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Global Visibility
In today’s high velocity logistics environment, end-to-end visibility to inventory, orders and shipments across the supply chain is emerging as an essential capability to reduce network-wide inventory levels, maximize customer satisfaction, and respond dynamically to events that occur during the execution process.
The traditional focus of warehouse management systems has been limited to inventory within the four walls of a single distribution center. Higher level, aggregate inventory information has been left to ERP or other inventory management systems. However, the level of supply chain visibility achieved through ERP has often proved inadequate to meet a company’s supply chain
needs, due to the way ERP has been deployed, the level of information detail, and the inability of ERP to easily integrate with other systems.
Achieving real-time global visibility is a powerful value creator that can reduce inventory (working capital), decrease execution costs (operating expense), and increase the level of responsiveness of customer order fulfillment (revenue growth). It also supports increased network flexibility and overall supply chain velocity. Integrated metric systems will also create value through the ability to provide near-real time visibility to key logistics performance indicators across the enterprise.
This access to metrics and performance results will serve to focus logistics professionals in multiple functional areas and domains on a consistent set of goals and objectives. It will also enable more timely response to problem areas.
Defining Supply Chain Visibility:
So what exactly is visibility in the supply chain? “Visibility means you know what you and your closest partners are up to.” In other words, where the product is flowing at all times. However, creating a truly visible supply chain takes planning, business process fine tuning and a top-down commitment from management. According to David Caruso, VP of Industry Research for AMR, “Visibility is an organizational challenge. Some of this isn’t cheap, especially if you’re a hard-boiled manufacturing company that’s been running on low IT investment for years. It is a shock to realize you have to invest serious money on communications, enterprise application integration tools, and maybe even a data warehouse.”
Visibility is two-fold, Internal & External to the organization. Before compliance requirements can be enforced on vendor partners and alliances, a clear revamping of internal processes must be established. This is the “foundation building” of the visibility pipeline. Next is the “relationship building” of the pipeline.
Building a visibility pipeline is truly knowing who good partners are. The one’s willing to share information, data, and costs of technology. Those partners that are with you for the long haul. Those that resist or repeated fall out of compliance may be contenders to drop from the partnership list. Visibility beyond the internal environment means there must be real collaboration among partners, suppliers, manufacturers, transportation providers, outsource providers, technology applications, and on and on. The most important part of building a visibility relationship is TRUST. Each partner must understand each other’s business problems, concerns, strategies, and then trust that each will use the information for the benefit of the whole pipeline.
Industry Statistics:
In a recent study by Innovations Magazine, the top 20 projects were analyzed for spend. Within the top 5 were projects that related to visibility and visibility readiness:
· Business Analytics 179 companies $1 million
· Enterprise Portals 177 companies $250,000
· Application Integration 195 companies $600,000
· Customer Relationship
Management 178 companies $250,000
· Intrusion Detection 285 companies $150,000
Similarly AMR is predicting that for Sarbanes-Oxley compliance spending, (which deals primarily with visibility where the supply chain is concerned), will be around $ 6 billion in 2006. The breakdown of the expenditures is expected to be $1.9 billion on technology or 32%, $2.3 billion on internal labor or 39% and for external consulting 20% or $1.8 billion.
Conclusion:
This may seem staggering to some, but considering federal mandates (Sarbanes), customer mandates (RFID & Wal-Mart), and the need to constantly improve internal to meet or beat the competition, understanding and implementing Visibility within the Supply Chain is essential. As always, Navesink Logistics is readily available to help assess and implement the necessary steps for a complete visibility pipeline within your organization.
References:
1. Building True Visibility by Doug Barney. CSCO magazine, November 2005.
2. Top 5 Projects by Todd Spangler. Innovations/Baseline Magazine, Winter 2006.
3. Eight Steps to Corporate Compliance, Symantec 2005.
4. Sarbanes-Oxley Compliance spends projections for 2006. AMR research November 2005.
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Introduction
