Tom McDonough, Sr. Director Product Marketing
One of the Supply Chain Management trends apparent at the Gartner Supply Chain Executive Conference in May was highlighted by several vendor/customer presentations focused on the value of Collaboration and Visibility projects. In 2013 Gartner defined end to end supply chain visibility (E2ESCV) as “a capability that provides controlled access and transparency to accurate, timely and complete plans, events and data – transactions, content and relevant supply chain information – within and across organizations and services to support effective planning and execution of supply chain operations.” That is a mouthful.
Nevertheless, I like the definition. I’ve had direct experience with several of these projects both as a vendor and as an operations/supply chain practitioner and I wanted to discuss the benefits I’d seen, some of the key success factors in these types of projects and how disruptive technology is fitting into the picture.
In a previous role, I was involved very early in what we deemed a ‘Supply Chain Performance Management’ software startup. I would categorize our mission and value to be directly in line with the Gartner definition for E2ESCV so, today we would have been a visibility and collaboration solution vendor. In the end the company was acquired but I continue to see projects, spawned during our 6 years, continue as ongoing ventures at other startups or as ongoing projects inside the customers we’d worked for in that time period.
At the highest level, these projects are providing visibility to ongoing operations via a dashboard or a cockpit or some other similarly defined mission control center. This was a relatively heavy investment in time and resources when we had our startup due largely to the investment in data gathering and integration. However, advances in data management and systems integration have reduced the time and data investment required, enabling customers to consider different approaches such as several smaller, focused projects rather than one big bang. See Oracle’s PaaS for SaaS data integration cloud for more information.
The projects themselves bring together people, processes and data across multiple organizations and systems (usually planning and execution) in several ways:
- Provide visibility to execution level data relative to pre-defined targets (e.g. safety stock or other planned parameters)
- Often this data is rolled up organizationally, geographically or in distribution through performance metrics or key performance indicators (targets change with these roll ups)
- Provide notification and context when some process is ‘out of control’ as defined by those pre-defined targets
- Bring the decision makers together, usually from multiple organizations or even companies, with the right data to collaborate and make decisions about the situation
- Initiate and track process improvement activities
It’s important to note that not every event necessarily requires immediate action. Sometimes there is a logical explanation and targets can be re-defined or alerts ignored for the short term.
As with any project, definition of the objective (usually based on ROI) is the starting point. ROI for collaboration and visibility projects can be defined in many areas of the supply chain, and by way of example (real projects) I can more easily share the value:
A large grocery retailer had negotiated complex, long term, vendor managed inventory (VMI) agreements with several consumer goods suppliers. A visibility and collaboration project was implemented to focus on
- Reducing in store stock outs. The ROI on projects effective at avoiding stock outs is large.
- Optimal inventory management using data from point of sale systems, in store inventory updates, in transit inventory and VMI on hand at supplier warehouses.
- Supplier adherence to VMI contract parameters
- Impact of demand changes by the retailer on supplier ability to manage to VMI contract parameters
- Effective measurement of shrinkage and the ability to implement programs to reduce it, another retail issue driving billions of dollars in annual opportunity
I can see clear advantage for retailers, facing the challenge of today’s omnichannel demand, in developing a strategy around collaboration and visibility tools and processes.
A high-tech contract manufacturer was growing rapidly through acquisition. The company implemented a visibility and collaboration project to
- Gather global commodity prices and planned global procurement to drive procurement to best prices
- Eventually incorporate quality and delivery data into the mix to ensure they were getting the best prices from the best performing suppliers
- Drive acquired sites from traditionally local, higher priced sources, to the best commodity prices
- Allow the global procurement organization to consolidate resources and become more efficient
Today we see a growing number of examples of use of sensors and Internet of Things data aggregation and management tools to more finely measure ‘what is where and in what state’ in execution. These systems can be rolled up into collaboration and visibility projects to provide more frequent updates to plans and faster time to problem resolution. See Oracle’s Internet of Things Cloud Application for more examples.
Oracle’s Supply Chain Management Cloud Applications work seamlessly with Oracle’s Supply Chain Collaboration Cloud and both are fully supported by Oracle’s innovations in IoT and PaaS for Saas data management and integration.