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Five 'I's' of Supply Chain Visibility

While reading a thought provoking blog on a speech by David Allen, famous author of “Getting Things Done”, I could not help but find a corollary between capabilities, what he calls as five “I’s” , of  personal productivity software and an ideal supply chain visibility solution. A day in life of an executive is a quite interesting corollary for Supply Chain. There are constraints, demanding customers, reluctant suppliers and unforeseen meetings/happenings that continuously disturb the meticulously planned schedules. Executives pay a lot of attention to their personal planning gadgets and hire great assistants who help them maximize their day’s worth. Just goes to explain how much would be the worth of a supply chain visibility solution that allows the supply chain managers similar control over their processes.

Summed up eloquently by David as the Five “I’s” the five capabilities that would make for a great personal productivity software also can be extended to become the critical capabilities of an ideal supply chain visibility and control solution:

Interception: The solution must be configurable for line managers to place process sensing “listeners” that actively seek process deviation. For example a fulfillment manager might place a “listener” to intercept any delays in picking an express parcel due to labor shortage in the warehouse. An elegant solution would have an easy to navigate visual modeler that can be quickly configured by business managers and process owners.

Interpretation: A signal becomes a message only when it is correctly interpreted. The visual representation capability of the solution must allow the managers to quickly deduce the impact of the event intercepted by the “listener”. For example the alert from delayed express shipment should not only trigger alert to the fulfillment manager but also display if any linked shipments to the customer need to be rescheduled or expedited. This can be specifically useful if the express shipment was a part of customer’s scheduled plan for a critical project and it needs appropriate communication and resolution.

Investigation: A supply chain event cockpit would provide the manager a single control dashboard to not only monitor and interpret the critical events across the supply chain but also to quickly access other required information to take the corrective action. This goes beyond the plain vanilla BI offerings and should have “what-if” scenario generation capabilities to help manager quickly decide the best solution to get out of the soup.

Integration: Once the manager is through with the interpretation and investigation, the application must go beyond being the visual dashboard and analytical tool. Capability to trigger changes in other applications or start workflow do seem surreal like a Star Trek pilot control board, but with companies on their way towards SOA enablement and  a robust portal strategy, this capability would certainly deliver the maximum bang for the buck.

Implementation:  There are many products in the market that promise the proverbial manna of complete supply chain visibility but not many are easy to implement and integrate with existing applications. An ideal solution should cause minimal disruption to existing processes and infrastructure and act as an “ether” layer on top of other applications.

Now where do I start looking for such solutions?


While I agree with the idea of the "five I's", I don’t think it goes far enough. I completely agree that with the article that visibility is important. Supply chain visibility is critical in fact. However, visibility is NOT enough.

Let’s look at an example.

Let’s say that a large shipment of long lead items is found to be defective. A visibility system would potentially alert you that this event has happened and might even tell you the next higher assemblies that are impacted by these parts. But typically, a supply chain visibility system would stop there. It’s kind of like the check engine light on your dashboard. It tells you something bad has happened – and that you are probably going to be spending some money, but it doesn’t give you enough information to resolve the problem. To solve the problem you need to go to the shop. In supply chain, you need to go to the ERP system.

So what do we really need. Well, yes, we need a system that provides supply chain visibility across the entire supply chain, and yes, that system needs to alert us when something has happened, so let’s start with that.

We need;

Visibility- We need to be able to see across the supply chain. We need to be able to integrate data from multiple disparate systems inside and outside the corporate boundaries.

Alerting – We need to be able to trigger an alert when some event that we care about has happened. The system, however, should not just dumbly report that some parts are scrapped, but instead should report that event only if it matters. To do this, we need Analytics – which brings me to my next point.

Analytics – If you are to truly understand the impact an event will have, you need to be able to replicate the analytics that exist in your ERP system and your demand management system inside the tool. Why? Let’s say that the order we scrapped above is pegged to forecasted demand several periods out. And let’s say that there is enough time to generate an order and replenish the inventory before these scrapped parts are actually needed. The event is not really important. It doesn’t impact customer orders, it’s just an inconvenience in that you need to send the bad parts back and get good parts. Let’s say now that the next order for a different part is pegged to a customer order worth several million dollars that is now going to be late. This is an event that we need to deal with NOW.

Active Spreadsheets – People are used to working in Microsoft Excel. It’s a natural feeling environment for analyzing information. Now, imagine if you could enter a change into this spreadsheet and see results appear in seconds – not just a simple calculation, but instead, actually see the results of full ERP analytics.

Collaboration – Often, the person alerted to a potential problem, is not authorized or able to simulate all possible resolutions. For example, you wouldn’t expect a buyer to change the master schedule, nor would you expect a master scheduler to change a purchase order. For this reason, you need a tool that allows you to identify the people impacted by the change and collaborate with them to resolve the problem.

Simulation – The post talked about the need for simulation. In my opinion, this is critical to responding to an event. We need to try out different alternatives (splitting orders, expediting, finding alternate sources, etc) which can only be effectively done in a simulation environment. We need to be able to share these simulations with others to get their input. Further, we need to be able to compare these different simulations side by side. Something is clearly required that clearly shows which potential solutions best meets the corporate goals and objectives – this brings us to scorecards

Scorecards – Let’s say that for my scrapped part example, I have three different solutions that could potentially resolve the problem. I can see that for each of the solutions, the customer orders that were late are now on-time. Great! Except, one solution used a much more expensive replacement part, another solution expedited a shipment that increased transportation cost, and the third solution borrowed parts from other orders. How do I see the impact of these three choices? Which should I choose? A multi-scenario scorecard would take these three solutions and compare them side by side measuring the impact of the potential resolution on key corporate metrics. In this example, the first two metrics would result in an increase in cost of goods sold and a corresponding decrease in margin. The third solution would show as a decrease in on-time delivery and potentially a decrease in revenue for the quarter. These results, compared against a given target and appropriately weighted would provide an overall score for each solution that the analyst could then use to decide which scenario is best to use.

Now, this is a tool that could drive the 21st century supply chain. With a tool like this, it’s no longer just about supply chain visibility, it’s about being able to respond to events when they occur. It’s about Response Management.

John, I agree with your elaboration of the 5 I's into the various system components. In fact a typical supply chain visibility system offers just the first of five I's - Interception. That leaves managers at sea to try and connect the dots and plan a response to the event. The other two capabilities of Interpretation and Investigation that add agility to the response are sorely missing as functions in the visibility systems.
These in turn are highly dependent on the last two capabilities of Integration and Implementation. Not many solutions in the market integrate well with the myriad ERP systems that are used by companies. As per a Forrester report by Patrick M. Connaughton, over 53% of companies have implemented multiple best of breed SCM applications. Just as an example, many companies that I have worked with for their supply chain transformation projects have more than one inventory management system, over two or three WMS systems and a lot of legacy applications thrown in to spice up the mix. Many companies have failed in their BI initiatives due to the presence of multiple data sources and data inconsistency. Implementation also becomes an issue in face of such complexity. Unless the solution can become the single window of information and control for supply chain managers, there will not be many avid users of such system.
Hence rather than a single visibility package implementation, what companies need a supply chain network ‘glue’ that not only brings together information and alerts from multiple sources, but also allows executives to trigger suitable responses after analyzing impact of the event and response. After all, managing exceptions is the real job of executives.


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