Crucial Processes for Perpetual Execution

By Paul Lavery

Successful supply chain execution today demands that supply chain professionals maintain frequent, fluid action, that they become more sophisticated, and that they go from managing business processes within one organization to integrating business processes among multiple organizations.

There are five crucial integrated business processes all supply chain professionals should consider: sustainability-based sourcing; product lifecycle tracking; cash flow management; community provisioning, and data governance and visibility. Let's look at each of those in turn.

Sustainability-based sourcing. Today's enterprises face increasing social and regulatory pressure to meet sustainability goals and support green initiatives. Channel masters are requiring companies to adopt a scorecard approach for shared and collaborative logistics (e.g., co-owned warehouses, transportation, cross-docking, consolidated delivery services, etc.); industry benchmarks (e.g., Dow Jones Sustainability Index); and reporting capabilities for physical elements like packaging, facility energy output, transportation fuel and more. In the future, enterprises can expect multi-relational trading systems and business interaction automation to play a much more integral role in agile SCE operations.

Product lifecycle tracking. The increasing number of intermediaries needed to manage a network of distribution points has decreased transparency of end-to-end supply chain data. Yet supply chain visibility is recognized as critical to sustainability, product innovation and tracking. As such, manufacturers, retailers and logistics/distribution companies are now investing in track-and-trace technologies to help them improve margins and secure product lifecycles. The most effective initiatives have used a "small step" approach, for example, investing in unique serialized identifiers at the pallet, case and/or unit level.

Cash flow management (i.e., order to cash). Supply chain executives must be able to prove that their processes and supporting IT systems accelerate cash flow and reduce days sales outstanding (DSO). And this isn't just the CFO's priority either, as any CEO who trudged through the financial quagmire of October 2008 to October 2009 can attest. The right technology helps, of course, since many of these processes have supply chain functions directly or indirectly related to them.

Community provisioning. How quickly can you connect with key trading partners and service providers? How quickly can you change contacts, data specifications and integration points with your internal systems? The ability to respond positively (and promptly — as in days, not weeks; as in hours, not days) to those two questions will determine where your organization is on the "community provisioning adoption curve." Technologies like composite application architectures, single sign-on (SSO), trading partner endpoint (or client) toolkits and Web services are all helping to connect user communities more efficiently. Technology will help (in fact, selecting the right technology provider will be critical), but this arena within supply chain will continue to rely on human intervention via reporting and system tracking.

Data governance and visibility (DG&V). Organizations that synchronize have real-time access to data exchanges from accounting, inventory, payment, product, customer and sales systems, and they enjoy a competitive advantage. They can track anomalies and exceptions, improve back-end processing of changed orders and modified invoices, and update inventory systems. In addition, connecting supply chain data provides the structure to keep the data from going to the wrong place (i.e., governance). Prevention is good; reaction is not so good. Best practice DG&V will help supply chain organizations mitigate deep points of integration and keep pace with changing market and technology requirements.

The five crucial processes allow organizations and their partners to benefit from positive cash flow, obtained from products tracked from sustainability-based sourcing processes, delivered through a value chain, which is then monitored via real-time reports. ¦

About the Author: Paul Lavery is director of supply chain solutions at Axway. More information at www.axway.com.

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