Here in Canada, major highways are getting new electronic signs that provide warnings to motorists about upcoming road hazards. One foggy morning, I drove by a sign that declared “REDUCE SPEED – LIMITED VISIBILITY”. Sure enough, the fog was so thick in some places that I needed to drive much slower – I couldn’t see anything beyond my own hood. When you think about it, many supply chain companies operate with the same visibility. They can see things happening within their company, but they have no visibility to what’s happening outside the four walls. Unfortunately for them, the pressures of business means that they have to operate at “normal” speeds otherwise they will lose business.
A few months ago, Kinaxis published an infographic titled Supply Chain Visibility: Seeing is Achieving. It focused on why supply chain practitioners need to have better visibility to do their jobs. I won’t go into details on the infographic except to say that it’s worth reviewing. I did want to add some of my own thoughts about why visibility is so important and why today’s traditional ERP systems are doing such a bad job at providing that visibility.
First let’s talk about what supply chain visibility means. If you can imagine the typical supply chain, you would expect it to be comprised of customers, suppliers, and potentially one or more levels of integrated manufacturing facilities. Imagine an environment where your customer could request a demand change and within seconds, you could see the impact of that change on your entire supply chain…including any plant that contributes to the manufacturing of that item or any supplier that provides components. You could assess impacts to inventory, margin, cost of sales, new purchases, capacity…all within seconds, all within a single system. How would that knowledge affect your ability to confidently accept that new order?
Compare that to traditional supply chains. Many supply chains grow through mergers and acquisitions and as such have a mixed set of ERP systems. Some sites have SAP, others have Oracle. Data flows between nodes using nightly data transfers. This means that a particular change (new order, supply shortage, etc) won’t show up on the other systems until the next day. Further, any planning adjustments to respond to the change won’t be propagated to the originating system until the day after. Even when the same ERP system is used across multiple sites, data has to be transferred from one site to another sometimes between applications within the same system! Unfortunately supply chain planners and managers still need to make decisions quickly – so they often will turn to Excel with all the inherent issues that causes.
Despite having limited visibility, companies still need to make critical decisions and often do so without knowing the full picture. Imagine on our foggy day scenario, deciding to pull out and pass a slower moving vehicle, without being able to see what’s coming the other way. – sounds like a recipe for disaster, right?
How do you clear the fog? What capabilities do you need for full Supply Chain visibility?
Supply Chain Data – Obviously you need to be able to pull in the data from multiple supply chain data sources into a single system.
Supply Chain Analytics – Having the data isn’t much use if you can’t do anything with it. You need to be able to replicate the analytics used by any ERP system you are getting data from. The tricky part is that the analytics could be based on SAP for some data and Oracle for other data – in the same system.
Reporting – When looking at a supply chain’s worth of data, being able to slice and dice, summarize and find details, search and sort are critical to being able to make good decisions based on that data. You need the ability to have configurable reports that meet the needs of your changing business.
Alerting – With all this data, understanding the critical few issues from the noise of day to day supply chain activity becomes a real challenge. Imagine you have a supplier that supplies a production facility, which makes a component, which goes into an assembly at another plant, which goes into the final product before being shipped to a customer. It would look something like this….
Now imagine that the supplier has just delayed the delivery date for a key component. That component shortage has just put a customer order at risk of shipping late. With end-to-end visibility and supply chain analytics that emulate ERP logic, lateness is propagated up through the manufacturing sites to the impacted customer order. Based on that customer order delay, an alert gets triggered which is sent to your planner, master scheduler and customer service representative. Because you have this end to end visibility of the supply chain, rather than simply alerting that a supply order is late (possibly noise), you get an alert that the customer order has been delayed (critical issue).
Scenarios – While not a critical component supporting visibility, having the ability to evaluate different options within scenarios combined with end to end supply chain visibility becomes a very powerful tool. Now planners can look at different options and understand the impact of one option over the other on the overall supply chain – not just their respective area of influence.