According to Aberdeen's June 2006 study benchmarking more than 150 manufacturers and retailers, almost 79 percent of companies reported that their top concern is the continued lack of supply chain visibility due to manually-driven processes. Approximately 77 percent of the companies put supply chain visibility as their top technology investment priority over the next 24 months (4). The second highest concern was the uncoordinated nature of global supply chain processes across all the parties involved.
Below is an example of a European pharmaceutical company adopting visibility technology that resulted in cost reduction and boosted sales (4).
We believe that companies should manage supply chain visibility in the following manner, as described in the process-technology-organization framework.
"What to Do" — The Process Angle
The process piece of the framework guides the business users and advises what needs to be done to improve supply chain visibility, thereby overcoming some of the stated challenges. The critical ones are described below:
- Effective deployment of Sales & Operational Planning (S&OP) Processes — Conduct fortnightly/monthly S&OP meetings: As companies mature in a flat supply chain, an effective and a successful S&OP process provides a forum to bring right and timely information in front of all the stakeholders. It is a very integral component in building transparency and trust in the system. The ideal scenario would be to conduct S&OP meetings as frequent as possible to align it with the market dynamics, thereby capturing the latest information in the system and taking suitable actions.
- Review inventory turns internally and externally:
- Alerts and exception management:
- Align supply chain metrics with business goals:
ConsumerCo, a $1 billion manufacturer of household goods, had issues with low demand forecast accuracy, below-par perfect order fulfillment capability,and high inventories (5). By adopting the DDSN metrics hierarchy it was able to target the critical issues through a root-cause analysis. Poor demand visibility was the main cause for all these problems. So, with proper alignment of metrics, ConsumerCo reduced cost and improved service at the same time.
"How to Do" — The Technology and Organization Angle:
Technology will play a pivotal role in providing visibility in flat supply chains. The business cannot be supported by a rudimentary way of capturing information.
It needs to look toward an extended enterprise application systems and standardize processes to have a single source of data. Companies can also look for specific business solution applications for immediate and low-cost benefits such as inventory optimization tools, business intelligence tools and master data management.
One of the leading fashion retailers demonstrates the capability to use technology for competitive advantage (i.e. reduced time-to-market at less cost). The company spends heavily on sophisticated technology such as PDAs for all its store managers to monitor customer preferences that are sent to a central planning office. This has resulted in reduced execution time, allowing it to postpone design decisions to incorporate feedback from its stores. It has also helped in adapting to new designs when unforeseen events occur.