As manufacturers' supply chains go global and become increasingly complex, getting end-to-end supply chain visibility...
across an extended value chain is a little bit like trying to keep pace on a treadmill. Therefore, experts suggest manufacturers take on the visibility challenge by narrowing the scope of their efforts to the primary pain point surrounding visibility as the best way to achieve demonstrable results and to chart a course going forward.
"You have to pick your spot -- spray and pray doesn't work with this kind of effort," said Ann Grackin, CEO of ChainLink Research, a research and advisory company specializing in supply chain issues. "You've got to give some serious thought to the corporate CEO initiative -- that's how you pick your first one."
- Collaborative demand planning: While a major factor for consumer products manufacturers, companies in other segments also need more accurate and real-time information on customer demand. Collaboration hubs or tools that let a manufacturer and its customers share demand and inventory information and manage exceptions greatly aids in inventory management and helps keep operating costs low. "Manufacturers today are interested in better forecast accuracy, and that requires more demand visibility than they had before," said Noha Tohamy, vice president of research for AMR Research.
- Risk management around suppliers: As manufacturers look to low-cost suppliers overseas, they open up their supply chains to a certain amount of risk. Tools or platforms that provide information about the financial standing of suppliers or deliver a window into a contract manufacturer's inventory and ability to fulfill order commitments can help a manufacturer mitigate risk around quality and time-to-delivery issues.
- Track and trace visibility: Knowing exactly where orders or inventory are in real time is critical for manufacturers so that they can ensure they have the right products and inventory in the right place at the right time, ultimately helping them to deliver high-quality customer service.
- Sales and operations planning (S&OP): An increasingly popular supply chain visibility project, which delivers a 360-degree view of a company. By accounting for all of the functional areas of the organization as part of business planning, manufacturers can more effectively match supply to demand and make informed decisions on order fulfillment and inventory based on customer profitability and other factors.
One project at a time
For food giant Del Monte, the primary pain point around supply chain visibility had everything to do with bolstering the order fill rate for its retail customers, without having to carry significant inventory. Three years ago, the company had embarked on a corporate mission to be recognized at the No. 1 CPG supply chain by its customers, and two specific supply chain visibility projects played into that goal. The manufacturer put in a new demand management system from JDA Software in addition to leveraging on-demand supply chain planning, execution and business analysis services from One Network, which functions as the order execution tool. "The two together address our key concerns: predicting what our customers want and making sure what we have gets there," said Rob Ferguson, director of supply chain projects at Del Monte. "Previously, we had no inventory visibility to know what products were where, nor did we know what to move to fill anticipated customer demand."
Not any more. Today, Del Monte has become 20% to 30% more accurate with order prediction, resulting in fill rates that are the highest in the company's history. In addition, proven retailers can achieve 99% in store, in stock rates with a total of 15 to 20 days of retailer inventory, Ferguson said. Flush with that success, Del Monte will now broaden its efforts to deliver similar visibility to suppliers.
At BreconRidge, a contract manufacturer in the electronics industry, the visibility issue was more about inventory management and control, as well as visibility for revenue recognition. The company had difficulty getting a clear and accurate picture of inventory despite using existing tools like Excel and its SAP ERP system, according to Paul Smithson, BreconRidge's corporate planner.
In 2007, the firm began using Kinaxis' RapidResponse on-demand supply chain management service, initially in the demand intake process, allowing planners to analyze the impact of changes so they could determine more accurate commit dates to customers and identify any materials that were holding up the process. "If we can control demand going into the box effectively, it helps us with on-time delivery and inventory management processes downstream," Smithson said. Over time, BreconRidge gave buyers access to the system to give them visibility into demand constraints for suppliers that could affect realization of revenue. Next up is giving customers access to the system so they get visibility into things like their order book profile, inventory and status of shipments, Smithson said. "It will give them a level of confidence that they can see what we're doing and what we're committed to."
Dig Deeper on SAP SCM software