Supply Chain Visibility and Complexity
June 11, 2012
“In today’s world,” writes Naveen Polyamut, “supply chains are no longer localized to an organization’s four walls. As companies go more global for their demand and supply markets, there comes with it a spider-web of partners and dependencies.” [“Supply Chain Visibility: The need & qualities of an effective system,” Supply Chain Management, 9 May 2012] This complex network of partnerships and dependencies is what makes supply chain visibility so difficult to achieve. According to Commerce In Motion (sponsored by RedPrairie), visibility is “knowing where products and inventories are located, being able to monitor order progress, and being able to anticipate unplanned events in the supply chain.” A wonderful infographic from Commerce In Motion (shown below), notes that “companies understand the link between visibility and performance” but struggle to achieve the level of visibility they desire. To see a more readable version of the infographic, click on the above link.
Polyamut asserts that supply chain complexity “has a potential to lower the supply chain efficiency due to lack of collaboration between partners and non-availability of timely information. As a result, organizations end up either under stocked (that leads to lost customers) or overstocked (leading to unwanted inventory carrying costs).” To overcome some of the challenges associated with complex supply chains, Polyamut insists, organizations must increase end-to-end visibility. He writes:
“There arises a need to implement a system/process that can collaborate and obtain information from various sources, analyze and help formulate strategies for a more ‘visible’ supply chain. Today’s ever expanding supply chain environments have forced companies to think beyond traditional techniques of partner collaboration and information management which otherwise only increases latency and inconsistency. Systems not only need to be able to collaborate and provide data rich solutions but at the same time be nimble when expansion and changes occur. This is where most modern supply chains are automated – and Visibility is no exception.”
In fact, challenges associated with supply chain complexity simply can’t be addressed without technology. Too much activity takes place too fast for manual systems to monitor and respond effectively. “Technology,” of course, is broad term that, by itself, means little. Polyamut is correct when he writes that “leveraging the right technology” is an imperative. He continues:
“The rules, flexibility and exceptions associated with supply chain information have created large volumes of data for companies to evaluate. The right technology can analyze data and produce valuable business intelligence, which can ultimately lead to better, more informed supply chain decisions.”
Since my company, Enterra Solutions, offers Big Data solutions for companies, I obviously agree with Polyamut’s assessment. He goes on to offer some observations about what to look for when selecting “a best-in-class Visibility system”:
“Ease of on-boarding: This is a step that needs to be executed with utmost caution and with ease. A challenge modern companies face is in onboarding partners onto their network. In some cases of modern Visibility implementations, this has been a deal-breaker! Not all partners of customers are gung-ho about painstakingly making themselves part of new networks.”
One reason that partners are reluctant to join networks is that they are wary about who will have access to proprietary information and for what purpose it will be used. Enterra uses attributes-based access control for the sharing of sensitive information. This approach puts the owner of the data in control of who sees what data and under what circumstances. Ease of on-boarding is also helped by running a pilot project before trying to scale a system company-wide.
“Collaborate & Integrate: Firstly, to achieve total visibility it is very important for all partners of the network to share their side of information on the proceedings. Secondly, since different partners work on different systems, each of them may have their own data standards. The visibility system should collaborate and consume data in various forms from across all partners and use it in the best possible way.”
Polyamut is correct that a best-in-class visibility system must be agnostic about the systems and kinds of data it must integrate. A system must be able to integrate both structured and unstructured data.
“Present Information Effectively: Data accumulation & management still remains a key ingredient to a successful Visibility program. Equally important for Visibility systems is to provide a platform that helps evaluate KPIs, compare information using scorecards and create strategic dashboards that can be utilized to take better decisions and improve overall supply chain performance.”
I have repeatedly noted that information that is presented in a way that is difficult for users to understand or work with is little better than having no information at all. User-friendly dashboards are absolutely essential.
“Manage surprises: As organizations resort to more globalization and outsourcing, there is always an element of surprise embedded into the supply chain. As long as Visibility systems are able to keep key participants informed of key events, the system has proved its worth. A valuable visibility system also tells you what you SHOULD know in addition to what you already know. Most modern Visibility systems term this as ‘Event/Alert Management’.”
Again Polyamut hits the mark. Decision makers really don’t need to know when things are going smoothly (they should expect their processes to work under normal circumstances). What they need to concentrate on are the exceptions. It is the exceptions that can bite you. By providing decision makers alerts in time for them to take actions that can prevent or mitigate a costly situation is what supply chain visibility is all about.
“Be Near Real-time yet Scalable: A typical Visibility solution interacts with multiple systems to acquire, assimilate, churn and present data in a comprehendible way. Common challenges in this area are reading partner data in different formats and still adhering to different business rules that govern data processing. In trying to do so, performance should not be compromised.”
You can’t stay inside an industry’s decision cycle if the information being monitored is not near-real-time. If information is provided too late to do something with it, it is of little or no value.
“‘Partner type’ dependent: Visibility is every single partner’s problem. A competent Visibility solution should be able to present same data to all participants of the supply chain network, with their individual perspective. Example: For a shipper, number of shipments at a 3PL warehouse might be a relevant metric while the 3PL provider may be more interested in the number of shipments for all serviced shippers. However, processes within an organization should clearly outline owners of specific areas that are able to respond and take action in case of surprises.”
Although I agree with Polyamut that every stakeholder must take ownership if visibility is to be achieved, every stakeholder doesn’t need the “same data.” As I noted earlier, sensitive information sharing is a critical part of any best-in-class visibility solution. If, when Polyamut writes that a “visibility solution should be able to present the same data to all participants,” he means that when stakeholders require the same data that it comes from a single source (i.e., an integrated knowledge base) then I agree with him. There should never be several versions of “the truth” that can be accessed — that only causes tension and confusion. Polyamut concludes:
“Having considered the above points, the onus then is on companies to conduct a detailed study on existing processes, identify opportunities to streamline them and at the same time, evaluate the best of technology vendors that enable successful Visibility programs. For any modern day supply chain, [a] technology enabled visibility system is not to be treated as an overhead but as a backbone of operations.”
The editorial staff at Supply Chain Digest believes that all of the tools are now available to make supply chain visibility a reality. [“The Supply Chain Visibility Tool Kit,” 18 April 2012] They write:
“Technology has evolved to the point where there is almost no technical limitation today to achieving extraordinarily high levels of supply chain visibility. Most of these technologies have been around for more than a decade. All are being used in visibility systems today.”
The article goes on to provide “a brief summary of these tools, which in total provide companies a wide array of technologies to combine in the quest for additional visibility.” Most of the technologies relate to inventory monitoring and control. They are:
“Auto ID/RFID: Traditional bar coding has been an important tool to increase accuracy and hence visibility for two decades, but RFID has many advantages (automatic readability, no line of sight) that eventually will lead it to dominate the auto ID landscape. ‘Inlays’ (chips before they are put into a label) for passive RFID tags are now down to about 6 cents apiece. Even lower cost ‘printable’ tags may not be that far off. ‘X-Raying’ a pallet (reading all carton/item tags on the pallet in one pass of the reader) is still a challenge though.
“Wireless/Mobile: The growth of wireless technologies and devices from beyond the distribution center floor to other areas of the supply chain is extending the reach for real-time communications and automatic data capture.
“Sensors: Technology for monitoring temperature, moisture, etc. have been around for decades, but are now increasingly being tied to RFID and other communications technologies to provide visibility to environmental conditions and changes.
“Motes: A small wireless device that when deployed with other motes can form its own communication network by ‘talking to each other’ without human intervention. Motes are often connected to sensors, especially in manufacturing.
“Global Positioning Systems: Increasingly sophisticated GPS technology provides a real time view of where a truck, a person, or even a pallet of inventory is in the supply chain. That can enable, among other benefits, dynamic routing in case of delays.
“Video: Video technology is now being used primarily in a reactive way (a customer says the order is wrong, supplier shows video evidence the carton or pallet was accurately built). But ‘video analytics’ are coming that will also enable more proactive use of video.
“The Internet: Obviously, a broad communication pipe that provides the ability to communicate and share data easily, often with less painful connectivity efforts and potentially even ‘ad hoc’ connectivity.
“The Cloud: Related to the Internet, but the real promise is visibility-related workflows and the ability to house and manage supply chain data in a multi-party environment.”
The SCD staff concludes, “Together, the technical ability to build an ‘internet of things’ is clearly here. These tools will also enable a new era of ‘perfect logistics.'” Although I love the optimism of the SCD staff, I fear we are still a long way from achieving the era of perfect logistics.