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Unpredictability vs. Supply Chain Management

The winter of 2013 was one to remember. The National Weather Service nearly reached the end of the alphabet naming all of the season’s storms with their record-breaking snowfall amounts. There was no shortage of news coverage on the human toll that Old Man Winter afflicted on the American population, but there was little focus on the impact of the winter weather on day-to-day business operations. That is, until Amazon and UPS had their holiday shipping snafu.

A combination of bad weather, shoppers waiting until the last minute and the overwhelming surge in online holiday shopping resulted in some packages not getting delivered in time to be put under the Christmas tree. What a logistics and publicity nightmare to deal with during the most wonderful time of the year. While UPS hurried to deliver delayed packages, Amazon promptly refunded shipping charges to customers who failed to get their gifts by Christmas Day and also gave those customers a $20 gift card.

If an incident like this can happen to Amazon, just imagine the implications for everyone else in the supply and demand chain. The ripple effect of the Amazon/UPS story was a wakeup call to the industry. In the same way that companies rely on Oracle for human resources (HR) management and SalesForce for lead generation, supply chain management, specifically data management and integration, is critical to ensuring successful operations.

The Tangled Supply Chain Web

Today’s supply chain is transforming to broaden the value chain, and include an evolved community of partners, channels and customers. Trading communities are often comprised of dozens, if not hundreds, of companies engaged in manufacturing, various layers of wholesale distribution, and value-added assembly or configuration, as well as retail distribution to the end customer.

It’s a collaborative, extended enterprise in which profitability and market position are determined by ever-increasing demands for speed and efficiency. This fundamental change made previously popular point-to-point, manual or traditional VAN-based supply chain solutions obsolete because of their inability to address the time to market, messaging agility or technical interoperability needed in today’s business climate.

Speed is the name of the game, and increasingly, companies are rewarded for their ability to drive substantial speed through both their supply and demand chains. On the supply side, the ability to find, integrate, and ramp up a new partner that can provide a cost, logistic or quality advantage can make the difference in meeting business goals or not. Additionally, the negative implications that come from long cycle supply chain decisions are far larger than ever before.

The demand chain may, in fact, have an even greater impetus to make substantial change to support a more flexible and rapidly changing infrastructure. Retailing, for example, is seeing dramatic changes with the inclusion of new channels, new demand generation tools like Groupon and Living Social, and even the impact of viral “review” tools or other social media rating phenomena.

On top of all of these complexities is the added uncertainty of trying to prepare for and manage unpredictable circumstances like the impact of natural disasters or unexpected spikes in transaction volume on operations. When faced with all these challenges, it is at this moment when companies have the opportunity to realize the power and leverage the agility of cloud-based data management and integration solutions for supply chain management.

To the Cloud

One of the most difficult challenges any executive or information technology (IT) team must face is when a critical and trusted system, like your supply chain management solution, starts to actually hinder business opportunities rather than enhance them. Thankfully, the “rip and replace” option of the past is not the only way to do things.

In particular, cloud-based computing and the as-a-service movement give enterprises the ability to augment and extend existing infrastructure, and support a community of disparate applications and processes. The key is to use the cloud as the point of mediation to handle the integration of multiple, siloed, and in some cases, rudimentary systems and data sets that come from partners.

The ability to bring up the necessary infrastructure to support business relationships in significantly less time is what is driving demand and supply chains at today’s new speed of business. A bonus and often underemphasized benefit of cloud computing is that it works for organizations of all sizes—an important point given the start-up nature of many new partners in the value chain.

Let’s not forget about return on investment (ROI). As there can be significant churn among new and emerging partners, having to invest any amount of scarce programming resources every time a new partner shows up increases the up-front investment and ultimately makes adding new partners less attractive.

The Power of Data Management and Integration

Integration and data management go hand in hand in the supply chain. Today, a stronger set of integration tools and data management solutions is powering the new generation of cloud-based supply chains. Not only are modern integration solutions connecting disparate systems technologically, but they are also permitting multiple companies to interconnect at a process level. This is essential when it comes to tying together back-office systems into a seamless supply chain, which can then help companies better manage unforeseen events.

In particular, data management comes into play with two critical elements needed to help manage unpredictability—data quality and data harmonization. More accurate answers to questions happen when different data types representing common ideas can be normalized, de-duplicated and error-remediated. The key to getting good, solid answers to business intelligence questions that can help address unpredictability is directly impacted by the quality of the data. This requires a good data management strategy to empower the data being captured for business intelligence.  

True harmonization means more than just connecting data—it means making sense of it all so it can be used to speed time to market and enhance secondary use. Finding the right partner to help capture, manage, normalize and harmonize data is key to creating a quality data set that can then be analyzed. A solid data management strategy can make all the difference in the world in getting the right answers to the right questions. While data harmonization can be one of the most difficult things to do, it’s a critical piece that allows companies to get the most out of their data to help optimize their supply chain.

Additionally, for businesses like Amazon that work with multiple distributors, third-party retailers and delivery systems, activities like confirming the right product was shipped to the right customer at the right time, and management of backend enterprise resource planning (ERP) systems are imperative. To be truly successful and prepared, companies need to consolidate each step in the supply chain under a single electronic data interchange (EDI) platform, and leverage a data integration solution that works with multiple ERP systems. With the right solution, businesses can minimize the expense and effort of having to standardize on a single ERP system among distributors and suppliers.

While no company can completely safeguard itself against Mother Nature or Murphy’s Law, companies can take steps to minimize the risks associated with unpredictability and the inevitable impacts unforeseen incidents can have on business operations. Data management and integration solutions enable enterprises to connect disparate systems and validate data for business intelligence that can help companies better prepare for the unexpected.

Through these solutions, companies are enabled with better communication between partners, suppliers and delivery services, providing the most updated information to all parties of the supply chain, as well as to customers. Additionally, the power of the cloud gives companies the agility to quickly augment and extend their infrastructure to address unanticipated changes in supply and demand chain needs. In the end, life would be a lot easier if we all had a crystal ball, but if the winter of 2013 taught us anything, it’s that you can never be too prepared.

Rob Consoli is senior vice president of North American sales and marketing at Liaison. He brings over 25 years of technology industry experience, and has a demonstrated track record of successfully building teams and helping growth-oriented companies navigate cultural and process transitions as they expand operations and global reach. In this pivotal role, Consoli leads Liaison’s North American efforts to strategically position and sell the company's cloud-based integration and data management solutions.

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