Better visibility into an enterprise supply chain is the new "black" this year for CIOs, according to analysts and pundits alike.
Not just run-of-the-mill intelligence about procurement, manufacturing, and transportation, but true information transparency and real-time business intelligence using a cadre of optimization, global sourcing, outsourcing, and social media. Reports are coming in that global retailers like Wal-Mart, Tesco , and Costco are pursuing stronger eco-efficient global sourcing strategies in 2010.
As an example, Apple Inc. (Nasdaq: AAPL) was likely monitoring a strike at a Wintek factory in China this past week through multiple channels. The facility makes touchscreens for Apple's iPhone and, more than likely, for its upcoming tablet computer.
Most senior supply chain executives agree that talent acquisition, flexibility, optimization, and supplier negotiations are keys to a successful year. Surprisingly, there are far too many companies that are not using best-in-class procurement and sourcing tools.
An Aberdeen Group Inc. survey of more than 135 companies found 57 percent of respondents said they had consistently inaccurate demand forecasts; 50 percent said they had poor or late visibility into channel sell-through to the end customer; and 37 percent said they had problems with channel inventories, especially after the fulfillment of purchase orders.
So how do companies balance the demand planning with short-term response strategies to manage the high levels of volatility? The answer may be a common information framework that supports communication and collaboration.
I'm not necessarily suggesting throwing all of your eggs into one software suite. That seems to be drumming up a lot of negative feelings, irrationally focused on vendor lock-in and opex costs. Perhaps a hybrid approach using trusted partners is better. That's what industrial services company Harsco announced this week in tandem with IBM Corp. (NYSE: IBM). Aberdeen's report also suggests integrated enterprise resource planning (ERP) systems are preferred over standard, out-of-the-box ERP tools.
The benefits are that information transparency and real-time business intelligence can lead to shorter cash-to-cash cycle times. Reduced inventory levels and increased inventory turns across the network can lower overall costs.
And as Aberdeen Group analyst and report author Nari Viswanathan suggests, an adaptive network means your enterprise can control demand within an execution window, "...having the ability to impact projected supply chain delivery costs by changing carriers, means of transportation, etc. The best of demand plans are not enough if the ability to adjust to short-term demand changes are not put in place."
This means if you are working with a "build to stock" format, your company's execution horizon should be focused on statistical and probabilistic forecasting, price optimization, and inventory optimization. If your chain is "build to order," inventory optimization, along with distributed order management including dynamic sourcing strategies, will be your focus.
One final area for improvement is in trading partner collaboration, according to Aberdeen. New tools in this area can allow for the ability to share information with suppliers, customers, and contract manufacturers. And while there may be much interest in this happening, Viswanathan notes that this requires "trust levels between partners."
Ultimately, as the 2010 economy improves, senior supply chain executives will be in the midst of the turnaround. And we know investors will be closely watching.
— Michael Singer, Senior Editor at Internet Evolution. is focused on executive (Executive Clan) and midmarket (Midmarket Clan) issues.