A SearchManufacturingERP.com ebook A A Adocs.media.bitpipe.com/io_10x/io_101706/item_450065... · retail partners but also for planning and collaboration across supplier net-works—the

A SearchManufacturingERP.com ebook

1 IMPROVING SUPPLY CHAIN VISIBILITY VIA TECHNOLOGY • SEARCHMANUFACTURINGERP.COM

CHAPTER 1The changingface of supplychain visibility

CHAPTER 2Do you needsupply chain

visibilitysoftware?

CHAPTER 3Enhancing

supply chainvisibility to

achievecompliance

CHAPTER 4Fast paybacksupply chain

visibility projects

IMPROVING SUPPLYCHAIN VISIBILITY VIA TECHNOLOGY: OPTIONS, TRENDS AND ROI-DRIVEN PROJECTSBY Beth Stackpole, Contributor

A AAA

Supply chain visibility has become a hot topic, as companies struggle to keep costs lowwhile increasing efficiency and service levels.

A clear view of what’s going on across the entire supplychain has become a competitive imperative. This ebookexamines the types of technology that companies are usingto improve supply chain visibility and offers examples ofROI driven projects that can make a measurable impact.

In this eBook, appropriate for SCM, IT and business professionals, readers will:

D Get a better understanding of the scope of the supplychain visibility challenge and the benefits of solving it,as well as learn more about justifying SCM technologyinvestments

D Get an overview of the many kinds of SCM technologyavailable today that contribute to improving visibility

D Learn more about how compliance is driving the needfor greater supply chain visibility

D Read about specific projects with a defined scope andROI that can help improve supply chain visibility withquantifiable results

Introduction




visibilitysoftware?

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visibility projects

The changing face of supply chain visibility




visibilitysoftware?

CHAPTER 3Enhancing


achievecompliance


visibility projects

THE CHANGINGFACE OF SUPPLYCHAIN VISIBILITY1

NOT SO LONG ago, effective supply chainmanagement meantstaying abreast oforders, inventory levels,even raw materials andparts supplies withinthe confines of a man-ufacturer’s four walls.Yet fast forward adecade and the gamehas completely changed,driven primarily byglobalization and therise of outsourcing. Today’s manufactur-

ers have multi-tierednetworks of suppliers,partners and cus-tomers, all of themplaying a pivotal role inhow the manufacturersbring their products tomarket. Factor in theeconomic downturn,customer demandchanges and a multi-

Simply defining the supplychain visibility challenge istough in and of itself. In thischapter, learn how to define the scope of a supply chain visibility project, and find out how to identify the most relevant pain points in yourorganization to build visibilityprojects around.

tude of possible supply chain interrup-tions, and manufacturers are lookingat a much more complex picture. Tra-ditional enterprise software platformslike ERP or SCM are not equipped todeliver the end-to-end visibility and

controls a manufacturer requires inorder to optimize its supply chainfrom the standpoint of both cost andoperational performance efficiencies.“Back 15 years ago, an ERP system

gave you good visibility into whereeverything was within the four walls of your company—everything fromwhere parts were to what was onorder,” said Anil Gupta, principal atApplications Marketing, a consultingfirm. “As companies started outsourc-ing and more core business functionsmoved outside the four walls, ERP nolonger had visibility into all of that.Companies now need inter-enterpriseprocesses and visibility, and they needaccess to information that is not nec-essarily within their company.”The number of partners composing

a supply chain network is certainly onthe rise, according to a Supply ChainBenchmark survey by Gatepoint

Research and E2open, a provider of on-demand, multi-enterprisedemand-supply network solutions.More than half of the 4,000 respon-dents reported having in excess of500 component suppliers or manu-

facturing partners. Of that broad net-work, 44% of respondents said theyhad deficient visibility into tier 1 sup-pliers, while 75% confirmed they hadinsufficient visibility into tier 2 and tier 3 suppliers. More than 80% ofrespondents admitted they hadn’t yet automated—or had only partiallyautomated—their supply chainprocesses.Much of the problem lies with the

fact that there is no single definition of supply chain visibility, nor is there awell-defined product category of solu-tions. Rather, the definition of supplychain visibility depends on what kindof manufacturer you’re talking to,according to Noha Tohamy, vice presi-dent of research at AMR Research, aGartner company. A high-tech manu-facturer, for example, would probablydescribe its need for visibility from asupply-side perspective, as a way to





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“[Organizations] need access to information that is not necessarily within their company.”

—ANIL GUPTA Of ApplicAtiOns MArketing

do rapid planning and stay on top ofwhat’s going on with contract part-ners, Tohamy said. On the other hand,a consumer products manufacturerwould view supply chain visibility fromthe demand side, in terms of leverag-ing downstream or point-of-sale datato come up with better forecasts and

eventually to optimize inventory andsales.Yet supply chain visibility on its

own isn’t enough to make a businesscase for a project, whether it involvespurchasing enterprise software, on-demand supplier network solutions or doing custom integration to syncup existing business systems. To make a successful case for sup-

ply chain visibility, manufacturersneed to zero in on the most relevantpain point for the business and buildthe case for visibility around that. Forinstance, for manufacturers dealingwith contract outsourcing, havingreal-time visibility into interruptionsthat could affect product delivery orquality levels can help manage cus-tomer expectations, reduce returnsand provide overall better service. For manufacturers of packaged goods,

being able to collaborate with suppli-ers and share real-time forecasts anddemand data can help reduce invento-ry on hand and improve order fill rates.

“If you’re a company or supplychain investing in a supply chain visi-bility solution, bring it back to a very

concrete business benefit you’reexpecting,” Tohamy said. The businessowners expecting benefit from the ini-tiative should work in tandem withsupply chain management, the CFOand high-level representatives from ITto make the business case for supplychain visibility projects. It helps to pickone spot to start and hook that projectto the CEO’s core mission.“Check out what the CEO is doing

and hook your star onto that,” saidAnn Grackin, CEO of ChainLinkResearch, a research and advisorycompany specializing in supply chainissues. “What the corporation is driv-ing to—that’s how you pick your firstproject.” �

Beth Stackpole is a freelance writer who has coveredmanufacturing techniques and manufacturing tech-nology extensively.

“What the corporation is driving to—that’s how you pick your first project.”

—ANN GRACKIN, ceO Of chAinlink reseArch





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UNLIKE MOST categoriesof enterprise software,a Google search onsupply chain visibilitywon’t turn up a plethoraof possible solutions.There will be no feature-by-feature comparisonof like products or even an evaluation of a common set of tools.Rather, choosing a solu-tion for supply chainvisibility really starts bydefining the businessproblem and the kind ofvisibility that’s required.Only then can a manu-facturer zero in on theproper category andproduct solution that is best positioned toaddress its particularvisibility problem andwork toward achievingits specific businessgoals.

Do you need supply chain visibility software?




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There are many vendors claiming to enhance supplychain visibility, but not all products will advance an organization’s goals. In thischapter, get an overview of the SCM technology availabletoday that contributes toimproving supply chain visibility.

DO YOU NEEDSUPPLY CHAIN VISIBILITY SOFTWARE?2

“If you do a search on supply chainvisibility on the Internet, you’ll findthat it’s not one category of solutionsbut rather multiple categories ofproviders making that claim,” saidNoha Tohamy, vice president ofresearch at AMR Research, a Gartnercompany. “The reason is that you

can’t define supply chain visibility—it’s not a feature or function—andthere is no one-size-fits-all supplychain visibility solution. Rather, it’smore about a foundation of how youneed to manage your supply chain andget visibility with suppliers and visibil-ity within your own organization.” Many vendors tout supply chain vis-

ibility among the benefits of theirsolutions. But each comes at the visi-bility problem from a different angle,depending on what audience or spe-cific industry it serves and dependingon where the need for visibility is mostacute. Some key in on providing visi-bility on the demand side, helpingmanufacturers that have a heavy retailand distribution presence in optimiz-ing inventory and order fulfillment.Another set of providers tackle visibil-ity from a supply side view for compa-

nies looking to better manage and gar-ner efficiencies with their outsourcepartners or large networks of suppli-ers. Some providers interpret supplychain visibility from a logistics per-spective, delivering applications thattrack a product as it moves through-out its distribution cycle, while others

have targeted track-and-trace as themajor visibility challenge, providingsolutions that help manufacturerskeep tabs on products throughout thevarious stages of the lifecycle, greatlyaiding in compliance efforts.Here are the primary product cate-

gories that have staked a claim aroundsupply chain visibility:

D Traditional supply chain manage-ment (SCM) and ERP softwareproviders: Companies like Manugis-tics and I2, both now owned by JDASoftware, have been expanding theirSCM suites to address the visibilityproblem beyond the traditional viewof what’s happening within the fourwalls of a manufacturer’s internaloperations. ERP giants like Oracle andSAP have also become more aggres-sive about mapping their offerings to

“it’s not a feature or function—and there is no one-size-fits-all supply chain visibility solution.”

—AMr’s NOHA TOHAMY





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support the supply chain visibilityproblem. SAP’s SCM suite, forinstance, has features not only fordemand planning and forecasting withretail partners but also for planningand collaboration across supplier net-

works—the goal being to help reduceinventory and increase the velocityand accuracy of raw materials sup-plies while improving replenishmentof stocking locations. Many of the offerings in this catego-

ry do a good job of supply chain plan-ning, but there is still work to be donearound the execution part of the visi-bility problem, according to AnilGupta, principal at Applications Mar-keting, a consulting firm. “Supplychain visibility systems that can tellyou how you’re executing against yourplan are key,” Gupta said. “It’s becomemore of an execution issue than aplanning issue.”

D Business intelligence tools: Best-of-breed business intelligence toolsare another avenue for addressing the

supply chain visibility problem.According to a new report publishedby Aberdeen Group, pervasive androle-based supply chain intelligencehas emerged as a critical factor forimproving operational performance.

The only way manufacturers canadapt their supply chains to continu-ous business changes fast enough isto establish an adequate level of sup-ply chain intelligence, according to thereport’s author, Viktoriya Sadlovska.Therefore, tools and processes mustbe put in place to monitor supplychain performance and notify specificprocess managers before problemscan morph in disasters, said Sadlovs-ka, Aberdeen’s researcher of productvalue chain and supply chain manage-ment when this article was published.A full 57% of the 209 respondents tothe Aberdeen survey indicated thatimproving supply chain intelligencewas a critical factor for improvingoverall operational performance.

DNetwork operators: Traditional

“supply chain visibility systems that can tell you how you’re executing against

your plan are key. it’s become more of an execution issue than a planning issue.”

—ANIL GUPTA Of ApplicAtiOns MArketing





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value-added network (VAN)providers, Electronic Data Interchange(EDI) tool vendors and B2B e-com-merce platforms are highlighting sup-ply chain visibility as one of the areaswhere they can deliver a competitive

edge. Companies such as SterlingCommerce and GXS now tout capabil-ities that let manufacturers trackeverything from active orders andpayments to in-transit shipments. Inaddition, there are a growing numberof new Web-based, software-as-a-service offerings in this space, includ-ing companies such as One Networkand E2open. These services connect asupply chain network, providing capa-bilities for supply-side and demand-side collaborative order management,inventory planning and logistics plan-ning, in addition to serving up inte-grated business intelligence, businessprocess management and real-timeexception management. The SaaSofferings tout ease-of-integration forsyncing up multiple enterprises.

D Best-of-breed: There are scores of

applications that key in one particularsupply chain visibility problem—forexample, global trade managementsolutions, which deliver a window intointernational inventory and shipmentstatus. Players in this category include

companies like GT Nexus, Logility andManagement Dynamics. Sales &Operations Planning and inventorymanagement are other categoriestackling a specific slice of the visibilityissue. These solutions can hit themark for manufacturers that have avery defined visibility problem.

D Custom integration: Of course,manufacturers can always try to solvethe visibility problem by developingtheir custom integrations betweenmultiple legacy packages and enter-prise systems used by their suppliers.Unless there is a specific reason to do so, most experts discourage thisroute, as it’s a lot of heavy lifting for IT, which doesn’t necessarily have the expertise, bandwidth or ability todeploy and support external systems.

—B.S.





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“it’s more about a foundation of how youneed to manage your supply chain and get

visibility with suppliers and visibility within your own organization.” —AMr’s NOHA TOHAMY

PROVIDING A more accu-rate, real-time pictureof demand signals orsupplier inventory lev-els is the focus of mostmanufacturers’ supplychain visibility projects.But facing an increasing-ly complex regulatoryclimate, manufacturersare beginning to wantenhanced visibility tohelp meet compliancedirectives related totrade practices, envi-ronmental mandatesand upcoming seriali-zation and track-and-trace laws.“[Compliance] is an

up-and-coming factor,and manufacturers areexpecting a lot moreregulations for environ-mental compliance,around packaging fortrade compliance and

Enhancing supply chain visibility to achieve compliance




visibilitysoftware?

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Faced with a complex regulatory climate, manufacturers are starting to seek supply chain visibility to meet compliance directivesrelated to trade regulation and the environment. In thischapter, learn more about compliance as a driver for visibility.

ENHANCING SUPPLYCHAIN VISIBILITY TO ACHIEVE COMPLIANCE3

things like ePedigree, for understand-ing where your product is comingfrom,” said Noha Tohamy, vice presi-dent of research at AMR Research, aGartner company. “We see a lot ofmanufacturers working with the gov-

ernment and their customers to comeup with what to invest in without sti-fling their ability to be profitable andefficient within their supply chains.”One of the more prominent areas

where enhanced supply chain visibilitycomes into play is environmentalcompliance. Regulations like REACH(Registration, Evaluation, Authoriza-tion and Restriction of Chemical Sub-stances), which makes manufacturersresponsible for tracking and managingthe hazardous chemical substancesthat are part of their products; RoHS(Restriction of Hazardous Sub-stances); and WEEE (Waste fromElectrical and Electronic Equipment)up the ante for manufacturers. Thesedirectives require manufacturers tokeep tabs not only on the attributes ofthe supplier components and materi-

als that go into their products but alsoon how those parts and componentsare disposed of and potentially recy-cled at end of life. The ramifications for manufacturers

that aren’t on top of these mandates

can be quite significant—costlyredesigns, scrapped parts, blockedshipments, potential customer dissat-isfaction and, possibly, steep fines.Most manufacturers are still usingspreadsheets, homegrown databases,even manual processes to retrieve andmanage this data with their supplychain. Increasingly, however, a varietyof enterprise systems—from supplychain offerings to product lifecyclemanagement (PLM) suites—areadding functionality to help manufac-turers automate these processes andmore effectively track and improve theenvironmental performance of theirproducts. Forthcoming environmental regu-

lations around carbon emissions willbe the real game changer for manu-facturers, stepping up the need for

“[compliance] is an up-and-coming factor, and manufacturers are expecting a lot more regulations for environmental compliance, around packaging for trade compliance and things like epedigree.” —AMr’s NOHA TOHAMY





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visibility solutions to aid in meetingcompliance. According to a study bythe Business Performance Manage-ment Forum and E2open, 42% ofmore than 125 companies surveyedhave yet to consider carbon footprint

or greenhouse gas emissions acrosstheir extended supply chain. While76% of respondents said their cus-tomers have not requested such infor-mation, two-thirds expect them todemand such data in the comingyears.Aside from environmental compli-

ance, new laws related to global tradeare another area where manufacturerscan benefit from better visibility intheir supply chains. Global trade man-agement solutions like those fromManagement Dynamics, Oracle andothers automate the processes thatallow manufacturers to efficientlytrade and collaborate across bordersand ensure they pay the correct

amount of duty while protectingagainst fines and penalties, as well asloss of trading privileges.Directives around serialization and

track-and-trace laws emerging in suchindustries as pharmaceuticals and

retail are yet another area of compli-ance that can directly benefit fromimproved supply chain visibility. Com-panies such as Acsis and IBM, amongothers, are offering solutions, manybased on barcode and RFID technolo-gy, to help track, monitor and measurethe chain of custody of a product as itmoves through its lifecycle.Despite the fact that all of these

compliance efforts create visibilitychallenges for manufacturers, expertssay compliance is rarely a springboardfor building a case for a specific sup-ply chain visibility project. Instead,organizations should focus on trace-ability and visibility of products, ratherthan compliance as the focus. —B.S.

“We see a lot of manufacturers working with the government and their customers to

come up with what to invest in without stiflingtheir ability to be profitable and efficient within

their supply chains.” —AMr’s NOHA TOHAMY





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AS MANUFACTUERS’ sup-ply chains go global andbecome increasinglycomplex, getting end-to-end visibility acrossan extended value chainis a little bit like tryingto keep pace on a tread-mill. Therefore, expertssuggest manufacturerstake on the visibilitychallenge by narrowingthe scope of theirefforts to the primarypain point surroundingvisibility as the bestway to achieve demon-strable results and tochart a course goingforward.“You have to pick

your spot—spray andpray doesn’t work withthis kind of effort,” saidAnn Grackin, CEO ofChainLink Research, a

(Continued on page 15)

Fast payback supply chain visibility projects



visibilitysoftware?

CHAPTER 3Enhancing


achievecompliance


visibility projects

Manufacturers should tacklethe visibility challenge bychoosing a primary pain point.In this chapter, read about specific projects with a definedscope and ROI that can helpimprove supply chain visibilitywith quantifiable results.

FAST PAYBACK SUPPLY CHAIN VISIBILITY PROJECTS4


FOR FOOD giant Del Monte, the primarypain point around visibility had every-thing to do with bolstering the order fillrate for its retail customers, without hav-ing to carry significant inventory. Threeyears ago, the company had embarkedon a corporate mission to be recognizedat the No. 1 CPG supply chain by its cus-tomers, and two specific supply chainvisibility projects played into that goal.The manufacturer put in a new demandmanagement system from JDA Softwarein addition to leveraging on-demand sup-ply chain planning, execution and busi-ness analysis services from One Net-work, which functions as the orderexecution tool. “The two togetheraddress our key concerns: predictingwhat our customers want and makingsure what we have gets there,” said RobFerguson, director of supply chain proj-ects at Del Monte. “Previously, we hadno inventory visibility to know whatproducts were where, nor did we knowwhat to move to fill anticipated customerdemand.”Not anymore. Today, Del Monte has

become 20% to 30% more accurate withorder prediction, resulting in fill rates thatare the highest in the company’s history.In addition, proven retailers can achieve99% in store, in stock rates with a totalof 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 manufac-

turer in the electronics industry, the visi-bility issue was more about inventorymanagement and control, as well as visi-bility for revenue recognition. The com-pany had difficulty getting a clear andaccurate picture of inventory despiteusing existing tools like Excel and its SAPERP system, according to Paul Smithson,BreconRidge’s corporate planner. In 2007, the firm began using Kinaxis'

RapidResponse on-demand supply chainmanagement service, initially in thedemand intake process, allowing plan-ners to analyze the impact of changes so they could determine more accuratecommit dates to customers and identifyany materials that were holding up theprocess. “If we can control demand goinginto the box effectively, it helps us withon-time delivery and inventory manage-ment processes downstream,” Smithsonsaid. Over time, BreconRidge gave buy-ers access to the system to give themvisibility into demand constraints forsuppliers that could affect realization of revenue. Next up is giving customersaccess to the system so they get visibili-ty into things like their order book pro-file, inventory and status of shipments,Smithson said. “It will give them a levelof confidence that they can see whatwe’re doing and what we’re committedto.” �





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CASE STUDY: ONE PROJECT AT A TIME

(Continued from page 13)research and advisory company spe-cializing in supply chain issues.“You’ve got to give some seriousthought to the corporate CEO initia-tive—that’s how you pick your firstone.”While most manufacturers face a

common set of supply chain visibilityproblems, their most pressing painpoints will differ, depending on whatkind of manufacturer they are, wherethey sit in their own value chain, andthe kind of industry they’re in. Themost universal visibility challenges are related to demand and inventorymanagement, while having up-to-datetrack and trace information on ordersas they move through the logistics andfulfillment cycle is another big areathat manufacturers target for visibility.Here are some of the more commonsupply chain visibility projects with adefined scope, which will yield meas-urable results:

D Collaborative demand planning:While a major factor for consumerproducts manufacturers, companies inother segments also need more accu-rate and real-time information on cus-tomer demand. Collaboration hubs ortools that let a manufacturer and itscustomers share demand and invento-ry information and manage exceptionsgreatly aids in inventory managementand helps keep operating costs low.“Manufacturers today are interestedin better forecast accuracy, and that

requires more demand visibility thanthey had before,” said Noha Tohamy,vice president of research for AMRResearch, a Gartner company.

D Risk management around suppli-ers: As manufacturers look to low-cost suppliers overseas, they open up their supply chains to a certainamount of risk. Tools or platforms thatprovide information about the finan-cial standing of suppliers or deliver awindow into a contract manufactur-er’s inventory and ability to fulfill ordercommitments can help a manufactur-er mitigate risk around quality andtime-to-delivery issues.

D Track and trace visibility: Knowingexactly where orders or inventory arein real time is critical for manufactur-ers so that they can ensure they havethe right products and inventory in theright place at the right time, ultimatelyhelping them to deliver high-qualitycustomer service.

D Sales and operations planning(S&OP): An increasingly popular supply chain visibility project, whichdelivers a 360-degree view of a com-pany. By accounting for all of the func-tional areas of the organization as partof business planning, manufacturerscan more effectively match supply todemand and make informed decisionson order fulfillment and inventorybased on customer profitability andother factors. —B.S.





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A SearchManufacturingERP.com ebook A A Adocs.media.bitpipe.com/io_10x/io_101706/item_450065... · retail partners but also for planning and collaboration across supplier net-works—the