Global Visibility: Seeing the World as a Crystal Ball
By Ned Blinick, Blinco Systems

AMR Research provided the following quote from one of their clients:

“More than 80% of our purchase orders are for configured products—we don’t buy from the supplier’s stock. I estimate about 40% are special orders customized in one way or another to our needs. As a result, a big portion of our orders have long lead times, usually measured in months rather than days. Our volume averages about 6,000 line items per month. On-time delivery from our suppliers runs 80% to 85%. That means that 1,000 to 1,500 items will not be delivered on time. I developed a pretty slick tool where I show my suppliers their status, and highlight with bright colors when they are delinquent or not supporting my needs. The problem is that most suppliers in my category are not organized to provide an update when they miss a schedule, or, for that matter, to give me an early warning before they become delinquent.”

This quote is rather remarkable. First, this quote is from a company among the Fortune 2000. They spend mountains of money on ERP and SCM solutions along with all the other ancillary systems to support their business processes, improve their global supply chain visibility, and ensure high levels of customer service. That this quote is so prominently positioned indicates that this is not an isolated issue among AMR’s clients.

So the quote begs the question: Why -- after all the hype, investment in and discussion about ERP, SCM, CRM, SRM, Logistics ASPs, 3PLs, integrating middleware applications, the Web, etc. -- does this problem still exist?

Today, many solutions and ASP's [Application Service Providers] provide event monitoring and reporting on the activities of suppliers and service providers. These solutions represent that they "seamlessly" integrate into the larger ERP/SCM solutions. The theory is that information they gather is available across the entire organization so that everyone knows when tasks are not executed to plan and decisions can be made to proactively influence outcomes. But theory does not reflect the reality.

Today, despite vast sums of money spent, most enterprise systems are poorly integrated and the information is rarely synchronized. The result: information available across the business environment is rarely balanced, validated and audited and is thus often of marginal use.

The second issue is not that the supplier has failed the customer, but that the customer, after “having developed a pretty slick tool,” appears unable to proactively monitor activities and insure better deliveries from his suppliers. This problem stems from the inability to see into, aggressively monitor and strongly influence suppliers’ compliance to plans.

To truly collaborate with and positively influence suppliers requires systems that easily provide absolute visibility into all aspects of the global supply chain. Systems must be totally integrated, operate in real-time, and support automatic monitoring, reporting and prompting. These systems must capture information in ways your suppliers and service providers are able to interact with you: web, EDI, fax, and/or manually. Most important: these systems must provide reporting that is meaningful and supportive of your business planning and decision-making processes, and those reports must be instantly available at all times and so that information can be sliced and diced as needed.

The fundamental error AMR’s client made is to rely on its suppliers to keep them informed of events without having a proactive tracking and monitoring systems in place. Assuming that this company’s suppliers are “good” suppliers, why is the on-time delivery number only 80-85%? How can this company significantly improve this situation? By taking control.

All of 3rdwave's solutions provide superior control, which is a direct result of being able to achieve unimpeded visibility into suppliers’ global pipelines from end-to-end.. With the ability to see as deeply into the supply chain as needed, performance can be accurately and instantly monitored against pre-established milestones. For large or even small companies, this can mean monitoring hundreds if not hundreds of thousands of simultaneous events. Larger companies can thus monitor thousands of simultaneous events across all departments, divisions and/or companies.

3rdwave's visibility is the result of capturing information on performance execution that is meaningful, actionable, and timely. Having exceptional visibility and supporting systems that automate and track communications with suppliers will dramatically increase compliance. Visibility into suppliers’ performance enables companies to take control of the process instead of relying on their suppliers.

Today, there are reasons why the vast majority of companies lack adequate supply chain visibility: They are fully dependent on their suppliers and service providers - i.e., carriers, customs brokers, 3PL's for their global logistics execution information and reports. They have limited or no control.

With the tremendous increase in global trade and use of offshore providers, organizations have tremendous challenges to manage their long supply chains, control costs and deliver consistently high levels of customer service (internal and external). Achieving those goals starts in their global supply chains must start with enabling real global visibility.

To find out why 3rdwave Solutions' clients have attained their desired visibility levels, listen to a recent webinar that our client, John McLennan, V.P. of Liberty Richter, gave on what he did to not only achieve accurate enterprise-wide visibility on all his globally sourced goods, but to also improve his inventory turns 75% in one year, and drop more cash straight to his bottom line.

Ned Blinick is Vice-President, Sales & Marketing of Blinco Systems.
This article originally appeared in SupplyChainDigest.com.

3rdwave WHITE PAPERS concerning global visibility that you may be interested in:

Creating Value from Lean, Agile and Adaptive Global Organizations

Getting Global Sourcing Right