Supply chain visibility instead of word of mouth

It’s important to understand that supply chain visibility today cannot be achieved without IT support. If you source next door, manufacture in-house, and deliver around the corner – yes, you might be able to get away without IT to keep an eye on things ;). But, today, such basic supply chains barely exist anymore.

E-commerce and the ability to easily compare products and services are key drivers for change in today’s modern supply chains. Consumers can shop around the clock and expect delivery within hours. This has led to a sharp increase of small parcel volumes globally, with highly individualized “last mile” requirements. Based on consumer behavior, there is also a high global volume of corresponding return deliveries. Businesses today face…

• Greater customer expectations
  
• Increased competition
  
• Shorter product cycles
  
• More complex products
  
• Global procurement
  
• Volatile markets
  
• Natural disasters and traffic disruptions
  

And the only way to manage such complexity is through comprehensive IT support. “Word of mouth” is a great song (…actually, I have not heard it in a while – you can listen to it here) but it surely is a very, very bad way of running a supply chain. Unless of course, you manage the simple “around-the-corner” supply chain as described above. But that's rather the exception these days...

Despite these tremendous benefits, there is a major discrepancy between how important businesses say the topic is for them, and how often they actually implement visibility projects. Many still compensate for a lack of visibility by throwing money at the problem: maintaining high levels of safety stock, changing modes of transport, or paying for special trips and overtime.

• The need for information and the interpretation of specific data can vary greatly from one supply chain partner to the other, and this represents a great challenge because of the number of participating parties and the corresponding varying data requirements.
• The same diversity is reflected in data standards, the scope of data collected, and the semantics of the in-house IT systems used by the various supply chain parties across sectors and regions.
• To make things even more difficult, IT tools deployed across supply chains are non-harmonized, and typically designed for a particular company’s internal processes. Direct processing of outside data is either impossible or technically very difficult. The result is information that does not flow easily or seamlessly from one supply chain party to another.
• The basis for functioning cross-company visibility and collaboration in procurement and distribution networks is the exchange of data between all involved parties. And it can be quite difficult to get all supply chain participants on board and make all relevant data available. This begins with the overseas supplier who needs to issue a prompt alert if a container misses its ship. It applies to the forklift operator who accidentally drops a package. And it applies to the truck driver who needs to let everyone know he’s stuck in traffic.

The core technology required for end-to-end collection and electronic analysis of relevant information is already available: touch-free identification via RFID, geolocation via GPS or GSM, ubiquitous computing, voice recognition, and digital image processing.

Powerful IT solutions in the form of visibility and collaboration platforms are available and affordable, too, but their implementation often fails because businesses don’t take an integrated approach by involving all parties – internal and external – and connecting all systems.

The technology can only deliver its full benefit if all supply chain partners take part and agree to cross-functional knowledge transfer and information sharing. When this is in place, businesses are set up to really reap the benefits.