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Coming full circle: Gathering knowledge throughout the supply chain improves decision-making

This article appears in the issue June 2003 [Volume 12, Issue 6]

By Kim Ann Zimmermann

Supply chain management systems are designed to take care of the logistics end of the product distribution cycle—i.e., making sure that the order from the retailer for 500 gizmos arrives at the retailer in time for the weekend sale. But what if the order is lost in transit, or it arrives damaged, or the sale goes so well that the manufacturer needs to ramp up production to meet demand?

Getting the information from the supply chain system back to headquarters—and into the production system, marketing database and accounting systems, just to name a few—is crucial to better decision-making and to providing a more accurate picture of the supply chain.

“Organizationally, manufacturers are not structured to have all the components of the supply chain responding to customer demand,” says Roddy Martin, a VP of research with AMR Research. “For example, sales and marketing teams handling customer management processes are implementing customer relationship management (CRM) software for sales force automation, but it isn’t doing much for supply chain goals; it also has questionable value except for limited customer analytics.”

But things are changing as leading manufacturers turn to the consumer demand-driven supply network, according to Martin. He points to strategies, such as segmented channel management, which monitor profitability by product, channel and customer, even at times down to the packaging.

“Sales and marketing functions are, therefore, an integral part of the supply chain team, as are product development and introduction functions,” he notes.

Traditionally, the way to ensure that customer demand was met was to maintain high levels of inventory in the supply chain. However, in tight economic times, trading partners want to cut down on excess inventory in the supply chain. Greater collaboration and improved knowledge management are key to trimming inventory while meeting customer demand.

“Manufacturers have traditionally made products to forecast, pushed them into the supply chain with high levels of inventory to counter unplanned variability, and then enticed sales and marketing to move the products,” says Martin. When efforts were made to trim the supply chain, out-of-stock situations arose, which caused many to revamp their supply chains and improve visibility over the past few years.

One of the biggest challenges in retooling the supply chain to be customer-driven is providing enterprisewide access to the pertinent documents and reports.

Providing a common view of the supply chain is a unique challenge when you’re dealing with 200,000 users, but that is exactly what the U.S. Air Force intends to do with the U.S. Air Force Supply Chain Common Operating Picture, known as SCCOP.

SCCOP is a collaborative logistics Web site that integrates all Air Force supply chain processes, including fleet status, program management, technical data management, storage and distribution, and e-business connectivity to commercial suppliers.

The software environment will provide 200,000 Air Force users with a common operational view of the supply chain and deliver details on factors that affect aircraft availability. Intergraph Solutions Group, a division of Intergraph, is partnering with Northrop Grumman and Oracle.

Many companies are relying on business intelligence software to help manage the flow of information to and from their supply chain systems.

Shell Oil Products, the worldwide fuel and lubricants business within the Royal Dutch/Shell Group, is looking to improve the flow of information in its supply chain by implementing Kalido Group’s solution, which provides the integration layer across multiple supply chain management software applications. The global sales and marketing information platform will provide a single view of customers and products across the company’s 85 separate operating units, enabling the company to fine-tune the supply chain quickly to meet customer demand.

"It is a massive task to integrate global data within a business the size and complexity of Shell Oil Products,” says Jim Smitheman, management information manager for Shell International Petroleum. “Using the Dynamic Information Warehouse, our customer and product data are coded consistently across the globe, giving management a crystal-clear view of performance. This will enable us to assess how well our customer value propositions are delivering on either a business unit or a country-by-country basis."

Like Kalido, CentrPort is focused on bridging the information gap between the supply chain and the rest of the organization. The company’s solution analyzes results from online marketing efforts to predict future supply chain demand. The company’s CentrPort_Optimize provides cross-channel campaign measurement and optimization. The information is then fed into the manufacturers’ forecasting systems to improve supply chain accuracy.

Many companies are streamlining the flow of information with their trading partners by providing online access to critical supply chain information. Emerson Power Transmission, for example, is using a system from Click Commerce to create a one-stop information source customized to fit the needs of its distributors and customers. The Web-based solution is said to eliminate barriers to access posed by internal sales systems, while offering the opportunity for partner self-service and cost reductions throughout the channel.

Customers and distributors can select products, conduct stock and price checks, confirm order status and search catalogs through the use of a Web browser. Click Commerce's solution reduced customer service costs and provided Emerson’s partners with tools for streamlining their own business transactions. The result was a reduction of as many as 800 calls per day. Also, partners can now access supply chain knowledge in real time.

To meet the growing demand for access into the knowledge contained in supply chain, some traditional supply chain management software vendors, such as Manugistics, are launching Web-based collaborative planning solutions. That company is teaming with Sun Microsystems on a project.

"We believe there is significant opportunity for companies in discrete manufacturing environments to leverage Net-centric technology and streamline internal and external collaboration with key business partners," says Bill Gerould, director of manufacturing, Sun Microsystems.

In today’s security-conscious world, there are increased demands for documentation. Some supply chain management systems, such as Precision Software’s TRA/X, are incorporating knowledge and document management features.

Elizabeth Arden, the global fragrance and beauty products company, plans to deploy Precision’s solution to simplify and automate its U.S. export shipping process.

TRA/X will provide Elizabeth Arden with a selection of more than 100 documents within the Export Documentation module and enable electronic filing of Shipper’s Export Declarations to U.S. Customs through the Automated Export System (AES). Elizabeth Arden also plans to use the TRA/X Document Imaging function to scan and archive all shipping-related documentation for added shipment visibility and control.

Elizabeth Arden will integrate TRA/X with its distribution software system to perform automated packing and load building and to generate international trade documentation.

Kim Ann Zimmermann is a free-lance writer, 732-636-3612, e-mail kimzim2764@yahoo.com.


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