Thursday, November 15, 2007

Global supply chain visibility solutions - have they delivered?

A recent Aberdeen study reported that the greatest problem for executives in global supply chain management is still visibility. In the study 79% of the executives from large companies and 41% of executives from SME that responded ranked "Lack of critical supply chain visibility" as the overall most important issue. The second greatest problem was "Uncoordinated multi-tier supply chain processes" which garnered 56% and 37% respectively from the executives responding.

The results are rather telling given the emphasis and investment that has been made by organizations to insure that they have the critical visibility required to enable their global supply chains to operate efficiently.

Are the results really surprising? The answer is Yes and No.

Yes, because it is believed that if people have visibility into where an item is within the global supply chain they are able to make optimal supply and demand decisions based on the information.

No, because the visibility solutions provided are only stop-gap solutions that provide snapshots into where an item is in the supply chain, but provide
no, or very limited, visibility into the financial and compliance implications surrounding the item. With no integrated visibility into the physical, financial and compliance status of the item it is virtually impossible to have the critical view of the supply chain necessary to significantly improve supply chain performance.

Without context it is virtually impossible for individuals responsible for managing products across complex global supply chains to make decisions that are optimal for the organization. To get context the organization requires cross-functional execution, information and financial visibility and implication analysis.

Operations areas include internal functional areas such as sourcing, purchasing, international logistics, customs, inventory management, accounting and finance. Each functional area is affected by the activity within the supply chain. However, in most instances both the operational unit and the systems supporting it are not integrated and the information is often not easily reported in a meaningful way. This lack of integration is even more evident with external partners. The result is the lack of critical supply chain visibility.

Critical supply chain visibility is not just about the location of an item in the supply chain but it includes the ability to see virtually all aspects that affect the item. Critical supply chain visibility includes views into where an item is anywhere in the cash-to-cash cycle
and the views into all of financial and compliance issues that accompany the item.

It is undeniable that getting complete physical, financial and compliance visibility still does not exist in almost any organization, large or small. Which leads to the second finding of the study - uncoordinated multi-tier supply chain process. In order to deliver this level of capability and the benefits that come from it organizations must be able to capture the information at these levels, make it visible, and put that information into a comprehensive contextual picture. The two issues of visibility and coordinated processes across an organizations global supply chains are inextricably linked together. You cannot get multi-tier coordinated processes if operations is not linked to integrated and synchronized global supply chain information. This information must be visible at all levels of the supply chain and include the physical, financial, and compliance information.

Until that happens, the issue of global supply chain visibility and coordination of multi-tier issues will remain a very high ranking issue on executives minds because they will continue to lack the information required to support optimal demand and supply chain challenges.

What are your comments?