Real-time Demand Is a Supply Chain Black Hole

Oct. 4, 2010
Companies are still cautious about the economy and are focusing on solutions that can minimize supply chain risks

A recent survey of manufacturing and logistics executives indicates that respondents are still cautious about the economic environment and are therefore focused on the risks associated with a loss of customer relationships. To minimize that risk, one thing they plan to do is invest in “smart network” capabilities that include more collaborative risk sharing, supply chain synchronization, and secure, compliant B2B commercial interactions.

The survey, conducted by Edge Research, investigated the business concerns of 301 information technology (IT), sales and supply chain decision makers in the manufacturing and logistics industries. It was sponsored by Sterling Commerce, a provider of selling and fulfillment and integration solutions.

In regards to the economic environment, the survey found that 36% of respondents are concerned about the risk of slipping back into a recession. Their primary concerns are risk of losing customers/customer volume (46%) and demand/channel volatility (41%). Other findings include:

● 82% indicate that managing volatile demand, specifically unexpectedly accelerating or decelerating demand, will be a priority in 2011.
● The most prominent information “black hole” among companies is real-time demand (39%), followed by supplier issues/problems (34%).

A continued reliance on manual processes for both customer and supply chain collaboration hampers companies’ ability to manage volatile demand and gain real-time demand signals. The survey found:

● For both customer and supplier collaboration, half the respondents still use manual processes for monitoring changes, exceptions and disruptions to planned activity.
● For customer collaboration, 24% of respondents have implemented highly automated processes for “visibility of order and shipment status” and 18% have done the same for “visibility of inventory and demand of their key customers’ customers” (18%).
● For supplier collaboration, “visibility of order and shipment status” was implemented as a highly automated process for 24% of respondents, with less than 15% of respondents indicating they had implemented highly automated processes for the other areas of collaboration.

The survey results indicate that as manufacturers and logistics companies look to 2011 and beyond, they are addressing the black holes and supply chain volatility by focusing on implementing solutions that are much more precise and automated, enabling them to reduce risk. The survey found the following percentage of respondents plan to implement:

Supply chain synchronization solutions (40%) that enable them to provide seamless customer experience from the moment an order is placed, via whatever channel, to its ultimate fulfillment. Supplier relationship management, transportation management systems and multi-channel e-commerce are key components of any supply chain synchronization solution.

Risk sharing solutions (35%) like vendor managed inventory and available-to-promise capabilities that give them more precise views of inventory at multiple levels in the supply chain.

Process management and analytics solutions (32%) that enhance multi-enterprise process management, such as supply chain analytics and automated business-to-business (B2B) integration.

Secure network solutions (31%) that protect transfer of sensitive data and intellectual property, as well as that ensure compliance with ever-changing customer and regulatory mandates.

The survey also found that cloud computing continues to be an area of investment. Six in ten decision-makers are currently implementing cloud solutions, with just over one third (36%) of respondents implementing two or more cloud solutions. Survey findings show that order management, supply chain visibility and warehouse management are the most commonly used cloud solutions among manufacturers today.

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