[From iSource Business, June 2001] The word coming from auto dealers into DaimlerChrysler's U.S. headquarters in Auburn Hills, Mich. last fall was that -- once again -- fickle consumers were going for an interior color trim that confounded the automotive giant's forecasts. Orders coming in showed an unexpected increase in demand for one color and a drop for two others. The message to the supply chain: shift gears, folks.
In the past, such a change in the carmaker's parts requirements would have taken two weeks to filter from the car manufacturer down to the tier-one supplier of the interiors and further down to the tier-four mill that produced the cloth for the interiors. That's 14 days of labor and materials that would have gone into producing the wrong materials. Or, looking at it another way, 336 hours before DaimlerChrysler's supply chain could start producing what consumers wanted. But under a pioneering pilot program designed to give its supply chain greater visibility into its production requirements, DaimlerChrysler was able to communicate the change in consumer preference to its interior trim supply network in just 24 hours. That adds up to 13 days spent producing to consumers' preferences and a truckload of savings for the entire supply chain.
Visibility: Hazy, with Increasing Clarity
Supply chain visibility is fast becoming one of those ubiquitous catchphrases that pops up in every press release coming from the B2B enabler community. But, like the near-cliched collaboration, visibility is a genuine issue for companies trying to make the most of their supply chains. The technical and cultural obstacles to attaining visibility are numerous and not trivial and, as the example above illustrates, the potential benefits are also very real. No solution yet exists to provide a complete view of the supply chain, but that hasn't deterred a few forward-looking companies from working with enablers to attain a greater degree of supply chain visibility.
The first thing you realize when you start investigating the issue of supply chain visibility is that the phrase has different meanings for different people, depending on where those people stand in the supply chain and which way they are facing, upstream or downstream. Kirsten Cloninger, an industry analyst with research firm Cahners In-Stat Group, offers this definition: From my perspective, it's really the ability to see what's going on in your supply base, from the raw materials end of your supply chain all the way out into your demand chain and the needs of your consumers.
So for a chief purchasing officer and others on the production side, having visibility probably means knowing inventory levels at the company's suppliers and the suppliers' manufacturing schedules and capacities. Marketing chiefs and their sell-side colleagues want visibility into the demand chain: what do the company's customers want, how much of it do they want, where do they want it and what sales channel is most appropriate for that customer? Transportation managers and those on the fulfillment and execution side want to have a clear picture of where the company's inbound and outbound shipments are at any given moment. For all these supply chain stakeholders, the benefits come down to faster time-to-market, reduced inventories (and therefore lower costs), higher quality and greater customer satisfaction.
Visibility is certainly not a new concept, as Mike Kanze will tell you. Kanze, C.P.M. (certified purchasing manager) and A.P.P. (accredited purchasing professional), is a 30-year veteran of procurement and currently president of Cornerstone Services Inc., a consulting firm that helps senior management at small- and medium-sized enterprises increase the productivity of their purchasing departments. Kanze recalls his days in procurement at Procter & Gamble, where a purchaser charged with buying, say, a conveyor would trace the supply chain back to the hole in the ground that produced the bauxite that went into the aluminum for the conveyor¹s framework. On the fulfillment side, Sandy Orr, vice president of e-commerce at logistics provider Ryder System, notes that visibility has traditionally been important in the transportation business: It's always been critical, even back in the days when you were tracking the trailers on the whiteboard with the telephone.