By Nikki Baird, Managing Partner
5/27/2008
At Manhattan’s User Group Conference, Momentum 2008, three retailers sat on a panel session about supply chain visibility: Jonah Saint McIntire, Supply Chain Improvement Bear from Build-A-Bear Workshop; Miles Tedder, VP Supply Chain at Anna's Linens; and Ken McKinney, Director of Distribution at Urban Outfitters. For me, it was déjà vu all over again.
Almost since the internet became an option for business to business transactions, supply chain leaders have tried to tackle supply chain visibility. Depressingly, it appears that many of the challenges have remained unchanged from those days. One version of the truth, collaboration with suppliers, the cultural implications of moving to exception management – all of these issues continue to plague retailers on their quest for better supply chain visibility.
However, while it appears on the surface that the issues haven’t changed, some progress has been made. According to the panelists, retail supply chains have become more sophisticated – though the opportunities to improve hang as low as ever on the branches. Here’s a synopsis of what they see:
· Basic supply chain visibility is merely “ante” these days. It used to be that third party logistics and other service providers offered visibility as an added extra that retailers had to pay for, but now it’s included – and expected – as part of the base offering. This means that carriers have to take it to the next level, now. It’s not about where goods are, but what you can do with that information.
· “Taking it to the next level” requires more than just actionable information. As one of the panelists noted, if you have created an exception process that ends with a human being making a decision, then you haven’t gone far enough. But this requires developing a very detailed understanding of your extended supply chain so that you can design a set of rules and tolerances that will enable you to truly automate responses to exceptions.
· One version of the truth is even more complicated than we thought. You can have world-class data synchronization and data warehousing, but the reality is that even if people are technically operating off of “a single version of the truth”, they are still using different applications to access that truth. Applications are like windows into the data – if each decision-maker uses a different window to see what’s going on, they risk missing the big picture – and making decisions without having a full understanding of the impact.
· It has to be the whole truth. One panelist shared a lesson-learned on this front. He described a tool they had developed to increase supply chain visibility, and while it was a great tool, it lacked air freight data, because that one carrier wasn’t able to provide the data. While it was only a fraction of the business – 5% or less – it was still enough to undermine the implementation, because users had to go back to the original tool for the missing data. And it made it difficult for users to rely on the new tool because they knew that at least some of the data was missing – so it became easier to question the authenticity of the rest of the data.
· Vendor scorecarding ain’t what it used to be. Consistent with what our research has shown us at RSR, panelists described an evolving role for supplier scorecards. The emphasis has moved from “perfect order “ type metrics, like label compliance or order completeness, to measures that track quality and reliability of vendors on much more than just supply chain – reflecting increasing concerns about the quality of goods shipped, especially from overseas suppliers.
· Change management is as tough as ever. Those implementing supply chain visibility at least understand today the challenges involved in shifting the culture from a report-based, reactive one to a proactive, exception-based culture. Whereas five or six years ago, the idea of giving up reports wasn’t really considered in the context of “change management”, today it’s better understood that this is asking a major shift in thinking and in how a day-to-day job works. As one panelist noted, change management is a major, on-going activity, rather than just the one-shot program involved in an implementation.
This last year in particular has seemed to see an increase in interest for supply chain visibility solutions. That in itself is progress – that people speak about “solutions” rather than visibility as some kind of feature or side benefit. But there is still a long way to go – and the path hasn’t changed a whole lot since we first started down it.
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