Many successful organizations will feature some capability in all categories. However, most have not yet achieved pervasive process and systems integration and collaboration.
Each integration capability is explained here:
* Companies at Level 1 are beset by siloed processes among different departments and supply chain systems. These companies attempt to drive out cost or enhance revenue at the department level, rather than through integrated processes.
* Level 2 companies have integrated processes across departments, so they feature some level of demand planning, which drives sourcing, logistics, sales, etc.
* Level 3 companies begin to enable further process integration by linking disparate systems and introducing technology to automate and standardize processes. They are also introducing true sales and operations planning. In addition, the organization begins to sense changes in operating conditions and responds proactively.
* At Level 4, an organization aligns business processes with key customers and suppliers. Additionally, improvements gained by aligning internal processes are externalized. This collaborative capability drives out cost and improves service levels through demand driven planning with key customers and suppliers by sharing forecasts, demand signals and key business events.
* Level 5 companies enable further process alignment with customers and suppliers, again by automating execution of processes and using technology to monitor business events and provide exception alerts. They also share information across their supply chain transparently.
As the processes are managed and visibility increases, results can be far-reaching within an organization. With quality data being properly captured, processed and stored, it can be used by all levels of an organization, improving execution as well as operational, tactical and strategic decision making.
Value Proposition of Supply Chain Visibility
Before discussing the hub's conceptual architecture, features and functionality, it is important to examine the value proposition for supply chain visibility. In general, supply chain improvement opportunities abound. Most can be placed into four distinct categories: revenue growth, inventory cost reductions, transportation cost reductions and reduction in distribution costs. The value proposition depicted in Table 1 illustrates the overall improvements possible within a typical supply chain by addressing its weaknesses and limitations.
New or upgraded systems may be necessary to realize full benefits. However, a significant ROI can be realized by expanding visibility across existing systems. Doing so results in increased awareness and extended collaboration opportunities, and can include:
* Identifying and including new data sets
* Improving the quality of existing data sets
* Using existing data sets in new ways
* Integrating siloed processes and systems more tightly
* Improving measurement and monitoring of process and system performance.
Of course, exact opportunities will vary by company, but specific examples that typically result in positive returns include:
* Sharing demand data with customers and suppliers
* Enabling advance shipment notifications and visibility into in-transit shipments
* Proof of deliveries
* Developing more accurate visibility into customers' inventory levels
* Tracking partner compliance.
Although obviously not exhaustive, these examples represent opportunity for continuous improvement. They do so because integrating visibility and collaborative capabilities with existing supply chain systems improves an organization's performance, and thus its ability to achieve these results.
Having established a basis for defining a supply chain visibility value proposition, and having determined how to measure the effectiveness of an organization's collaborative readiness, it is possible to describe the conceptual technology model of a supply chain visibility hub. It is also important to remember how to handle inherent data quality issues that arise during integration efforts.
The visibility hub comprises three main pieces:
1. The trading partner network
2. The event manager engine, which supports alerting, visibility and collaboration
3. The visibility data repository, which supports execution and planning.
Trading Partner Network
The trading partner network provides physical connections and interfaces between supply chain partners, as well as several other critical features, including data validation and partner compliance. The physical network itself consists of several technologies, which:
* Manage physical connections with trading partners, and monitor and report on their conditions in the network.
* Provide for secure transmission of electronic data interchange (EDI) and other data over the Internet by using AS2, HTTPS or Secure FTP. The network should also support transmission via value-added networks (VANs).
* Support service-oriented architectures to exploit Web Service access to logistics services providers and adapt to legacy applications.
* Deliver Web forms to capture and transmit information globally for trading partners who lack sophisticated systems or are low-volume providers.