Warehouse Visibility: Looking Beyond the Four Walls
Today's visibility tools open a window into the warehouse so supply chain partners can see in—and out.
Consumer products giant Unilever, Englewood Cliffs, N.J., is developing a "glass pipeline" for inventory management, providing visibility across its network. A web-based supply chain visibility application will enable co-packers for Unilever Home and Personal Care Division, for example, to view deployment orders, register production, and send Advance Shipment Notices (ASNs) to Unilever.
The visibility tool, McHugh Software International's LENS, is being integrated with Unilever's warehouse management applications (also from McHugh) to enable integrated enterprise supply chain management.
Like Unilever, Timex Corporation turned to its WMS vendor to gain visibility into its warehouse. The web browser of ViaView, a visibility tool from Provia Software, Grand Rapids, Mich., enables Timex to give its retail customers visibility to the status of orders.
DSC Logistics, a third-party provider based in Des Plaines, Ill., has taken a different tack—using a standalone visibility tool from Viewlocity, an Atlanta-based solutions provider. The tool provides different views of information for customers and DSC personnel (see sidebar, below).
Gaining information visibility is a top priority of logistics managers today. And no wonder. When you marry supply chain event management (SCEM) capabilities with the ability to view information, you've got "a tool for operational excellence within supply chain management," says Steve Banker, director of supply chain research for ARC Advisory Services.
Here's a look at how visibility and SCEM tools can extend information beyond the four walls of the warehouse or DC.
"Visibility tools provide network-wide, real-time visibility of inventory, orders, shipments, and events as they occur through the execution process," explains Dan Gilmore, vice president of marketing for McHugh Software International, Waukesha, Ill.
Warehouse management system vendors may offer portals for their customers that, in effect, provide Internet entry into their system, Banker says. "The portal requires users to be proactive—they have to look at the screen to get that visibility."
"Visibility is a great thing, but you ultimately have to take action on it," notes Gilmore. Supply chain event management capabilities enable the visibility tool to become proactive, he says, so that "the system can inform you when there is some exception condition (based on parameters that you have set) that you want visibility to and can take action on."
"SCEM provides real-time visibility into the supply chain at a very granular level—around events, anticipated or exceptions—with workflow and analytics to identify priorities, escalation paths, and guidance in resolving variations," writes Kimberly Knickle in Outlook, an AMR Research online report.
AMR identifies five core process elements of SCEM for tracking inventory and orders in the supply chain. These process elements include monitor, notify, simulate, control and measure (see sidebar, below).
To gain visibility in the warehouse, users have a number of options. Some companies gain visibility by integrating their warehouse management and order management systems, says Russell Dryden, director of manufacturing industry marketing for SeeBeyond, Monrovia, Calif. For example, SeeBeyond's business integration platform enables a real-time information network and business integration suite, and can help companies integrate these type of applications and compress critical hours out of the supply chain.
Some companies use SeeBeyond's solution to create a common customer interface, with the tools to map the data from their Order Management System and/or WMS and present it to the customer via the extranet.
Standalone vendors of supply chain event management tools, such as Viewlocity and Celarix, offer a number of visibility tools. These tools are also available from a growing number of supply chain execution systems vendors, including WMS developers such as Provia, McHugh, and Manhattan Associates.
"SCEM and warehouse management systems are different applications," notes ARC's Banker. The SCEM tools offered by WMS vendors are separate tools, he says, with the event management piece based on an alerting infrastructure that enables the user to create events, then create alerts around those events.
"Where you turn to buy SCEM depends on the data you want to collect, who you want to have access to the data, and how they access the data and apply it," according to Knickle.
Many observers say visibility and SCEM eventually will be integral parts of most supply chain applications. For example, a newly unveiled solution, e-Supply from Four Soft International (FSI), "brings the power of the web to managing the entire supply chain," says Gary Friedman, managing director of FSI.
e-Log, a component of e-Supply, brings complete access on freight or inventory status to any desktop in the world, according to Friedman. It tracks warehousing, freight movement, and purchase orders, and allows partners to share information about orders, shipments, and inventory status over the web.
The Dimensions of Visibility
"Visibility is multi-dimensional," Gilmore notes. "There are several vectors of difference." For example, there is a vector of vertical industry needs. Retailers need visibility of inbound shipments from their suppliers; stores need visibility of shipments coming to them from the retailer's DC.
Manufacturers, on the other hand, "may deal with lots of basic raw materials, so they have modest inbound needs, but significant outbound needs," he explains. A consumer goods manufacturer who is shipping truckloads to large retailers in California to support a major promotion would want "visibility and event management notification of the entire logistics process."
3PLs Face Complex Visibility Requirements
Third-party logistics providers have a completely different and perhaps even more complex set of visibility requirements as they work to meet the varying needs of multiple customers.
The type of network can also affect the type of visibility required. Consumer products and food and beverage companies often use co-packers, so they have "a supply chain landscape network that's different from a high-tech manufacturer whose suppliers are shipping components across the ocean," Gilmore says.
A company's role in the supply chain will also affect its visibility needs. McHugh is currently working with a large wireless phone company, Gilmore reports. "Often, orders wind up changing, and the company wants to have flexibility to change an order before it leaves the warehouse." For this company, the major types of visibility needed include pick, pack, and ship status plus visibility of inbound components and parts being shipped from abroad.
Visibility related to the warehouse includes providing access to information about inbound shipments, inventory levels in the warehouse, and information about orders, such as when an order was received, picked or shipped, whether it's out of stock, or has been put on hold for some reason.
Reducing Inventory Costs
Providing the DC with visibility to inbound shipments enables companies to accurately estimate when a shipment will arrive. As a result, "they can postpone their deployment decision, and can send the product to the geographic region that's closest to demand. This reduces inventory levels, and the cost of repositioning inventory," says Nathan Pieri, vice president of product management and marketing for Celarix, a provider of supply chain visibility and connectivity solutions, based in Cambridge, Mass.
Celarix's visibility software is a portal that enables warehouse managers to define what they want to see regarding incoming shipments. "They can get a good understanding of what's going to hit their dock, and when," Pieri says.
A World of Possibilities
Portal technology enables parties outside the warehouse to see what inventory is in the warehouse. Combine that with the alerting capabilities of supply chain event management, and all kinds of possibilities exist.
Take vendor-managed inventory, for example, suggests Steve Banker. "With mins and maxes around certain SKUs, the system can automatically alert you when inventory levels fall below the minimum," enabling the vendor to take action quickly.
In addition, he says, "inventory has always been something that companies had to have to protect themselves against their own inefficiencies." With continuing pressure to compress cycle time, companies are turning to visibility and SCEM tools to get better forward visibility. Potential applications include:
Quality assurance. Visibility and SCEM tools have significant potential to assure quality across the supply chain. Take a food manufacturer with a quality problem involving a specific product. A visibility tool would make that inventory visible at a lot, pallet, and carton level across the network. Add a centralized command and control tool, and the manufacturer could put a quality hold on that product, whether it's stored, picked, or staged at a warehouse, in transit from the plant—or to a customer, or sitting in a trailer in the yard.
Measure carrier performance. "In the old days, if I was in a warehouse looking at carrier performance on the inbound leg, I'd keep records that were often not granular enough to tell the full story," thus hampering evaluation of a carrier's performance, Steve Banker explains. "With an event management system, you can have an events notification triggered when the carrier reaches a key supplier's site, when the trailer is loaded, when it reaches your yard, and when you finish unloading the trailer. You now have a much better understanding of what is actually happening.
"The SCEM tool will enable you to break down how often the carrier was late picking up or was delayed at the carrier dock, in-transit, or at your own dock."
Such detailed event management data, coupled with supply chain performance management tools, can enable you to "do a root cause analysis of where the problems are in the supply chain," Banker says. "With that data, you can tighten up the supply chain," whether in the warehouse or on the inbound or outbound side.
Provide historical views. Some visibility tools provide real-time visibility of information only. "You also need visibility of performance over time so you can perform analysis, drive continuous improvement, and attain corporate objectives," says Banker. An online performance measurement tool, for example, would enable you to drill down and understand why your Atlanta distribution center has a perfect order percentage of 84 percent, while the Raleigh DC comes in at 95 percent.
Managing across the network. "Many companies that implemented warehouse management systems some time ago are now looking to move beyond thinking of their distribution networks as islands of individual facilities," Dan Gilmore says. These companies, which have already gained savings and efficiencies by automating their warehouses, "are looking for the next level where they can drive out costs and increase customer satisfaction.
"The majority of companies don't have a real-time window into their inventory and orders across their distribution network," he says. "As a result, they've developed pockets of inventory across the network. While they might have the right amount of inventory in the network, it's consistently in the wrong place at the wrong time." Looking across the network will enable a company to redeploy its inventory to where it's needed.
Are visibility and SCEM tools the Holy Grail? No, but, observers say, by letting others see into and out of the warehouse, they'll help you improve supply chain operations, reduce costs, and increase customer satisfaction—all by opening a window into the warehouse.
Core Process Elements of SCEM
Here are the core process elements of supply chain event management as identified by AMR Research:
Monitor. Provides ongoing information about supply chain events, including the current status of inventory, orders, shipments, production, and supply.
Notify. Helps to support real-time exception management through alert messaging, proactively warning a decisionmaker if an action must be taken or if a trend is emerging.
Simulate. Supports decisionmaking by assessing what will happen if specific actions occur or recommends that an action be taken based on response to an event or trend analysis.
Control. Lets a decisionmaker change a previous decision or condition, such as diverting a shipment or expediting an order.
Measure. Provides measurements, often Key Performance Indicators (KPIs) and metrics, for assessing how well the supply chain performs, past and present.
Source: The Report on Supply Chain Management, February 2002, ©2002, AMR Research Inc.
Beware of Bad Data
Data quality can be a challenge when sharing information. While information is important, "just getting the data isn't enough," notes John Pindred, vice president/treasurer of ShopKo Stores Inc., a Green Bay, Wisc.-based discount retailer.
"The quality of the information received must be verified or it's useless. If our transportation service providers don't enter the correct information about our shipments in transit, we might as well not get the information at all."
"It's hard enough to get good data quality working within the four walls of the warehouse," observes Celarix's Pieri. "It's even harder when you're working outside the four walls."
Seemingly small problems—such as a lower case instead of a capitalized letter, or a forward instead of a reverse slash—can have a huge impact.
"Data quality is a big problem," Pieri says. "My feeling is that you'd probably get around 50 percent of information that's usable without a data quality effort."
By adding technology-based data cleansing capabilities—including sophisticated rules and resolution tools—a company can increase its usable data between 75 and 80 percent. Celarix has begun offering data management services to integrate with its technology-based data cleansing capabilities, which Pieri says can boost data quality to 95 percent or more.