Further Discussion about Supply Chain Visibility

Stephen DeAngelis

May 8, 2012

In an article published by SupplyChainBrain, analysts from IDC Manufacturing Insights ask an interesting question, “Is Visibility a Grand Aspiration or Grounded in Reality?” [22 March 2012] Considering all that is being written about the importance of supply chain visibility, one has to wonder why they would ask such a question. They explain:

“Supply chain visibility in the past has often fallen into the category of ‘aspirational.’ Yes, companies need it; no, they don’t know how to go about implementing it. This is due to the fact that supply chains are increasingly complex, global entities – nearly their own piece of the business. If one looks at the supply chain as a whole it becomes overwhelming to have complete visibility across every aspect of it.”

Supply chain visibility relies on obtaining the right information and making sure that information is provided to the right decision maker at the right time. Yes, the supply chain is complex. But is it really necessary to have all the data generated throughout the supply chain available all the time? After all, that is an enormous amount of data to gather, store, and analyze. Satinder Singh, an artificial intelligence expert from the University of Michigan, asks a different question, “Are large volumes of data going to be the source of building a flexibly competent intelligence?” [“Artificial Intelligence Could Be on Brink of Passing Turing Test,” Brandon Keim, Wired, 12 April 2012] His answer, “Maybe they will be.” The field of Big Data analytics is aimed at making life simpler for decision makers by taking complex data gathered across the supply chain and from it providing only the information that is essential for making better and faster decisions. Singh points out that there are “all kinds of questions that haven’t been studied” but are becoming “much [more …] important at this point. What is useful to remember? What is useful to predict?” Scientists and technologists are on the cusp of providing answers to these questions. That is why the IDC Manufacturing Insights question remains a good one. The SCB article continues:

“In two separate surveys conducted across nearly 400 manufacturers the concept of supply chain visibility is key:

• In the IDC Manufacturing Insights’ Supply Chain Profitable Proximity Survey of 2010, 200 manufacturers found that the ability to provide visibility into the supply chain – the ability to know operational status, including the location of inventory and deliveries – was a key factor contributing to regional or global sourcing decisions;

• Further, more than 400 manufacturers in the IDC Manufacturing Insights’ 2010 Supply Chain Survey listed increasing supply chain intelligence to monitor and drive improved supply chain performance in the top four of over a dozen supply chain initiatives.

“Interestingly, in the same supply chain survey noted above, visibility into the supply chain was one of the two biggest gaps in terms of capability between IT and supply chain professionals – IT felt the capabilities were on par, supply chain found there was a lot left to be desired.”

The difference in viewpoint is probably the result of knowing what is available (IT’s viewpoint) and what is desired (supply chain professionals’ viewpoint). The IT people know they are doing the best they can with available technology while supply chain professionals are looking for new tools to provide exponentially better visibility. The article continues:

“IDC Manufacturing Insights has found that organizations need to look at visibility across the supply chain in terms of cost and benefits – as related to specific use cases. Much like collaboration or business intelligence – organizations can’t just ‘do’ collaboration or BI. One takes a common business case and applies the technology to either improve efficiencies or save money. Similarly, break down the supply chain and apply visibility where it makes the most sense.”

In other words, companies need to answer questions like those posed by Singh (i.e., What is useful to remember? What is useful to predict?). The SCB article continues:

“This allows for both IT and the supply chain professionals to understand:

• Where they are most lacking visibility in the supply chain – perhaps certain suppliers, or factories in emerging countries

• What is the cost to implement visibility in this particular piece of the supply chain

• How will the data be used to improve upon existing business operations

“Implementing supply chain visibility for a specific use case will allow companies to have a clear picture of the overall costs and the resulting benefits from the improved visibility.”

When my company, Enterra Solutions, is working with a client, that is the approach that we take. We look for pieces of information that clients believe will help them make better decisions and then figure out how to obtain and analyze it for the best results. We know that a business case must be made for our solutions so that clients understand they are getting a good return on investment. The SCB article concludes:

“As the applications progress and a company begins to implement multiple instances of visibility across its supply chain it may have redundant or overlapping data. At IDC Manufacturing Insights we feel it is better to start somewhere, in terms of visibility, than not start at all – if it makes business sense. … We predict that supply chain visibility will remain a top initiative for manufacturers. This is particularly true for those organizations that analyze the supply chain and understand where it is lacking visibility; and determine the best application for a true ROI. Manufacturers started down the right path in 2011 and will continue to do so in 2012 – looking not for grand aspirations, but a practical review of each use case to improve visibility.”

In a separate article about supply chain visibility, the staff at SupplyChainBrain, references a study by the Aberdeen Group (“Supply Chain Visibility Excellence: Mastering Complexity and Landed Costs”), and concludes, “The increased complexity of global supply chains has led to longer lead times, more pipeline inventory, and the need to control downstream and upstream logistics.” [“Growing Complexity Demands Greater Visibility to Control Inventory, Landed Costs,” 22 March 2012] The article continues:

“In its most recent visibility survey, Aberdeen found that growing supply chain complexity was the top business pressure (44 percent) for many executives. This, in turn, has contributed to increased supply chain management costs. It is not surprising that in a period of global expansion and business turmoil that visibility is taking center stage. But before a company can reduce inventory or landed costs, it needs visibility into them. Only then can it apply tools to agilely adapt to the information it collects. Best-in-Class companies, compared to Laggards, have a 23-percent higher complete and on-time delivery rate to customers and an 11-percent greater advantage in year-over-year unit landed costs. Aberdeen’s research is based on interviews with representatives at 128 companies.”

Anytime a company enjoys a double-digit advantage over its competition it is undoubtedly getting a good return on investment from the systems that are providing it with that advantage. Last November the staff at SupplyChainBrain published an article aimed at helping companies get a start on gaining better supply chain visibility. [“How to Enable Supply-Chain Visibility,” 2 November 2011] The article states:

“Visibility and customer satisfaction are two of the biggest challenges confronting supply-chain managers today, according to Garland W. Duvall, Jr., chief executive officer of Datatrac Corp. On the customer side, suppliers must know precisely where their shipments are, whether they arrived on time and undamaged, and whether the move got the best possible rate. Over the last several years, Duvall says, shippers have been laboring to obtain that level of visibility from the ‘first to last mile.’ Technology can help, he says, but it’s no ‘silver bullet.'”

I probably would have stated that differently. I would have said, “Technology is essential, even if a single silver bullet approach is not available.” In the era of Big Data, you simply can’t gain supply chain visibility without technology. Duvall explains his position this way:

“Shippers looking for software to solve their problems face two pitfalls: either they attempt to buy multiple, disparate systems that create silos of information, or they acquire a single system that purports to encompass everything, yet often falls short of that goal.”

I’ve written a lot about the downside of siloed information and thinking and I agree with Duvall that any system that actually establishes siloed information within in a company is moving in the wrong direction. As for Duvall’s second point, every CIO has been confronted by vendors who over-promise and under-deliver. Duvall suggests that there are some things that shippers can do to help themselves. The article explains:

“What shippers need is a vendor that will make an effort to understand their particular problems, then find the right mix of products to address them. Unfortunately, says Duvall, ‘most shippers don’t have the data that allows them to get the visibility they’re looking for. They buy the tools, and the tools don’t have anything to look at.’ Coming up with usable data, then, is the logical starting point for achieving end-to-end visibility of a global supply chain. To make that happen, shippers must reach out to service providers, then amass the data within a central collection point from which they can begin to make sense of their operations.”

I would suggest that shippers look for a vendor who is willing to help them identify what data is needed and then work with them to obtain that data. Gathering “usable data” may not be as easy as Duvall makes it appear if a company doesn’t have the technical expertise to make that happen. That’s where a good vendor partner is invaluable. The article concludes:

“Duvall says the effort can be a lengthy one, depending on how much the buyer relies on each supplier. His company has seen rollouts that take from a few months to several years. The most difficult segments are those that have only recently been added to the visibility picture – the first and last miles of a shipment. Typically, says Duvall, that’s where a shipper is using the greatest number of providers with the lowest level of technology.”

From the question posed at the beginning of this post, it should be clear that we remain in the infancy of obtaining better supply chain visibility — but we are growing up fast. I’m glad that Duvall noted that obtaining good visibility may take a little time; after all, it requires collaboration between numerous stakeholders. Most analysts conclude, however, that the time and effort are going to be worth it.