Posted by: Christian Verstraete | October 29, 2009

To See or not to See


During the last year, I have been talking at a lot of conferences ans a theme that has come up regularly is the one around increased visibility. Either because of cost cutting exercises, or because of the need for better decision processes, it looks like companies are finally understanding they need to work more closely with their suppliers. Having been advocating this for a couple years now, I am really surprised to finally hear the same message from so many companies in different industries.

After having spent years and millions implementing their ERP system, it looks like the more advanced companies are shifting their focus to the operations not just of the company, but of its ecosystem. Indeed, these days ERP is no longer a competitive advantage. I remember a conference a couple years ago where a CIO presented its ERP project starting by saying “there are 35 companies in our industry sector; we are the 32nd to implement SAP”. Sure, that in its own right says it all.

A number of companies have shifted to lean and six sigma, using IT to understand and improve the operations within the enterprise. Unfortunately, many of those have done so by pushing inventory and tasks to suppliers and distribution channels. What they did not envisage was that the end customer has to pay for the inefficiencies in the supply chain, regardless where they are. So, improving one’s own operation without looking at the overall eco-system does not really add value as far as the end customer is concerned.

It is easy to walk through the factory and spot waste; it’s more difficult to do that through the supply chain. And here is where visibility comes in again. To understand the supply chain and where the inefficiencies are, gaining visibility of what happens is mandatory. This can be achieved by sharing information between partners. But that requires a willingness to collaborate, which often implies a different attitude towards suppliers and partners. This is a good subject for a separate entry, so we will come back to that.

When implementing a visibility platform, make sure to separate operational data, the details of what happens in “real-time” in the supply chain, from historical data, typically condensed, but maintained for a long period of time in a data warehouse. The operational data will provide you with insights of potential issues and allow you to react quickly, while the historical data will provide you with trends and allow you to understand how the eco-system works and what could be done to improve it.

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