Careful! They may be watching!
Today's consumer wants to track the status of an order in real time. Is your enterprise ready to provide visibility into your order fulfillment process?
By Bob Trebilcock, Contributing Editor -- Modern Materials Handling, 5/15/2001
Today’s consumer wants to track the status of an order in real time. Is your enterprise ready to provide visibility into your order fulfillment process?
By Bob Trebilcock, Contributing Editor
When you receive and store inventory in your warehouse, they're watching.
When you're picking orders, they're watching.
And when your product leaves the shipping dock, they're watching.
No, we're not talking about some crazed stalker in a supply chain horror film. The watcher stalking businesses today is the consumer.
Today's customer is a self-service beast who's no longer content to simply place an order and wait for delivery. Today's consumer wants to log on to your Website for information about inventory levels, order status, and transportation. And they want to do it 24/7/365.
What's more, they want the ability to change their mind – to add to or delete from an order at the last minute – and for your systems to be able to respond to those changes in real time without missing a beat.
What began as a dot com phenomenon in the direct-to-consumer market is becoming business as usual for the B2B company selling parts and equipment to another business.
The advantages are heightened customer service and flexibility.
"If I can bring all of the information about an order together in real time, I can offer a whole new level of service," says Henry Bruce, vice president of corporate marketing, Optum, Inc., White Plains, N.Y. "Now, either I or the customer can change our minds right up to the point when I close the doors on the truck off. It allows for better decision-making."
There's even a term for this new level of order information: It's called supply chain visibility and supply chain event management.
According to AMR Research, Boston, the market for this software is expected to grow to $1.1 billion by 2004, a compound growth rate of 88% per year.
Why here and why now?
There are at least four factors driving the growth of visibility solutions.
For one, the bar has been raised by companies that provide e-mail order confirmations and alerts. In today's environment, customer service counts.
"It's important that you give the consumer as accurate a prediction as possible about an order, and notify them if you can't meet your prediction," says Ruby Raley, program director, transportation and logistics, Descartes Systems Group. "In the world of the Web, it doesn't take much to change people's views of you."
For another, the velocity of information impacts efficiency. If your trading partners have visibility into your order fulfillment processes in real time, cycle times will go down, and inventory levels can be reduced.
The move to outsource order fulfillment and transportation services to third party logistics (3PL) providers is also an important factor. 3PLs must provide information to their customers.
Finally, don't under estimate the fear of being left behind. "If enough companies in a sector do something visible, like offer real-time in-formation to their customers, the competition is going to follow suit," says Andrew White, vice president of product strategy for Logility, Inc., Atlanta, Ga.
Visibility: end-to-end
Just what is supply chain visibility? In a nutshell, visibility solutions allow an enterprise to create a real-time snap shot of inventory and orders across a supply chain.
The idea is this: execution systems, like order, transportation, and warehouse management systems, create a wealth of data. Traditionally, however, that information was unavailable to the people who needed it until after the fact. The result was blind spots in the supply chain.
"For the past 10 or 15 years, most companies have focused on optimizing each of the nodes within the four walls of their enterprise," says Beth Enslow, vice president, Descartes Systems Group, Waterloo, Iowa. "But you can't track what happens between the nodes. It's like driving 20 miles over the speed limit to get to the airport, only to find out your plane is delayed by 2 hours."
Visibility systems change all of that. When a transaction occurs, information is automatically updated in the visibility system, which creates a real-time data warehouse. For in-stance, when an order is picked, a record is created and inventory available to promise is reduced by that amount. If an advance ship notice is received from a supplier, that inventory can then be factored into the product that is available to promise.
Such information isn't just of value to your customers. Connect your suppliers to the visibility system and you can gather information from them. Crossdocking, for instance, can be facilitated by knowing in advance what items are going to be received on a particular shipment.
"If I tell you when my trailer is going to arrive at your warehouse doors, you might save a few minutes unloading a trailer," says Ron Riggin, vice president, MARC Global Systems, Dulles, Va. "But if I identify in advance the pallets, the products, and the unique ID numbers associated with that order, you process that receipt faster and create tremendous productivity gains by optimizing your work flow before the load arrives."
Ideally, these systems allow users to answer a variety of questions about their supply chains, says Larry Lapide, vice president of supply chain for AMR Research, Boston, Mass.
Where is the inventory in my supply chain?
What is the true status of an order?
What's in transit and when will it be delivered?
How are my suppliers performing?
Is my supply chain performing as anticipated?
The answer to the last item is a side benefit of visibility. By bringing that information together, you not only have visibility into what's happening, you can use that information to measure the performance of your business.
Event management
Visibility is a step forward, but not enough. What good is information, afterall, if you can't act upon it to improve your business?
"Information is fine," says Larry Lapide of AMR Research. "But that information, whether things are going right or going wrong in the supply chain, is the real point of visibility."
Applications that provide visibility and notification when events occur are part of a new set of solutions that AMR call supply chain event management, or SCEM.
The idea behind event management is that you should be able to subscribe for notification about any event that is important to your job. That notification can be in the form of an e-mail, a printed page, or a fax.
Let's say you're expecting a full truckload of parts to make a production run. But when your main supplier fills the order, it only has a partial shipment. If you have subscribed to be notified in advance of partial shipments, your supplier's system will automatically send you an alert, notifying you that the order won't be complete. That allows you to take some kind of action before a problem arises.
Lapide breaks an event management system down into three areas.
One is the status of an order throughout the supply chain. The operative word is "throughout." Remember, an order may consist of a variety of components. Some may be coming parcel post from one facility. Others may be coming less-than-truckload from another. Still other parts may be back ordered for days or weeks. Visibility provides a centralized view of the status of all the component parts of that order.
Remember, however, that black holes of information may still exist if some of your carriers or trading partners don't have the capability to provide you with order status information.
Second is the ability to have information that is important to you delivered when needed. Some call this "subscribe and publish." Other terms are "event management," "alert management," and "exception management."
Third is to create a history of transactions that can be stored in a data warehouse and mined at a later date to measure the performance of your supply chain and carriers. A data warehouse with key performance indicators can provide a dashboard measurement of how your business is performing.
If those three elements are in place, you can do more than monitor events in your supply chain. Through alerts, you can notify a decision maker in a proactive way that an action might have to be taken as a result of events unfolding in the supply chain.
What's more, you can simulate, or create "what if" scenarios based on those events in order to make the right decision. Finally, you can act, and, thanks to visibility, notify all the parties who will be impacted by that decision.
Supply chain visibility and event management solutions are available today. It may be several more years before these concepts are common practice.
Then again, 2 years ago, the idea of e-commerce and an electronic marketplace seemed far-fetched and off in the distance too. The future may be sooner than we all think.
Remember, the customer is watching.
Click on this icon to read more about visibility.
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