Using Visibility to Manage Supply Chain Uncertainty
Written By: Michael Bittner
Published On: November 9 2005
Leonardo da Vinci was once quoted as saying, "Art is difficult to replicate, and unpredictable in its application, other than by Mother Nature". This explains why there are so few Stradivarius violins on the market. Yet today, contemporary art is easy to replicate by using modern duplicating technology. However, in the case of modern manufacturing, "art" has mostly been replaced with statistical measurement and process control. For this reason, supply chain processes require the same kind of structured views to monitor, measure, and analyze activities within the modern supply chain that manufacturing entails to mass produce. Supply chain management (SCM) is the art and science of managing uncertainty. Supply chain visibility (SCV) provides the event level data and information required to make the concept of process control for the supply chain a reality.
Process uncertainty burns brightly in the manufacturing and supply chain flow of the extended enterprise. Demand and supply management, market dynamics, capacity, security, service and support activities, and network management all contribute to the enterprise uncertainty. SCV and supply chain event management (SCEM) are tools and techniques designed to quell uncertainty. SCV is much more than "track and trace"; it is the transparent view of time, place, status, and content that monitors events within supply chain processes. SCV measures the performance of processes and organizations, and notifies interested parties when processes fall out of the acceptable range of performance.
The use of science in supply chain management (SCM) has been evolving since the seventies when manufacturing resource planning (MRP) forecast modeling was first introduced to identify constraints. The eighties brought constraint based planning, manufacturing requirements planning (MRP-II), distribution requirements planning (DRP), electronic data interchange (EDI), and track and trace. Enter the nineties with enterprise resource planning (ERP), advanced planning and scheduling (APS), and the Internet. Today, we delve into continuous loop manufacturing, peer-to-peer computing, service oriented architecture (SOA), and the means for inter- and intra-enterprise SCV.
Understanding the Nature of and Responding to Uncertainty
When event level detail of supply chain activity is visible, multiple alternatives can be deployed to manage uncertainty. These include the following:
Eliminating the source of uncertainty. Visibility can identify sources of uncertainty and shed light on events in order to identify systemic process problems. For example, it can identify bottlenecks and provide other opportunities for improvement in processes, such as new product introduction (NPI). A Web-native application and platform can provide a single view of individual and aggregated events.
Protecting the supply chain defensively from unanticipated variability. Visibility can help predict the range of variability, as well as reveal when to deploy reserve resources and when to use resource buffers.
Protect actively by making supply chain processes more flexible. When changing conditions are visible, they can be identified, and users can respond immediately. For example, resources can be reallocated and transported across a network as conditions warrant.
Visibility Technology Options
Traditional ERP and SCM systems such as supply chain planning, order management, and logistics management provide static and fixed views, because the systems themselves are rigid. However, emerging interdependent supply networks (ISN) use collaborative planning and forecasting, distributed order management, and collaborative transportation planning to extend visibility beyond the edge of the enterprise. They are also mobile and can exploit new technologies like global positioning systems (GPS), active radio frequency identification (RFID), information exchanges, and satellite communications. As a result, global visibility is now reality, thanks to these and other technological advances.
Although many independent SCEM vendors have disappeared, supply chain offerings still include visibility software licensed technology, as well as visibility services. Visibility deployment providers include
- Visibility services, which are characterized by rapid rollout and economies of scale, and an ability to reduce an enterprise's data management burden. Example providers include GT Nexus, MDI/Bridgepoint, DesCartes, and many third party logistics companies.
- All major ERP and SCM vendors, as well as innovative companies, such as RiverOne, G-Log (Oracle), Viewlocity, and Pelion Systems. Look for a data model that supports event monitoring at the edge of the supply chain.
- Information exchange companies, which have deep integration experience and can add application layers. Vendors include Sterling Commerce, GXS Information, and Cyclone Commerce.
SCV Applications Have Emerged from Various Sources
SCV applications are a requirement for managing future supply chains, and competition has been fierce among vendors offering such solutions. Supply chain execution (SCE) vendors were the first to embrace the concepts of SCV as an extension to their SCE suites and now, almost every major SCE vendor has rolled out a version of SCV and SCEM, with many having plans to expand their product footprints over time. SCE vendors are using SCV technology to connect modules in their applications, integrate with enterprise systems, and create sockets into which the external trading community can link.
The scope of SCV and the simplicity of its deployment will become a differentiator for traditional SCE vendors. A few US-based initial, SCE entrants with original products in SCV or SCEM technologies, include Texas-based EXE Technologies, Inc., (now part of SSA Global) with EXEconnect; Georgian-based Manhattan Associates with InfoLink; Wiscons in-based RedPrairie with Logistics Controller; New York-based Optum, Inc. with TradeStream; Michigan-based Provia Software, Inc. with Viaware DSS; and Michigan-based Yantra Corporation (now part of Sterling Commerce), with PureEcommerce.
Supply chain planning (SCP) vendors have also gotten in on the act, with SCP software companies like Logility of Atlanta, Georgia (US), which offers its Voyager XES product; and i2 Technologies, located in Dallas, Texas (US) that has developed its Global Logistics Monitor software to address SCV and SCEM needs. Its rival, Manugistics, headquartered in Rockville, Maryland (US), offers its NetWORKS Collaborative Services, which includes NetWORKS Monitor, Visibility, and OneView for measurement.
Major enterprise application software (EAS) vendors are also offering SCV or SCEM solutions. Mighty SAP (Walldorf, Germany) initiated a major internal development project called the Event Tracking Server (ETS). Initially focused on SAP's Logistics Execution Systems (LES) software, but expandable to advanced planning optimization (APO), business to business (B2B), and customer relationship management (CRM), ETS is designed to provide multifaceted monitoring, notification, and proactive simulation and control of events as they unfold. SAP's WebOnline/Business Warehouse (BW) and InfoCubes act as the backbones for measurement functionality, and this technology is now interwoven with NetWeaver.
Best-of-breed entrants to the SCV/SCEM applications market are the most intriguing, and also the most difficult to quantify in terms of functional footprint, value proposition, and return on investment (ROI). They tend to cover a particular business process, like supplier management, inventory control, asset tracking and management, logistics, or customer management, but because of their niche offerings, many are considered acquisition bait. In fact, many of the initial entrants, such as Categoric, Celarix, Sage Tree, Vigilance, and Saltare, have already disappeared.
Supply chain visibility has come a long way since the initial track and trace capabilities of the eighties. Web-based automation of supply chain business processes and workflows is achievable, especially with the advance of SOA in the foreseeable future. Supply chain visibility can help characterize the nature of uncertainty and manage appropriate responses. Visibility, event management, and actionable response will ultimately play a role in the rapid consolidation of planning and execution, thanks to data transparency. Enterprise walls and barriers must come down; however, even with the advent of such promising technology, the true benefits visibility enables won't be fully realized without organizational and process realignment.