Supply Chain 20/20

Companies that don't have real-time visibility into their supply chains (and their demand chains) are losing focus on the promise of e-business. There's no use making a blind investment in automation technology if you can't see the big picture.



The difference today is that new technologies make accurate, real-time information flows theoretically possible, both within an enterprise and, more important, between enterprises. Why theoretically? Because the technical and cultural obstacles to greater supply chain visibility remain frustratingly significant.


Blocking the View


The technical challenges to a clear view into your supply chain include both data and content issues. Data are critical because visibility assumes a smooth flow of accurate information between trading partners. The problem is not just moving data from one computer system to another. Rather, it's moving information through multiple systems both within an enterprise and among partners. Even when partners do establish   bi-directional connections, they must ensure the information they are transmitting to each other is mutually intelligible, requiring the adoption of common standards and nomenclature.


At a more fundamental level, real-time visibility assumes a high level of automation among all partners in a supply chain and a continuous (or at least near-continuous) data flow, which is something that might not be possible for companies using the type of batch processing typically associated with electronic data interchange (EDI).


The cultural obstacles may be even more daunting than the technical issues. For example, buying organizations looking to gain greater visibility into their suppliers' inventories may encounter resistance among suppliers reluctant to take on any additional expense or work that might be required. Going after information about a supplier's suppliers could raise the specter of disintermediation or, should the buyer take an interest in the supplier's cost structure, a price squeeze. On the other hand, the buying organization might hesitate to share proprietary information relating to demand or  planned products, and purchasers may find it difficult to move from the traditionally antagonistic buyer-supplier relationship to one that is more (dare we say it ) collaborative, with the value shared among partners.


Despite the obstacles, changing market dynamics continue to push increasing numbers of companies toward greater supply chain visibility. In a consumer-driven economy, the time-to-market and cost reductions that greater visibility affords are compelling competitive advantages. No enterprise has reached the Holy Grail of 360-degree visibility, but the following examples show that a few companies are putting in place the technologies and relationships necessary to gain a better view of at least part of their supply chain.


A Step Toward Visibility


DaimlerChrysler has been putting supply chain visibility into practice for years -- to a point. Under the Chrysler group's longstanding Extended Enterprise Initiative, the company had built extensive EDI connections and some Web-enabled applications with the first tier of its supply chain, giving these suppliers a view into the original equipment manufacturer's (OEM's) material requirements, production schedules and forecasts. But beyond the tier-ones, the suppliers' view of the automaker's requirements was considerably murkier, resulting in lost cycle time and production delays that reverberated down the chain.


In early 2000, the company's Global Procurement and Supply Group formed a team called e-Extended Enterprise to explore ways for DaimlerChrysler to apply new technologies to improve the current process or to create new processes. As part of this program, a team working on an initiative called Supply Network Collaboration took on the challenge of fine-tuning the process for moving information out from the OEM all the way down the chain to critical-components suppliers, giving suppliers visibility into DaimlerChrysler's requirements.


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