Brewing up a Smooth Supply Chain

Andy Cullen and his planning and export team at Guinness thought the iconic Irish beer brewer's customer service numbers looked pretty good: 99-100 percent month after month, according to their figures. But when Cullen and his team sat down with their U.S. customer back in 2003, they learned that the customer was looking at an entirely different set of metrics, and by those numbers Guinness was barely breaking 50 percent service levels.

It wasn't just that the two parties were looking at different numbers, Cullen says now. "The problem was that the way I thought the supply chain was working was actually not the way that it was working." In fact, supply disruptions causing the breakdown in service were going undetected at Guinness. In response, Cullen not only realigned the key metric that his team tracked but also went looking for a technology solution that would allow Guinness to become proactive in how it diagnoses and addresses the hiccups in its supply chain.

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Guinness' dilemma is not unique, of course. Kevin Brooks, vice president of marketing with Apexon, a provider of on-demand solutions for what it calls "active supply management," notes that supply disruptions still bedevil most enterprises despite companies' work to streamline their supply chain processes — or perhaps even because of those initiatives. "All the efforts over the past 10 years, which have been good for reducing cost, have also unintentionally pushed a lot more risk onto the operations side," says Brooks. "And in many cases any of the benefits that they would have gotten are being eroded because operations is having to run around to keep the lights on."

In short, as supply chains grow in length and complexity, as companies seek to consolidate their supply bases and lean out their own inventory, and as external service providers assume increasing responsibility for greater portions of the supply chain, enterprises are finding it at once more difficult and more imperative to detect and respond more quickly to supply chain disruptions. Yet few enterprises have managed to put in place either the systems or the processes necessary to cope with these disruptions. "People understand that they need to be more strategic about supply chain," Brooks continues, "but they're distracted by these continuous one-off disruptions."

Not that companies haven't been willing to throw money and technology at this quandary. The traditional tools to address these challenges have included business intelligence (BI) and performance management (PM) solutions, and Boston-based AMR Research has projected that companies will spend nearly $23 billion on BI/PM applications in 2006 alone. But a report earlier this year by San Mateo, Calif.-headquartered Ventana Research pointed to significant flaws in how companies are using these tools. In the report, "Performance Scorecards and Dashboards," Ventana noted that "about 70 percent of scorecard, dashboard and performance alert use is by midlevel managers," rather than by the more senior-level executives who manage companies' strategic direction. On the technology side, Ventana reported that most tools that companies are using to monitor performance are built in-house, and users of these tools complained about an inability to drill down into the data to get the details behind the headline figures, a necessary step in understanding the cause of a problem.