December 2006 | How-To | Ten Tips

Improving Supply Chain Visibility Projects

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Having visibility into the supply chain allows companies to gather and utilize information effectively. It also helps them better communicate with customers and partners. Because of this, supply chain visibility (SCV) systems are a much sought-after logistics tool. If used successfully, SCV systems can cut logistics costs, improve resource planning, and allow your organization to manage by exception. But they can also be a bear to manage and implement. To help you properly plan your SCV project, business systems consultant James Davidson offers these 10 strategies.

1. Start with a small pilot. A pilot that initially includes only a few shipping lanes, logistics providers, and/or shipment events is a smart way to quickly learn the ropes of system implementation. You can use these lessons to more efficiently integrate the rest of your trade lanes and trading partners into the system later on.

2. Get a handle on your operation's capabilities. Many SCV projects encounter delays when implementation teams don't fully grasp their own operations. The team may spend too much time reconciling desired shipment visibility with inconsistent or untimely trading partner capabilities. Take container in-gate status, for example. At many overseas ports, ocean carriers cannot disclose container in-gate status in real time because bills of lading—linking the container to the organization—are not created until the vessel departs. Make sure the visibility events you choose coordinate closely with operational standards and logistics providers' capabilities.

3. Stick with the most significant events. Less is more when it comes to SCV systems because they require a great deal of data quality monitoring. Don't add too many events that are difficult to monitor properly. Stick with shipment status events that are critical to operational visibility, and add less important events only when you have the resources to manage additional information.

4. Invite all users into the implementation group. SCV systems allow many organizational groups to benefit from enhanced shipment visibility. Invite all parties—customs; customer service; order management; shipping and receiving; freight audit and payment; inventory control; and merchandise planning—into the implementation process so you are aware of everyone's needs and can incorporate them into the system implementation.

5. Maintain your schedules. Creating and maintaining shipment schedules will help you realize one primary benefit of SCV: more accurate estimates of when, what, and how much of your freight will arrive at key locations in your supply chain. Be sure to create schedules that mirror your current supply chain as closely as possible, and update them periodically based on actual performance.

6. Mandate visibility in your contracts. Full supply chain visibility requires all logistics partners to provide event status information. Depending on terms of sale or other regulations, however, some shipments may not be directly under your organization's control for some portion of their journey. Unfortunately, some logistics providers will only share visibility information with the shipper, not the consignee or other party. To avoid a loss in visibility, make sure your contracts with logistics providers stipulate that your organization receives this data, regardless of which party directly controls the shipment.

7. Make sure the business group owns the project. The business group should be in charge of an SCV implementation—leading decisions on system functionality, and rolling out the system across the organization—because they will use the system to make key logistics decisions. The IT group should be responsible primarily for coordinating data feeds into the SCV system or to trading partners, and integration with your organization's ERP and other systems.

8. Standardize, standardize, standardize. Make sure the data entered in the SCV system is consistent across logistics providers, shipment lanes, and inbound and outbound functions. Any differences should be noted for all users. In addition, your internal reports should share consistent formats across trade lanes and user groups. This ensures that whoever accesses the system will easily find the information they need.

9. Manage organizational change. A properly functioning SCV allows organizational users to track, trace, report, and receive alerts on the shipping information most important to them. This frees your transportation staff to manage by exception and focus on strategic analysis and reporting. Be sure your transportation staff has the right skill sets to switch from administrative tasks to analytical duties.

10. Set expectations.To promote user acceptance, let everyone know the system's limitations before you roll it out. Although an SCV system is a powerful decision-support tool, it will not optimize shipments or make decisions for users. This sets it apart from more advanced event management systems that process information and generate recommendations or take action automatically. Also, an SCV system's data quality will never be perfect due to occasional human error and the sheer number of transactions expected over time. Data quality—accuracy, consistency, and timeliness—of more than 90 percent is considered the hallmark of a well-functioning system.

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