“Like a lot of technologies, supply-chain visibility didn’t live up to the early hype. But just like the Internet, where Pets.com and Webvan failed, we can’t write off the whole concept of supply chain visibility due to some disappointments.”
Last time I wrote about some of the early work in area of supply chain visibility systems and why those systems didn’t match the early hype. So given the fact that supply-chain visibility systems haven’t evolved into all-seeing, all-knowing, supply chain monitors and controllers, are they worth bothering with? Sure. These tools still provide a lot of utility (just not everything that’s been promised over the years):
1) Source of data for metrics monitoring, and continuous improvements – If you can achieve a certain critical mass of data completeness and accuracy, supply-chain visibility tools provide you with a great data source for measuring key supply chain metrics such as on-time delivery to the customer, and the performance of your supply-chain vendors. Once you have a measure of where you are now, you can determine root causes of why you’re not achieving your goals, and figure out how to improve. A lot of companies still rely on their transportation providers to tell them what their on-time performance was. Those providers will tell you their interpretation of those metrics, but even assuming they are being “honest”, that’s still a very incomplete picture of your supply-chain performance. Your trucking firm may say an order was delivered on time, but if you can’t match that up to the problem in manufacturing or in your warehouse that prevented you from handing it to the carrier as planned, then you really can’t determine the root causes of your problems or understand your true customer service level. If you look at companies like IBM and Oracle’s marketing messages on the supply-chain, and “big data” and “smarter planets”, it’s a bit vague what they are talking about, but what comes across to me is the idea that there are new technologies for analyzing mass quantities of data that have, thus far, not provided many useful insights. So the data gathered by a supply-chain visibility tool is ideal for this “big data” approach—lots of data that’s being under-utilized, and which probably has a lot of stories to tell.
2) Tools for customer self-service – Customers today have an expectation that they can look up the status of their orders, as if your company was Amazon or Fedex. Never mind that you don’t have the IT budget that Amazon has, and that Amazon, for the most part, uses only 3 transportation carriers, and you use tens or hundreds. Or that you don’t own your logistics assets like Fedex does. Your customers don’t care—Amazon and Fedex are training them to expect this level of service. What you provide won’t be as complete as what Fedex provides, but the good news is that it’s still possible to impress customers and outdo your competitors here.
3) Tools for pro-active monitoring of critical supply-chain steps, with human follow-up – While I’m a skeptic of the idea that visibility systems will soon use all-knowing, Artificial Intelligence-like capabilities, and automatically take actions to save your butt, I’ve helped companies to pro-actively utilize visibility system data to monitor critical steps in their supply chains. And anyway, as I said in my last post, trying to use automation to solve this problem is probably overkill. Managing exceptions is actually something people are good at. So automate routine processes and let people manage the exceptions. They key here is to focus on a couple of error prone points in your supply chain. Work at getting better, more granular, and more accurate data for these steps into the visibility tool. Don’t worry too much about other, less issue-prone steps.
Like a lot of technologies, supply-chain visibility didn’t live up to the early hype. And a lot of money was wasted based on some science fiction notions of what the supply chain systems of the future might look like. But just like the Internet, where Pets.com and Webvan failed, we can’t write off the whole concept of supply chain visibility due to some disappointments. There’s a kernel of value there, and there are still plenty of opportunities to outdo your competitors by improving your supply-chain processes and your service to customers using these systems.