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Is the Quest for Supply Chain Visibility Unrealistic?

When I think of supply chain management applications, I am often reminded of the ad that ends with the statement: “there's an app for that.” The same can be said for the staggering number of supply chain visibility solutions available to manufacturers.

Whether your company is an OEM, components supplier, contracts manufacturer, or logistics and other third-party services provider, it seems you can readily find a supply chain visibility software tool that can be easily customized for your enterprise needs.

This should be a good situation, right? It's not. Strangely, as supply chain visibility applications and providers have proliferated, so have the challenges manufacturers face in gaining a deep enough insight into events within their operations and those of their core suppliers.

In fact, very few manufacturers today can claim to have a good handle on likely demand for their products just three months out, which means they are themselves limited as to the amount of information about supply needs they can offer suppliers and other contractors.

Could we be shooting for the stars, and as a result, letting ourselves down by setting and aiming for unrealistic goals? In some ways, I think we are, and that may be dangerous enough.

However, I believe the greater problem arising from the tendency to believe we can know everything about what's happening and what may happen to a company's operation is that we lose the flexibility and agility necessary for optimal performance and excellence. In other words, by searching for the magical supply chain visibility software, we ignore the need to focus on continuous performance monitoring, unceasing customer evaluation and information updates.

I've come to the conclusion that there's no magical bullet for supply chain visibility. Software vendors in the sector may disagree, but many of them — at least the reputable ones — won't make promises they can't deliver or vouch their software can provide end-to-end insight into future demand and supply patterns. Leaders in this industry segment include companies like {complink 2470|IBM Corp.} and Kinaxis, and a review of their products can help industry players determine how to set realistic goals, and benchmark these against best-practices in their industry segments.

The best supply chain visibility applications developers emphasize their products' focus on the need for operational transparency — “you have to know what's happening now” is how IBM puts it in a report. Kinaxis adds the following in a separate comment on its website:

While the need for supply chain visibility is clear, it is not enough. Coordinating the activities of a virtual supply network is not a passive responsibility. Demand managers and customer service representatives, manufacturing and supply chain staff and financial analysts must be actively engaged in the process, working side-by-side with their partners to develop plans and course correct around unplanned events that threaten the achievement of operations performance objectives.

This leads me to the next attribute best-in-class supply chain visibility software must have: the ability to alert stakeholders and prod them to initiate pre-determined “quick response” actions.

Often, the emergency responders may be confronted by situations nobody anticipated — such as the unprecedented earthquake and tsunami that crippled parts of Japan in 2010 — but by getting an early alert, they may be able to limit damages to the enterprise.

How does this work in reality? It starts with constant and accurate communications between all partners in the supply chain. Again, this is where visibility can get corrupted, fast. In order not to have impaired visibility throughout an extended supply chain, all players in the system — both internal and external — must have shared goals and believe in the sanctity of the system. Once even a single player determines that its interests are better served by not sharing all information critical to decision-making, visibility becomes instantly compromised.

In my opinion, this is the greatest danger to the creation of a total visibility environment in the electronics and high-tech supply chain. Due to competitive reasons, companies cannot disclose to everyone information about their operations, inventory levels, order patterns, etc. Therefore, at an industry level, the quest for total visibility is probably unattainable. It is possible, though, among companies sharing common goals, and whose individual success depends on the success of other partners.

In coming posts, I will examine steps companies can take to reduce volatility in their operations, despite constrains from not seeing deeply enough into a specific industry segment.

15 comments on “Is the Quest for Supply Chain Visibility Unrealistic?

  1. prabhakar_deosthali
    January 27, 2013

    Bolaji,

    I agree with you that the complete transparency across all the supply chain partners is unattainable because a lot of the internal information is too sensitive for the businesses to make it visible to the outside world.

     

    But yes, the pertinent information or indirect ways of giving information to partners can be explored. For example a distributor may not reveal the exact inventory in his warehouse but he can indicate lead-time pointers based upon his inventory level -which may be based upon the actual inventory plus the expected material in-flow. Similarly the manufacturer may not disclose his daily production volumes but indicate lead time for each manufactured item based upon some formula which takes into account the existing inventory, the expected production and the expected orders.

     

    So by giving the pertinent information without disclosing the sensitive internal data , the supply chain partners can bring about the transparency in their operations

  2. mfbertozzi
    January 27, 2013

    @p_d: Very interesting point p_d, although what happened until now in reality, has depicted how strong is the right trade-off for providing info but preserving sensitive (and in a such case privacy) data or industry secrets. And the matter is increasing its complexity while the market is trasforming in a global market, by leaving local geography.

  3. Taimoor Zubar
    January 27, 2013

    Interesting post, Bolaji. While visibility in the supply chain has it's own benefits, do we really need visibility in all cases? Can there be a situation where too much visibility be harmful and it's better if there's limited visibility?

  4. Taimoor Zubar
    January 27, 2013

    @prabhakar: Good point. I agree that in certain cases giving away too much information from your supply chain can be harmful for the business. Companies should have control over the system so they can restrict the sharing of information at any time if they feel the need.

  5. bolaji ojo
    January 27, 2013

    Matteo, It's difficult getting the right balance between the need to protect sensitive information and the need to disclose some information to business partners. The company first must decide which partners it could trust and then the level of trust and what type of information to entrust to the partner.

  6. bolaji ojo
    January 27, 2013

    Often the information you described as “sensitive” data is really what key partners need to have in order to provide the best support to an enterprise. Yet, that information may be the most critical to a company's success.

  7. bolaji ojo
    January 27, 2013

    Total visibility, even if achieved, can have its own problems. You can end up with the too-much-information syndrome where a company has more data than it can really manage, analyze and use. Plus, it's easy to get hung up on “visibility.” The data must be used. Right? It's not simply visibility, it's what you do with the info.

  8. mfbertozzi
    January 28, 2013

    I agree, definitely; after all, there is another point to consider; if we focus only for a moment on privacy – for instance – we find that a general rule worldwide valid, is not completely in place. Then, what it works within a region, doesn't work for a different region. As consequence, partners need to agree through contracts on top of that, but this process requires analysis and deep studies from legals; it takes time and it could be a cause for speeding-down business relationships.

  9. SP
    January 28, 2013

    Yes there are so many software solutions available in market that it becomes so very difficult to choose from. But then at the the organization level each company in supply chain business would have invested in few different kinds of software packets.

  10. SP
    January 28, 2013

    Partners as long as things are verbal and can be managed at informal relational level they would be happy to oblige but if you ask them to sign papers no one would.

  11. mfbertozzi
    January 28, 2013

    SP, I trust you, professionally speaking,  I've met with that situation several times.

  12. Houngbo_Hospice
    January 29, 2013

    @Bolaji,

    “Total visibility, even if achieved, can have its own problems.”

    That's correct. What do you think is the best way to determine what kind of visibility is good for your company? I agree that is it not a good thing to just follow the trend.

  13. Houngbo_Hospice
    January 29, 2013

    @SP,

    “there are so many software solutions available in market that it becomes so very difficult to choose from”

    There are many software packages you can choose from, but still you need to do an accessment in order to deternime which one is good for the company. When this is done, it becomes easier to make the right choice. 

  14. Ashu001
    January 30, 2013

    SP,

    I agree entirely.

    There is so much sunk into maintaining the Existing Software Infrastructure already that you try very hard to maintain the Status Quo.

    But eventually an Enterprise(any smart one for that matter) has no choice but to move towards a more Integrative/Comprehensive Solution for the Entire Enterprise;Else the inefficencies that creep in are massive.

     

  15. Taimoor Zubar
    January 30, 2013

    “The data must be used. Right? It's not simply visibility, it's what you do with the info.”

    @Bolaji: I agree. This is what leads us to the importance of having a good analytics system to represent the information as well besides storing tons of it.

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