There was a time when the latest craze in consumer technology did not completely alter the day-to-day operations of the supply chain landscape. Today, that is not the case. The emergence of the always-on, instant gratification Internet/mobile/social culture created a new type of consumer—one who is particular, displays less brand loyalty and demands faster delivery times and lower prices.
The ability to adapt to these rapidly changing consumer habits and technology trends put manufacturers, distributors, logistics professionals and retailers in a tailspin. As they try to play catch-up with the current commerce landscape, they find themselves asking, “What’s next? How do we prepare for the challenges of tomorrow while we are still trying to optimally satisfy the demands of today?”
The solution is simple to identify, yet increasingly harder to obtain—enterprise-wide inventory visibility. While the concept of inventory visibility is not new, the importance of achieving an end-to-end, collaborative, information-sharing supply network has never been greater.
If it were easy, it wouldn’t be worth it
While the benefits of inventory visibility are proven, achieving it remains elusive to many organizations. In an effort to balance service against cost, many enterprises have turned to contracting out both production and distribution to increase their financial and product agility. While this can provide solid advantages for companies, it also introduces two elements of supply chain risk: greater complexity and distance. Companies find themselves in a catch-22. They leveraged outsourcing but that outsourcing blurred their visibility of the supply chain, causing an imbalance between creating a positive customer experience and keeping costs in check.
To restore balance, businesses must establish and execute upon the four building blocks of global inventory visibility.
- Internal, Site-Specific Inventory Views: It would be easy to assume that visibility to internal inventory is simple to achieve. After all, it is all under our control, right? Well, yes and no. The problem lies with having too many different places where inventory resides and the systems that track it. Many enterprises have one or more ERP systems that track inventory at a high level for financial purposes but don’t necessarily track where the inventory is physically located. Often, multiple distribution systems—such as Warehouse Management Systems (WMS) and Transportation Management Systems (TMS)— primarily track inventory at specific locations or while in transit, between specific locations. And, of course, retailers have a percentage of their inventory on store shelves but often do not have good visibility into what is actually in each store and where.
- External, Multi-Enterprise Inventory Views: It is rare today to find vertically integrated corporations where all inventory resides within the enterprise. Most companies have many suppliers that provide finished goods, components or raw materials that all need to be monitored and tracked. Many also use contract manufacturers, co-packers and/or third-party logistics providers (3PLs) as integral parts of their extended supply networks. And companies that supply retailers have much of their inventory tied up in those retail locations. Unfortunately, the inventory located in all these external locations is usually not visible across the supply chain. Each external company or site typically tracks its own inventory using its own systems. These external systems come from a plethora of sources, built upon different technologies and communication protocols—and hence they do not readily interact with each other. Therefore, trying to pull together a single consolidated view of inventory across the supply network is very challenging. Yet, achieving consolidated visibility is essential for management to make intelligent sourcing, order management and fulfillment decisions; as well as to quickly react when disruptions occur.