Is supply chain event management (SCEM) the next best thing to supply chain perfection?

The answer is: yes, according to Kimberly Knickle, research director, integration strategies at AMR Research (www.amrresearch.com), Boston.

"Supply chain event management provides visibility into the supply chain and resolution of exceptions at a very granular level," says Knickle. "Other means of tracking inventory and orders in the supply chain have been tried, but none is as cost effective or accurate as SCEM."

SCEM software solutions allow a user to monitor inventory, orders, and shipments across the supply chain. The applications identify important events, anticipated events, and exceptions, and then alert designated individuals of their status.

The intent is to highlight exceptions that require additional attention by people, and to prioritize situations that need to be resolved.

"The goal isn't to fully automate the resolution to a problem," Knickle explains, "but to use the skills and knowledge of your people by giving them real-time information and guidance to select the best possible resolution."

The core elements of an SCEM solution are to monitor for exceptions; notify a decision maker when they occur; simulate various solutions; control the problem; and measure the outcome.

The most important benefit of these systems by early adopters has been better inventory management. "I'm familiar with a billion dollar plus enterprise that has reduced inventory carrying costs by nearly $1 million, and obsolete inventory by nearly $1 million," says Knickle

This is an emerging market with a relatively small customer count to date. However, Knickle expects the market to grow significantly in the future.

"Supply chain event management is likely to be a pervasive means of managing supply chain exceptions going forward," Knickle says. "Because of its ability to improve supply chain planning and execution, SCEM is likely to be a part of every supply chain application in the future."

The most difficult question potential users of SCEM solutions may face is whether to purchase an application from their ERP, supply chain planning, or warehouse and transportation management vendor, or from one of the start-up best-of-breed providers.

"That decision comes down to what information you want to monitor," says Knickles. "If that information resides in one system, like a warehouse or transportation management system, go with that vendor. If you need information across applications, you might want to consider a best-of-breed solution."