Envision: Shedding Light on Exceptions

Managing a supply chain under normal circumstances is difficult enough, but enterprises must be prepared to face the many exceptions that occur each day. The truth is that demand-chain disruptions don't have to be detrimental to your business.

[From iSource Business, January 2002] The problem with automated demand chains is that efficiencies are realized only if processes run as planned. And while defining the processes appropriate for each enterprise is assuredly valuable, the reality is that critical exceptions in the demand chain process occur daily. Real enterprise success is measured by how quickly enterprises can discover these demand-chain exceptions, analyze their impact and respond accordingly to capitalize on opportunities or mitigate risk. Ideally, enterprise decision-makers need desktop "command and control" systems to manage value chains in real-time.

Detecting Exceptions in the Process

Here's an example of a common exception that might occur in your demand chain: Let's say that the order rate for a particular product is less than your demand forecast, the parts ordered to produce your product are scheduled to be delivered in less than 30 days, and your current inventory can meet your adjusted order need. When these three pieces of information  which live in different enterprise systems, both inside and outside of your organization  come together, you've got yourself a "good, ol' fashioned" demand chain disruption that, if undetected, will leave a costly inventory surplus and significantly damage the profitability of your enterprise.

While process automation helps define the flow of applications and people involved in a business process, it lacks the capability to detect complex, granular exceptions across a multitude of Web and enterprise systems. In the aforementioned example, the critical bits of information might be found in an unstructured report generated by an order management system and in a separate customer relationship management (CRM) demand-forecast report. Either report, taken in isolation, might not necessitate a response. But when fused with other related data from across the extended enterprise, the totality of the information represents a critical situation that requires action.

Wanted: Enterprise "Command and Control"

Aggregated information clearly holds much more value for enterprise decision-makers. Therefore, procurement managers and vice presidents of manufacturing  those who are closest to understanding the events that disrupt the demand chain  need a strategic event management application to act as their command and control system. These applications allow business strategists to easily specify rules for constituting a demand-chain exception, as well as the appropriate applications, processes and functions to be executed if such events occur.

Such an application can provide a high level of visibility and control to help manage and mitigate risk across the value chain. For example, a command and control application that proactively detects supply/demand variances and automatically identifies which supplier contracts do not have cancellation penalties thereby limits risk for a company's value chain as a whole. An exception management solution can also help keep costs to a minimum, ensuring a more optimized value chain and improved customer satisfaction, which is so critical in a tight marketplace.

Strategic exception management solutions will become a necessary layer on top of extended business processes, where dynamic value chain events intersect with bottom line business decisions. The most successful companies will deploy these real-time command and control solutions to capitalize on new opportunities and avoid costly crises along the way.