Mhlnews 3579 Compete 1 Promo

Focus Your Eyes on the Social Supply Chain

Aug. 11, 2014
As supply chains grow increasingly complex and dispersed, the sources of essential information are more likely to be outside the four walls of the enterprise. They must all see with a common set of eyes.

Modern supply chains are not straight lines, but in essence, networks of multiple nodes, multiple operations and multiple relationships. Multiple companies are buying, selling and moving products for each other in a multi-tiered environment. Within each tier, multiple relationships and processes operate simultaneously and dynamically. Companies that are customers to one set of nodes can be suppliers to another.

Each partners' activities need to be tightly coordinated around shared goals and deliveries to ensure compliance and value-add. Visibility can cross several dimensions.

The first dimension implies multiple nodes (or trading partners) with dependencies on each other. Companies are buying from and selling to each other, while others are supporting the sale of the goods by moving them to end customers. Because this dimension is linear and sequential in nature, a delay at any point translates into bigger delays in other parts of the chain, which is often called the bullwhip effect. Visibility into this type of trading partner agreement would alert people further on down the chain of potential problems or delays.

In the first dimension, each supply chain participant, whether a buyer, seller or shipper, tries to make its own decisions with little regard to the impact of those decisions on other parts of the supply chain. In the case of inventory, this results in high inventory levels and low inventory turns. In the case of shipping, a delay at one gate can translate into unsatisfied customers.

The second dimension adds more depth by enabling relationships between any two partners. Both nodes have to agree on each business process they plan to conduct with each other, such as traditional order-to-cash or logistics load or vendor-managed inventory. These processes encompass everything from strategic planning to bill of materials to materials management to goods receipt to invoicing to acceptance. Each partner has to make adjustments in their processes to make sure they can work properly with partners.

In this type of relationship, such as a vendor and a buyer, both partners must gain visibility to drive process efficiencies. For example, one vendor manages a buyer's inventory. The buyer must trust the vendor to manage it properly. To enable this trust, both parties must agree to share data on the same level and must orchestrate processes consistently. The vendor manages both the minimum and maximum of inventory levels. Visibility into this type of arrangement reduces errors and improves working capital.

In the third dimension of supply chain visibility, each node is part of a network. Each company transacts with multiple partners who work in tandem, each with their own way of working on things. Each partner orchestrates multiple processes across multiple nodes. This requires the whole network to have consistent visibility.

DuPont's Shipment Tracking

Customer service representatives (CSRs) for DuPont were spending an enormous amount of time manually tracking customer orders and deliveries. They had to research a multitude of disconnected systems to find the status of deliveries. A small scale pilot program was kicked off in 2013 to validate gaps, address immediate pain points and get an understanding of the necessary tools required to build out a full-scale logistics shipment tracking system.

Expanding use of its existing cloud-based network (Elemica) enabled shipment visibility to a single mode of transportation, but was scalable to multi-modal and multi-enterprise levels. The goal was to provide early warning functionality for the CSRs. The system captured the estimated time of shipment departure, actual departure time and estimated time of arrival. Carriers were connected to the network and would send advanced shipping notifications while continually updating shipment status. With each shipment movement, transaction data were captured, such as carrier receipt date, shipment sailed, transshipment point and port arrival.

"The pilot provided good insight into the benefits of an integrated system," says David Choi, global logistics program manager at DuPont. "The CSRs started to understand the potential of the system once multi-modal visibility is achieved and data gaps are addressed. The pilot provided focus for developing requirements for the full-scale tracking system."

DuPont plans to expand visibility into multi-modal transportation operations (ocean, truck, rail, etc.) and to use predictive analytics. It believes end-to-end supply chain visibility will improve service level agreements, save up to 20% of its inventory value, improve forecast accuracy and reduce freight costs by 3.5 to 5 percent of volume.

The Power of Networks

For a network to be powerful, each node should have visibility into who is conducting business with whom, how trading partners are performing and how they measure up.

Taking it another step with cross process visibility, trading partners on the network can use social networks to resolve supply chain issues, obtain performance metrics and help make time-sensitive decisions. Social media can provide a holistic picture of real-time demand information, empowering supply chain managers to respond quicker to changes in the trading network. Mitigating risk is another advantage of a social trading network as participants can be alerted to problems in a shipping lane, with a supplier or in an entire geographic region.  

As the pace and volatility of business accelerates, access to timely, accurate operational information will be more critical than ever.

Arun Samuga is vice president of research and development at Elemica (