing a diagram of it seems absolutely impossible?

Do you think your answers to these questions correlate with the stability of your lead times?

Stabilizing inbound leads times is a sure way to gain positive results and serious efficiencies in your supply chain performance.

In the constantly expanding global supply chain, flexible sourcing needs to be complemented with real supply chain visibility and control in order to gain the competitive edge. Often product management, marketing or merchandising functions are not partnered with the related logistical review in evaluating forecast and pricing for products.

The bullwhip effect of demand variability and lead time swings (see more information on this effect from a report by the Tompkins Supply Chain Consortium) can offset the best laid plans. Also, when fluctuations to demand and sourcing complexities arise, getting everyone onto the same page how to handle the downstream impact is often difficult.

Where to start?

First, have an open internal dialog among product sourcing, logistics and IT. Make sure there is a common understanding on the movement throughout the supply chain and where the visibility elements may lie. Consider the suppliers’ capabilities for inventory management and manufacturing. Who are all of the parties involved in getting the product from source to destination?

Second, have an end-to-end walk through the supply chain – maybe for 2-3 key suppliers – to set the tone for the possibilities. What does the supplier do when you send the order? Are multiple orders accumulated to satisfy production efficiencies? Does what you understand as a minimum order quantity sync with the supplier? Walk through the essential logistical components – manufacturing site to outbound port, international shipment, inbound port and shipment to DCs or customers - de-composing the lead time into its multiple segments.

Third, assess how your internal IT systems support modeling the supply chain. Are there opportunities to better-represent lead times or make updates based on variable factors? Sometimes the updates might be a simple adjustment to existing practices. Other times, the updates may be justified by the addition of new supplier collaboration, trade management or order visibility tools – and just maybe, you have the tools sitting on a shelf ready to activate. Overall, focus should be on making sure everyone stays on the same page and knows the right way to manage.

Have you been able to walk the walk? What obstacles and discoveries have you identified?

-- Matt

Photo credit: D. Sharon Pruitt

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