Expand your supply chain visibility horizon



Supply chains globally are becoming more and more complex and one of the areas that are worst affected by this are the lead times and in transit inventory. This increases the overall supply chain management costs by not only increasing the time period of inventory stay in your premises but also by increasing the inventory obsolescence. So, reducing costs by driving down excessive inventory on hand should be the most important focus area for the best in class organizations and how can we do this? We can do this only if we know exactly, where the problem is or where are the opportunities of improvement that can substantially bring us tangible benefits.


This brings us to the business case for the need of increasing supply chain visibility (there are other factors too but we will just stick to this one in this article). Keeping an eye on the item movements within our organization is the primary metrics of supply chain visibility and be it incoming demand from customers or other channel partners or our own manufacturing or supplier receipts or shipping for that matter, all are mandatory parts of the supply chain visibility. All organizations, in form or another strive to keep things visible so that more informed decisions can be taken in the areas of manufacturing and supplier receipts specially but it is high time that we move to expand the horizon of supply chain visibility (SCV) and include our suppliers into it. Infact, best in class organizations have already started including suppliers into their SCV plans and they track metrics like:
  • Receipts of raw material at their supplier’s end
  • The shop by shop supplier manufacturing process and major production events
  • Events of trucking from supplier end to their premises
  • Custom clearance events
Including metrics like above will reduce your vulnerability of failing to fulfill demand on time and also will enable you to plan your own inventory in a much better way so that it stays the shortest time in your premises.


Coming back to internal factors or metrics that need to be included in the comprehensive SCV plan, we need to make sure that while we keep on measuring the manufacturing lead times, supplier lead times, customer-distribution centers proximity and relationships etc. but we also need to expand the metrics to include:
  • Capacity constraints
  • Shipping schedules
  • Forecasted and actual landed cost of shipments
  • Inventory rebalance among distribution centers or warehouses
  • Shipment delays both before and after shipment and even in multi leg shipments
  • Re-routing frequency of shipping specially for multi leg shipments
  • Item level genealogy and traceability
  • Availability of true and useful information for taking decisions
Expanded supply chain horizon will not only help you in tracking the metrics that might not be seen as directly impacting your operations (but still are) but will also help you in identifying the leakage areas that reduce the overall efficiency of the supply chain.

2 comments:

  1. Great Point Puneesh.

    SCV is a key to better planning of inventory and helps the stakeholders take appropriate decisions. Within the SCV domain, if the information is delayed, the purpose will not be met. For example, if the plant knows that the shipment is stuck @ customs or the truck has arrived late, its no point. There has to be a REAL TIME visibility of the movement. I was personally involved in running a 3PL operations for an auto major who has very less inventory levels (2-4 hours) and we used to track all the movements of inbound shipments (intra plant & from suppliers). Most of the time, any delay (beyond 15 mins of schedule event) is notified to the respective stakeholders.
    This real time tracking helped respective stakeholders take appropriate decision - air charter, special run, etc. and save the plant from shut down or loss units.
    I am not sure if there are any IT tools doing this kind of tracking. We used to do it manually and made home grown application to identify delayed events.
    I would love to see if there are any such IT tools which can be plugged into TMS to give Real time information.
    Regards,
    Maneesh

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  2. Thanks Maneesh!

    To your point, yes there are tools avialable these days that can integrate with your ERP or TMS to provide you real time information on truck movement and this can be achieved either through GPRS or RFID enabled devices.

    Regards,
    Puneesh

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