By attaching such tags earlier in the process, companies can track their products across their supply chains and, in doing so, gain better insight into what actually happens. Information provided by RFID or other locators like barcodes complements the ERP and partner information quite well. And once companies understand the added value of tracking products across their supply chains, the demand for better business visibility will drastically increase. The earlier companies embark on such journey the sooner they will gain profits, market share and better master their supply chain costs.
One last source of information may be important in business visibility, and this consists of public information such as can be found on the Internet. Early warning of competitor moves, geo-political events, natural disasters, or issues hitting suppliers or other partners, for example, allow companies to react faster and improve their responsiveness. Obviously, where the other data are typically structured and in numerical form, the data described here are unstructured and require different analysis tools.
Once the information has been collected, whether structured or unstructured, and "standardized" so that it can be exploited by analysis tools, it can be scanned for potential issues. A variety of events can be searched for, such as:
- Inventory stock-outs or pile-ups at a given node in the supply chain.
- Sudden changes in performance of one of the members of the ecosystem.
- Change in forecast.
- Reception of order.
The above events can be directly identified from a single piece of information provided by one single source. But where things really become interesting is when multiple information items provided by a variety of sources are correlated to spot more complex events. Examples of these are:
- Delays in order delivery
- Late shipment of a component or ingredient
- Delays in logistics
- Issues in product quality
- Change in market demand
Actually, one may even want to go further. When an order is fulfilled by the ecosystem all members work together to perform one business process called "order-to-delivery." The technology exists for companies to electronically monitor business process step by step. It is called workflow or business process management (BPM). By recognizing the appropriate information and using it to identify the completion of specific process steps, a company can follow the order-to-delivery process from end to end.
Gathering the data required to understand whether the partners do their job well and whether contractual agreements are met is a great improvement over many companies' current situation in which contracts are signed, filed and their execution is never evaluated.
Providing visibility into what happens in the supply chain and tracking an order as it progresses through the ecosystem also allows companies to identify orders that are in danger of being delayed. They can then decide what should be done to make up for the delay or, if that is not possible, inform the customer early of what is happening. In doing so customer satisfaction can be improved, giving them time to take the new situation into account.
Analysis and Reporting
We have looked at how to gather data and how to act on what is happening in the ecosystem in "real-time." We can also use the same data to analyze how the supply chain is behaving over time, such as where the delays are or what inventory buffers we really need in the supply chain.
Over the last several years, the concept of "Lean" has emerged. Lean is not a new concept; it consists in producing only what is needed, when it is needed with zero defects. In their book Lean Thinking, James Womack and Daniel Jones identify five organizing principles:
- 1. Specify value by product
2. Identify the value stream for each product
3. Make value flow without interruption
4. Let the customer pull value from the producer
5. Pursue perfection
The Lean concept was originally used at factory level and called lean manufacturing. Here again, the fact that all the information is available within the same organization makes it easier to apply. Lately we have seen a trend to start using the Lean concepts at a supply chain level. This is obviously called "lean supply chain." But here the information needs to be gathered from a variety of partners in the supply chain. Therefore, business visibility is a key enabler for the lean supply chain as it provides the information foundation required to perform the analysis identifying the areas of waste and loss of value. Companies that intend to develop lean supply chains should start by implementing a business visibility solution to gather the data they will require to spot waste in the system.