Daily Archives: June 18, 2012

What Elements Are Truly Necessary To Prevent Missing Links in Your Supply Chain?

A recent article in Canadian Transportation & Logistics that asked where the missing links in your supply chain are did a great job of of pointing out that when it comes to supply chains, what you see is what you get. And it often is the situation that the more you can see into the chain, the more benefits you can receive.

It also hit the nail on the head when it noted that the ability to view timely, accurate information from the beginning of the chain to the end is essential for:

  • reliable forecasting
  • accurate decision making
  • minimizing risks
  • optimizing inventory turnover
  • reducing days and costs in supply chain cycles
  • healthy cash flow and profits
  • customer satisfaction
  • competitive advantage

But when most companies rely on a patchwork of systems and software to address supplier management, purchase order processing, receipt of goods and inventory management, did it have the right checklist of critical system and software capabilities required to avoid the critical missing links that are currently present in most enterprises that are not Supply Management Leaders?

The article identified these necessary elements, which we’ll take one by one:

  • Real-time detailed visibility into every key juncture
    i.e. demand, procurement, production, transportation, and inventory and accounts payable (to make sure the invoices match the order), market data (to make sure quotes are reasonable), risk data (to detect potential volatility or issues as soon as the signals appear), and trade data (to inform you on issues of regulatory and customs compliance)
  • portals connecting the entire supply chain from order through deliver
    what year is this? 2002? there has to be e-integration all the way down through you supplier, and their suppliers, to raw material providers for key or scarce raw materials, but it doesn’t have to be a portal; heck, it could be as simple as the pull of a daily update EDI file from a secure FTP server or as complex as real-time asynchronous communication between multiple databases in a replication configuration
  • collaboration capabilities that allow stakeholders of the chain to readily share information on supply and delivery
    and communicate with each other, in real time, when they are both online
  • ability to integrate varying information formats from various supply chain partners
    which is a given and should be automatic; again, it’s 2012, not 2002
  • open-endedness with flexibility
    enabling easy modifications and integration with other systems and this is a definite must — avoid any system with proprietary integration methods
  • capability of generating alerts of events that require attention
    throughout the supply chain as most day-to-day management should be exception based, with the exceptions defined on your rules (and not the vendor’s)
  • ability to create “dashboards” that enable consolidate viewing of information from multiple sources
    in a manner that focuses on problem areas identified by missed metrics, bad data, missed data, or declining trends — generally speaking, you don’t care about the green, only the red

These were quite good, but it’s also very important not to overlook:

  • sourcing, procurement, logistics, and global trade solutions
    this could be one solution with dedicated sourcing, procurement, logistics, and global trade modules (or views) or multiple solutions that are interconnected — you need end-to-end sourcing to identify the right deal, procurement to secure it, logistics to get it delivered on target, and global trade to make sure there are no costly, disruptive snags
  • an analytic solution
    that lets you analyze trends and predict demand levels, market cost changes, and potential disruptions
  • out of the box ERP support
    because chances are that a number of supply chain partners are going to have one of the big ERP solutions and be relying on it at least partially
  • security
    as there will be a lot of sensitive data flowing back and forth — make sure it is encrpted and only accessible by authorized parties
  • adoption
    how many companies are currently using the solution, how big are they, how much third party support is there and what is the long term outlook for the solution

But if you can meet all of these requrements, and the collaboration flows, the the solution is probably going to prevent many of the critical missing links in many of today’s supply chains.