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Achieving Supply Chain Visibility: There is More than Meets the Eye
TOP TRUTHS TO GAINING REAL BENEFITS

Consistently, industry research cites that one of the most important challenges facing supply chain professionals today is supply chain visibility. This could not be more true for industries such as hi-tech electronics and consumer goods, where brand owners and contract manufacturers are challenged by an environment of distributed operations, high demand volatility, and rapid product evolution-all of which make the issue of visibility all that more pressing and yet at the same time, all the more difficult to achieve.

So as companies are clambering to adopt means to gaining better visibility into their supply chain, they are quickly recognizing there is more to visibility than what meets the eye. Among the considerations described below, the biggest realization is that achieving visibility is only a stepping stone towards solving the fundamental problem. Leaders are recognizing that achieving the right type of visibility is the first step, and then being able to leverage it to take quick and effective action is the real secret to success.

Visibility must work in a multi-enterprise capacity

The widespread trend of establishing plants overseas or outsourcing to specialists who can provide unique value and drive down costs shows no signs of waning with good reason. However, this business model is not without its challenges or sacrifices. For one, it increases the complexity of the enterprise and moves management of critical operations outside of its four walls, replacing the traditional single supply chain, with a complex supply network comprised of a multitude of partners. Brand owners, contract manufacturers, and suppliers now must manage a "virtual enterprise" of interconnected players working in a coordinated operation. Achieving visibility is no easy feat when faced with various geographically-dispersed sites and/or partners using disparate data systems.

For visibility to be truly insightful, it must be all inclusive. A company must have the ability to easily consolidate data from multiple sites (internal or external to the organization) for a holistic view of the extended supply chain. Piece meal information will only provide a look into a fraction of the business. For global performance management, one needs global visibility. A multi- enterprise, multi-tier view of operations is required to have a full outlook of the business and to strategically manage operations as appropriate.

Not all "visibility" solutions are created equal

Many in the marketplace are heavily promoting "visibility" solutions, but most focus on finite areas, addressing only a portion of the problem while often creating others. Portals or exchanges, for example, tend to provide limited access to a subset of data. They typically only offer separate, fixed views of information that can not be easily manipulated or integrated, and can be subject to version control, cross-referencing problems or difficulties with dissemination. Again, when you need visibility across multiple sites, several static pieces of information do not make for a complete picture or offer a "single version of the truth."

Many have come to rely on tools such as Excel as a way to extract, consolidate and share data. The problem is that Excel was not designed for this particular purpose. It cannot manage the volume of data required and has difficulty in effectively and simultaneously collaborating with supply chain participants. The solution turns out to be quite time-consuming and cumbersome, yet rarely yields ideal results given its propensity to human error and inconsistent processes.

Without a single source of comprehensive data, people will adopt their own processes for achieving the visibility they require, making consistency across the organization a real problem. For decisions to be effective, partners need to be on the same page, working from the same set of data, in the same way.

Visibility must be put in the hands of those that need it most

Surprisingly, it does little good to obtain key supply chain information for the purposes of historical monitoring or longer- term planning, which is executed by a select few within the organization. Visibility is most powerful when it is put into the hands of the people that are working the front-lines and who rely on the visibility to make decisions and take action on a daily basis.

When an issue arises (demand change, order drop-in, supply disruption etc.) as they always will, it is neither the time for ERP reports or queries, nor the time to "dig for data" or perform ad- hoc analysis using spreadsheets. It is a time for rapid decisions and action, requiring easily accessible, real-time information from across the extended supply chain.

Visibility alone will not solve your problem

This is the most important truth to understand, and likely the biggest misconception in the market.

Without question, visibility is important—an absolute must-have, but it's not enough. As alluded to earlier, achieving visibility is only part of the need. It is a pre-requisite to the end-goal, not the goal itself. What companies really need is the ability to leverage visibility to take action.

Many will promote "visibility" solutions and will tie that to statements like "sense and respond." The problem is few, if any, are actually providing tools to enable the response process. They provide a limited level of visibility and leave users to determine how to benefit from it. Information only has value when you know what to do with it. You can give someone all the song sheets you want, but if they do not know how to effectively translate that into music, then it's just noise.

Visibility without the tools to drive action gives only minor advantages to the organization. In demand management and manufacturing operations, where there tend to be hundreds of decisions throughout the day that must be made at the moment, information alone is not enough. The problems are complex and require one to interact with data in a collaborative way, performing real-time ERP calculations and data modeling etc. One needs to be able to alter and analyze the information, not just see it.

So in effect, visibility is really a feature that when combined with other capabilities, can help an organization respond to change—an ever-present reality of the volatile marketplace.

Companies must look to solutions that provide tools and technology to not only achieve visibility, but to leverage that visibility in responding to change across the extended supply network. By empowering the broad-base of front-line staff-the customer service reps, the planners, the buyers, the contract manufacturers, the suppliers: all of the people that can impact or are impacted by supply chain changes-to take quick and effective action when faced with constant volatility in demand, supply, capacity and product, will ultimately drive breakthroughs in customer service and operations performance.

When combined with tools FOR INTEGRATED PLANNING, MONITORING and RESPONSE, visibility can lead to significant business benefits

In today's business environment, which is characterized by increasingly outsourced manufacturing operations, growing global competition, constant demand volatility, staggeringly short product lifecycles, and stringent regulation requirements, a strong competency for integrated demand-supply planning, monitoring and collaborative response becomes a key competitive differentiator.

Consumers are clearly in charge and have companies scrambling to meet their aggressive and ever-changing needs. The success of an organization can now often be dictated by the success of their supply network. Whomever can deliver what a customer wants, when, where and how they want it will win-this requires an excessively responsive supply chain based on multi- enterprise visibility and coordination.

In an outsourced environment a balance is required, where manufacturing operations are managed by contract manufacturers (CMs) and suppliers. However, brand owners actively coordinate activities across the virtual enterprise to ensure the desired outcome. This is necessary because despite transferring the manufacturing of a product, brand owners ultimately remain accountable for the company's brand, quality, compliance, and every other aspect of performance. And with constant demand changes, new product introductions, and engineering revisions, the brand owner must continue to play an active role in orchestrating certain supply chain activities.

Greater visibility and collaboration with brand owner customers benefits CMs as well, counteracting the "bullwhip effect" that many CMs face when frequent changes are propagated through the system. CMs are better at providing a responsive and efficient supply network when more information is shared.

In the end, having quick and easy access to actionable supply chain information can set the stage for more meaningful and effective interactions between partners based on informed decisions whereby the impact of changes are understood and action plans are clearly defined.

Improving supply chain response through enhanced visibility and coordination can lead to numerous business benefits, improving customer service and reducing operating expenses in due course for both parties. Specific benefits include:

• reduction in inventory, increased inventory turns, and reduced carrying costs
• increased factory throughput
• lead time reduction
• coordinated introduction of new products
• more reliable quote processes and promise dates
• better forecasts

In addition, with the onset of strict regulations, operational transparency and reporting is a key driver behind the need for added visibility. In particular, the issue of calculating inventory liability is of specific priority within an outsourcing relationship.

The right tools should offer visibility into current and projected liability status, but also proactive inventory management capabilities to avoid liability in the first place.

Overall, achieving and maintaining customer confidence and satisfaction will not only reduce risks of customer erosion, but also can in fact lead to opportunities to earn new business. While perhaps for most, this is not their original or express intent behind achieving visibility, it should be-the end business benefits should drive the definition of the need and articulation of the fundamental technology requirements:

1. Compress Time to Action
2. Respond Faster and More Accurately by Quickly Engaging the Right People
3. Reduce Supply Chain Risk/costs and increase customer satisfaction

As companies embark or continue to pursue strategic initiatives to achieving supply chain visibility, a stringent list of criteria must be applied to the solutions considered to ensure the right expectations are met and the real root need is fulfilled.

ABOUT KINAXIS

Kinaxis™ RapidResponse is a single on-demand service that empowers multi-enterprise manufacturers with integrated demand-supply planning, monitoring, and collaborative response capabilities. RapidResponse embraces human judgment to enable planners and front-line responders to handle unpredictable changes. Global leaders such as Casio, Honeywell, Jabil, Qualcomm, and Raytheon use RapidResponse to achieve breakthroughs in sales and operations planning (S&OP), demand management, supply management, and supply chain risk management. The results are superior customer service, improved operations performance, and a competitive market advantage. For more information, visit the Kinaxis web site at www.kinaxis.com or the company's blog at blog.kinaxis.com.

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