Reader Question

My company has an extended supply chain with all suppliers and factories located in Asia. Visibility is clearly a challenge.

Could you suggest a few approaches to improve visibility? Currently, a flood of excel spreadsheets are the primary tools. Web portals comes to mind.

Richard Wells
Supply Chain Management

Category: Supply Chain Visibility


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Expert Panelist Response: Gene Tyndall, EVP Global Supply Chain, Tompkins Associates

Yours is a frequent question and has been an industry issue for over 10 years. Efforts to solve it have still not yielded a perfect solution, but there are incremental ways that companies are getting to it.

A complete, comprehensive solution to Asia-based door-to-North America door SC visibility is not yet available. While some software solutions now cover port-to-port, and container-loading to unloading, the fact that multiple companies handle the freight makes it a challenge. Technology is not the main issue problem -- system-to-system communications are increasingly in place -- but investments in the full solution have slowed and especially the smaller companies cannot afford to advance too far.

So, most companies such as yours rely on their service providers and/or carriers. The larger freight forwarders, and the leading logistics service providers, are well aware of the need, and they work with other partners in the chain to try to have more "near real-time" visibility information available for their customers. This can work well when you are a high-volume shipper; but, we recognize it may not when you are not. Yet, finding the right forwarder and LSPs can make a huge difference to you.

Software solution providers such as i2, GT Nexus, TradeBeam, Management Dynamics, and many others are actively working on this as well. You should talk with them about their capabilities, which are getting better all the time.

Your investment decision for improved visibility will depend on how you plan to use the information. Just having it may add little value; but, if you define ways to use it -- for improved on-time deliveries, for dynamic routing, for other value-added actions -- then you can often justify the business case for the added rates or fees.

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Other Responses

Dan Gilmore, Editor, Supply Chain Digest

I will just add some comments to what Gene has said.

First, most companies find that visibility is like the proverbial onion, where you have to keep peeling back layers to get deeper and deeper into the level of detail you need to manage your supply chain.

Second, where does visibility begin? Many companies first looked at visibility as starting ex-factory in Asia, but then found it was critical that they move visibility further back upstream to the factories themselves – what really is the status of that PO?

So, a number of software vendors have supplier portals that can be deployed at many/most Asian factories. This can at least force suppliers to enter (manually or systematically) status updates on the process of the order through the supplier, as well as apply bar codes for ASNs and other functions. Some of these are more purchasing centric, some more logistics centric. That is, the purchasing centric ones are unlikely to handle say bar code labeling and ASNs well; the logistics centric ones may have just basic PO acknowledgement kinds of capabilities.

Of course, there is nothing to prevent those suppliers from lying. So, the larger companies ultimately find they need to have agents (direct employees or contractors) who audit suppliers to ensure the data they provide is reasonably accurate. But that may not be realistic for mid-market companies, though many do use agents.

Of course, the name of the game in the end is connectivity, using whatever combination is required of web portals, traditional EDI (ocean carriers), web EDI, etc.

There are a number of solutions that can display the information you need, very flexibly, with "event management" and other advanced capabilities, but achieving the connectivity with carriers and suppliers is still fairly a custom effort for now. The alternative, as Gene said, is to use multiple systems from carriers and LSPs and piece together the total picture yourself.

Jim Barnes, President, EnVista

Many companies have been seeking supply chain visibility form source to consumption for 15+ years. Matter of fact, one of the first software companies that tried to solve this business problem and developed a technology framework was a company called Viewlocity. However, the software companies that are the leaders are the companies that Gene Tyndall mentioned in his response.

I think some of those companies are further aong than Mr. Tyndall thinks.

GT Nexus, Trade Beam, and Management Dynamics do have, and have been providing visibility from x-factory to POE or Distribution door for years. Companies like Cost Plus World Market, The GAP, Levis, and Home Depot track inventory from X-factor to Distribution door using the software solutions that I have mentioned. There are other companies as well, Avery Denison has a solution called Info Chain Express, INFOR and Sourcing Solutions are others.

What is interesting about the Best-of-Breed Supply Chain Visibility providers is that they have figured out how to provide a positive return on investment in less than a year. You may be asking how? The solution providers are doing more than providing visibility, they are 1) providing data for 10+2 Compliance and ISF; 2) transportation optimization; 3) carrier bid optimization; 4) purchase order acknowledgement; 5) proactive events and alerts based upon supply chain time lines by SKU and Vendor; and last 6) inventory safety stock reduction by minimizing inbound variability.

What is key and why these software companies are thriving in today’s economy is because they offer their software as a service (SaaS), but more importantly they have figured out how to connect and communicate with multiple trading partners. There is intellectual property in what they do and how they connect. For example: Maersk uses HKN (Hong Kong) vs. APL use HNK (Hong Kong) in their standard EDI 315. These providers are experts in connecting and integrating your trading partners. The lack of data connectivity and the ability to manage a lot information is like going to an ATM that is not connected to your bank. This is the reason that ERP and BOB warehouse management providers have failed in this market space.

We just completed a Supply Chain Visibility ROI and solution selection for a large retailer. Based upon 350 Asia Factories, 25,500 containers, $150M of in-transit and working inventory (3 Distribution Centers), the payback was 8 months with a 206% IRR.

Karen Owsowitz, Sr. Research Analyst, System Planning Corporation

To genuinely increase the level of knowledge available about how your supply chain is working, you must have a visibility system that offers 24x7 tracking and monitoring from manufacturer to final destination. Suppliers and other partners need controlled access to this information, too. Operational data captured during transport should be combined with shipping documents, purchase orders, invoices, and packing lists to support immediate inventory distribution decisions as well as production planning and cash management.

Ankush Deshmukh, Senior Consultant, Infosys

Todays supply chains are getting more and more complex as they are spread across different geographies. In such circumstances, to improve visibility with suppliers, the following measures can be effective.

1. Integration with the supplier's systems

2. Inviting suppliers to your portal to track PO/Invoice status

To implement all of the above features, there is a range of products available in the market. Most of these products are titled under supplier relationship management.

Anant Khudanpur, Director, Client Value Realization, Savi Networks

We have finally solved this challenge (belled the cat, crossed the rubicon, perhaps a eureka moment?).

HOW? We attach a device to the container and you can see where it is at all times on a map.

You can get alerts for tampering, temperature/humidity issues. You can be notified at any choke point in the world. (Did it hit the Panama Canal?, Is it a day out from the port so I can get customs clearance and arrange for a trucker? Is it a 100 miles out from Kansas on Rail? Why has it been sitting in Chicago the whole day? Am I getting detention charges because we lost this box and it's stuck at the port?)

Simple, isn't it?! We are finding that MOST containers run into some kind of problem or the other.

That's because of the number of hand-offs and dependencies of international trade. If you apply the perfect order principle, it is clear how even with every process operating at 95% efficiency, you still end up with over half your stuff delayed and creating uncertainty (e.g., 95%x95%x95%x95....).

Having this level of granular data not only gives you peace of mind, it reduces a lot of supplier risk, and transit risk, and actually creates opportunities for capturing sales (e.g., diverting products to different sales channels to improve your margins) and improving customer service.

The mystery in Global supply chains should now be history!

Clyde Usher-O'Neill, President, Applied Insight Management

Improvements to visibility can be incremental or dramatic depending on the current level of vendor/supplier management and process definition. While spreadsheets are cumbersome, various levels of visibility can be obtained at a nominal cost versus implementation of other software and/or service providers solutions. There are any number of sources and strategies for automating visibility of the international supply chain processes (aka Global Trade Management) at many different levels. The level of accuracy and visibility are dependent on what your company can afford and support. In many cases, reductions in expenses and lost opportunities will far outweigh the cost of development and implementation. The first step is to determine the objectives of visibility. The objectives determine the level and depth of detail required to achieve the desired results. The second step is to develop a current process map and design a "should be" process. You may learn the issue is not as much about lack of visibility as it is about lack of standard process requirements across the supply chain. Third, with this information, establish what needs to be visible and when. Create a standard operating procedure that includes all trading partners (carriers, brokers, forwarders, vendors, suppliers, etc.) regarding their role and responsibilities within the process, including deadlines for specific information reporting. Then provide copies to, and educate all the partners on the requirements. Fourth, begin implementation of the requirements in stages starting at the beginning of the process. Does the process begin with vendor selection, purchase order creation, or purchase order delivery to the vendor? Be sure that all internal partners are also trained on the process and your company's expectations for performance. Develop measurement tools for accuracy, timeliness and consistency of infotmation. Provide incentives to partners for meeting all the requirements in the form of additional volume, reduction of competition, better pricing, etc. Also develop penalties for failure to comply in the form of reduced volumes, lower pricing, increased competition, etc. This will establish continuous improvement as part of the process.