Holder Says: |
We believe that using historical data we can help the merchant create a more perfect PO that anticipates a vendor’s future performance based on their historical performance in similar situations.
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SCDigest editor Dan Gilmore recently sat down with Greg Holder, CEO of Compliance Networks, to discuss supply chain visibility in the consumer goods to retail supply chain.
This interview is also exceprted in our ew SCDigest Letter on Supply Chain Visibility, which can be downloaded here: Supply Chain Visibility Information and Resources page.
Gilmore: What does visibility in the consumer goods to retail supply chain really mean to you?
Holder: In one word to me, visibility means cash. Cash in cost avoidance, cash in expense savings, cash in inventory savings and cash in capital expenditure delay or avoidance. At this point if I were the audience I would ask; how can you say this? It is quite simple. Visibility allows people in the supply chain to see problems before they occur and take necessary steps to avoid the expense in real time.
Visibility also provides insight to make more intelligent decisions early in the order cycle (just in time inventory) and perform more intelligent audits in the distribution centers on inbound shipments (expense savings). Finally visibility can also be a major driver increasing throughput in the existing distribution network and thus delaying the need for costly new DCs. Two drivers of this savings through visibility come from what we refer to as the PO Lifecycle and ASN (Inventory) Accuracy.
Gilmore: Let’s start with the PO Lifecycle.
Holder: In its simplest form the PO Lifecycle refers to all of the supply chain events relating to a purchase order from creation to consumption either at a retail DC or retail store. Think about it this way. A retail buyer or replenishment system can create the most perfect order for the known needs at the time of creation.
This is the last time that order will be perfect. Too many things can go wrong for too many reasons. The order is transmitted (via EDI) to the vendor or supplier. The supplier must pick or in some cases perform some value added service, audit and prepare the order to be shipped within the start/stop and cancel dates provided in the PO and to the appropriate location in the appropriate quantities for the items requested. In many cases, they must also create and transmit an accurate ASN. Increasingly, they must also request routing through a TMS, the routing gets approved, trucks get dispatched, the order is picked up and eventually delivered to the retail DC yard.
At some point the DC will unload the trailer, receive and audit the order, perhaps perform some other value added service before shipping the order to the stores and booking the order into inventory. Now, imagine if the order is shipped more than once from more than one location or if there are problems associated to the order (wrong items or quantity). All of these events are a part of the PO Lifecycle and important parts of reducing days in the inbound supply chain which ultimately reduces investments in inventory.
Gilmore: In the consumer goods to retail supply chain, the Advanced Ship Notice or ASN is really an essential building block of supply chain visibility, isn't it? How well penetrated is the ASN in retail today?
Holder: The ASN is a very essential building block of supply chain visibility. For the uninitiated, ASN is an acronym for Advanced Shipment Notice and is essentially an electronic packing slip of a vendor shipment. The idea is simple, as a vendor prepares a shipment from their location to a retail DC, they account for the items shipped, generally at the carton level, and transmit the carton labels, carton contents and some other data to the retailer in advance of shipping.
With this information, the retailer can do many things. In the perfect world they can use the information to staff DCs receiving departments and to cross-dock or fast track merchandise through the DC. In the event of a discrepancy to the purchase order they can attempt to resolve a problem before the shipment arrives at the DC causing a physical blockage or multiple handling. Inaccurate ASNs can cause significant inventory accuracy issues in the stores if not caught in an audit process somewhere in the inbound supply chain.
I don’t think anyone knows the penetration of ASN in retail today but I think it is safe to say that for a technology that has been around for more than 30 years, the penetration is far too low.
Gilmore: What do you see as the barriers to better ASN adoption?
Holder: This is a great question. From a supplier perspective, creating and transmitting an ASN from a technology standpoint is simple and can be done with very little investment. However, for those suppliers that ship containers that have multiple SKUs in them or on them, the process can sometimes be complicated. For multiple SKU cases, an often sighted method is the scan and pack method. Stated more simply after an order has been picked (or during the picking process) the items are scanned and packed into the shipping container at the same time. When the carton is full, the carton label is printed and applied. The contents are known and can be included in the ASN. For single-SKU cases, carton labels can be pre-printed and applied as the order is being filled. These are simply a couple of examples from a supplier perspective.
(Supply Chain Trends and Issues Article - Continued Below) |