Improving Supply Chain Visibility
“I need supply chain visibility,” remarked the client over coffee at a break at a conference. I nodded my head in agreement. It was clear to me that improving supply chain visibility would greatly improve the client’s decision making. So, I asked, “What does supply chain visibility mean to you?” She looked at me like I was the dumbest analyst in the world and remarked, “Doesn’t everyone know what supply chain visibility is?” “No,” I remarked. “This is the problem. Most companies will use words like visibility and assume that everyone knows what they mean. For a successful project, companies need to be very clear in the definition. Let me explain.”
By Lora Cecere
I opened my book and started a discussion on the figure Supply Chain Visibility: ‘Important vs. Performance’. I explained, “While most companies speak of the end-to-end supply chain journey, they have automated their enterprise, not their value network. As a result, there are few gaps in manufacturing visibility, but large gaps in transportation and sourcing. Even larger are the gaps on the customer side with distributor networks. Each of these visibility elements are closed using different software, techniques and sources. Unfortunately, there is no system that enables interoperability between networks.”
I continued, “In the early journey for supply chain visibility, companies invested portals. This is much like investing in a billboard.” She laughed, rolled her eyes, and said, “ I hope that it is not like the one across the street!” “Yes, unfortunately, many of the portals are just as useless in extended supply chain visibility as the billboard across the street from your offices, ” I continued. “The issue with the portal is that there is no inter-company supply chain system of record. As a result, as the rules and data change, it is tough for a supplier to keep track of the net changes. I was speaking to a client of Caterpillar the other day that said that they get thirty-five different posts/day/manufacturing line via a portal on what supplies to ship to Caterpillar’s production lines. The problem is that with this number of changes the posting on the portal becomes noise.
The second step is often to invest in something that the client calls a control tower. It sounds good. Company’s want to be in control. However, there is no industry standard definition for a control tower, and most of the investments are in data models that are enterprise-centric. To build visibility between trading partners the flows need to be bidirectional over a one-to-many or a many-to-many data model. The control tower concept is useful within an enterprise, but proves to be very limiting in building trading partner visibility in the value network.
The third step might be to use your ERP system to push messages out into the network. However, these ERP generated messages cannot be automatically received through machine to machine interface. Most go into email or a portal, and as a result, there is no two-way dialogue or message confirmation.
So, to close the gap, companies need to invest in Supply Chain Operating Networks that have the following characteristics:
- Communication/Collaboration. Bi-directional flows with send and receive functionality. The need for collaborative workflows and bidirectional sharing goes hand in hand. • The Right Architecture. A many-to-many architecture to enable the system of record. There needs to be a persistence level to query and report on agreements.
- Onboarding and Community. Visibility solutions need to work for both parties. When the community is established and the trading partners are companies that you do business with, the network decision is easier.
- Right Applications. Today, the value networks do not extend across make, source and delivery. They tend to be very functional, and there is no system for interoperability between networks. As a result, build with the end-goal in mind.
- Canonical Infrastructure. Trading partners want to connect in the way that they are comfortable. So whether it is Electronic Document Interchange (EDI), Fax to EDI or an output from the client’s ERP, build a system to convert, synchronize and visualize the messages.
“I hope that this helps!” I said as the gong to return to the meeting chimed in the hallway. “It does, you have given me a lot to think about. I guess that it is not as easy as saying visibility. One of our challenges has always been defining terms well enough to enable implementation. This is another case.”