Managing supply chain complexity

As Murphy’s Law states, ‘If anything can go wrong, it will.’ While the phrase can be justly applied to describe the challenge of collaborative commerce in more stable and predictable economic circumstances, it has even more resonance in the troubled and very unpredictable times the world now faces.

Margin for error
The process of managing ‘buy-sell-deliver’ transactions in a single sales channel and on a national model is complicated enough. Once this process is translated, however, to multiple channels and to a global scale, a plethora of further complexities is introduced. Multiple vendors in different countries, sometimes working with other trading partners, are nowadays involved in the completion of one or a series of supply chain objectives before the baton is passed onto the next set of players.
The supply chain consequently elongates, becomes more complex and the margin for error inevitably becomes that much higher. This margin is further magnified by the current economic risks to which many companies’ supply chain are being exposed. What can companies do collaboratively to minimise complexity and risk?

Visibility
One obvious answer is to provide information about supply chain events as far down the chain as possible – from retailer to distributor to transport service provider to manufacturer. Many vendors currently offer Supply Chain Visibility services, of which the most elementary is a ‘Track & Trace’ system, but is that enough? In a real world scenario, how much value does the knowledge of event failure or a problem in the supply chain bring to a company after the occurrence of that event or problem? More importantly, how might that problem impact future business for the collaborative community as a whole?

Supply Chain Event Management
This is where Supply Chain Event Management becomes critical.  The principle of Supply Chain Event Management is that partners should be able to view, manage, synchronise and control all supply chain events throughout the collaboration as they occur. This ability to manage potential problems, rather than just to be made aware of them, means that companies can deal with critical supply chain events and take action to prevent event failures before they happen.
When something in the chain goes wrong, as it often does, effective Supply Chain Event Management ultimately provides the appropriate parties with alerts via every possible or preferred communication medium (web, Microsoft Office, handheld device) to address the situation without delay.

Collaboration
Another important consideration is the management of the degree of collaboration to which retailers, suppliers and their service providers want to commit. The much touted idea of ‘collaboration’ in today’s world of multi-channel, global commerce is certainly an idyllic concept, but in practice, many companies are still not willing to share data. An effective Extended Enterprise Management tool, which is more than just a Supply Chain Visibility and Event Management application, allows users to elect how little or how much of that information they want to share across the collaborative community. It allows them to achieve the previously elusive goal of ‘Context-based Information Delivery’, which might be summarised as “who needs to see what”, by taking into account the sensitivity and practical usefulness of the information to each member.

Real-time insight
To complement this, Supply Chain Intelligence solutions can allow both companies and partners to benefit from at-a-glance and real-time insight into the performance of their own operations. To be fully effective, Supply Chain Intelligence should be used pervasively across the supply chain.

Inventory management
Lastly, we should consider something that has become a new challenge in the world of collaborative, multi-channel commerce: effective inventory management.  The amount of surplus (non-active) inventory that exists in most companies’ supply chains is typically sizeable, and is found in manufacturing plants, in up and down-stream distribution centres, in transit on trucks, ships and planes, and in back-of-store warehouses at the retail end of the supply chain.  The ability to reduce this by even a fraction of a percent can significantly affect a company’s bottom line.
Effective Distributed Order Management technology enables companies not only to gain control of inventory held in multiple warehouses, across multiple channels, in different countries, but also to monitor and manage product as it moves along the various stages of the chain—in inventory, as it’s ordered, in production and while it’s being shipped. This can also enable companies to aggregate and prioritise orders to meet the needs of important customers and to re-route in-transit inventory based on where it is needed most. Managing stock in this way enables the effective management of both physical and ‘virtual inventory’. Views into real and virtual inventory can help companies better plan, optimise production cycles, improve transport execution, allocate inventory on the fly—benefiting the entire collaboration.

Supremacy
Collaboration between parties with individual objectives, working in different time zones and in different languages, is never going to be easy.  The range of solutions available to companies competing in this space, however, is growing. In the fight for supply chain supremacy, effective Extended Enterprise Management, Supply Chain Intelligence and Distributed Order Management will all be invaluable weapons in the armoury of companies battling for success.

Steve Smith is Senior Vice President at Manhattan Associates