Red flags

Supply chain software vendors are including "alert messaging" capabilities in their applications. This feature lets logistics managers respond to emergencies before they become crises.

By James Aaron Cooke -- Logistics Management, 3/1/2000

Today no shipper should be blindsided, learning of a shipment delay or a materials shortage long after the fact. Numerous supply chain software vendors are now offering "alerts," red flags that signal something is amiss in the distribution operation, and many more are expected to join the ranks very soon.

"Everyone will be doing this by the end of the year," predicts John Fontanella, research director at AMR Research in Boston. "It will be a requirement to be in the business."

"Alerts" flag exceptions to standard procedures--for instance, a delay in a freight delivery due to snarled traffic or a stockout of a sorely needed production component. "The 'alerts' tell you that there is a problem," says Steve Banker, senior supply chain analyst at ARC Advisory Group in Dedham, Mass. "You don't have to check the computer screen every hour."

More significant than easing eyestrain, "alert" technology lets logistics executives nip problems in the bud. Notified of impending trouble, a manager can intervene before the problem becomes a crisis. "'Alert' messaging is a time-reducing, proactive way to fight fires before they burn down the building," says Rich Sherman, senior vice president of visioneering at EXE Technologies in Dallas.

Beyond Track and Trace

To manage today's complex global supply chains, shippers require advance warning of any problem, whether it's a delay in a freight shipment or a sudden surge in orders for a product. "When I produced in my own backyard and shipped, it was less important for me to worry about 'alerting,'" says Lisa Hebert, associate partner in the global supply chain practice at Andersen Consulting, who's based in Phoenix. "Now with the globalization of the supply chain, there are so many more factors to be concerned about."

Thus, shippers have begun asking for the creation of messaging and "alert" systems in supply chain execution and planning software. "What people want is proactive 'alerts,'" reports Jim Talarek, a leader in the transportation management practice of PricewaterhouseCoopers LLP's Chicago office. "Tracing is too late. They want a provider who can track the movement and, if there is an exception, alert them so they can take appropriate action."

"Alerts" give managers the ability to foresee that a problem--such as a shipment delay--is happening at a given moment. "Visibility is key to big shippers," notes Ian Gittens, a product manager at the software vendor i2 Technologies in Irving, Texas. "If they don't know where their inventory is, they can't divert it."

Transportation management system (TMS) developers were the first to offer this feature in their packages. In a typical setup, the "alert" would simply notify a user that a shipment in transit would suffer a delay. "Most of the TMS guys have been offering [the 'alert' capability] for a while," reports Jim Uchneat, a director at Benchmarking Partners Inc. in Cambridge, Mass.

Today, other supply chain software vendors are starting to include this feature in their applications as well. Supply chain "alerts" typically go beyond merely notifying users of delivery foul ups and addressing inventory and production planning needs, however. For example, a program might inform a company that valued inventory is out of stock.

As for the alerts themselves, they can take many forms. "They can be converted to any combination of media," says Sherman. "They can be sent as an e-mail, a page, or a voicemail message."

A Growing Market

Currently, a handful of software vendors provide alerting capabilities. EXE Technologies, for one, offers "alert" message capabilities in its e-fulfillment and warehouse management system (WMS) packages, says Sherman. Similarly, supply chain software vendor Manugistics Inc. of Rockville, Md., last year introduced an "alert" capability called "exceptions management" to flag distribution delays, production breakdowns, and materials shortages. J.D. Edwards World Solutions Co. of Denver is another software provider that offers an "alerts" feature. "If a certain event happens, the system will notify people of that event," says George Gulliford Jr., manager of cross-industry solutions at Edwards. "For example, a truck's going off the road could trigger a series of messages."

One vendor of international trade software, Rockport Trade Systems Inc. in Gloucester, Mass., has provided the "alert" feature in its packages since 1996. "We track more than 400 given events against any one transaction and then alert every party that could be affected by a change," says Rockport's CEO and founder, Sue Welch.

Not all vendors develop their own "alert" systems. Optum Inc. in White Plains, N.Y., has licensed "alert" capabilities from Categoric Software Corp. of Palo Alto, Calif., so that the supply chain software vendor can offer the feature in its warehouse and transportation management packages. "We can apply it to every incoming or outgoing logistics message that's relevant to our application or a fulfillment process," says Henry Bruce, Optum's vice president of corporate marketing.

The Descartes Systems Group Inc. in Waterloo, Ontario, has provided an alerting mechanism in its packages for the past two years. "We allow each end user to create its own 'alerts' and triggers from a Web browser," says Art Mesher, executive vice president with Descartes.

And the marketplace is only going to get more crowded. A number of other software makers are expected to unveil packages with the "alert" function this year. Provia in Grand Rapids, Mich., for example, plans to offer event notification in the next release of its Viaware-DSS package this spring. "You're going to see the key application providers in warehouse management systems, transportation systems, and supply chain planning as well as the database vendors all developing messaging and 'alert' capabilities," predicts Dan Gilmore, an analyst with the Meta Group in Stamford, Conn.

The Next Step

There will likely be more to the "alert" messaging capabilities of the future, however, than mere red flags for activities that go awry. Many experts foresee software developers' writing routines that use the "alerts" to trigger other actions, such as notifying partners to follow contingency plans. Vendor i2 Technologies Inc. already has developed a contingency planning system that triggers an alternative shipping method if a carrier can't handle a delivery.

Using expert intelligence to supplement "alert" technology would allow the computer to take a set of actions to ensure availability of inventory for production or the on-time arrival of a shipment automatically. "The 'alerts' tell you there is a problem," says Steve Banker, senior supply analyst at the ARC Advisory Group. "The next step is building functionality on what to do. For instance, my factory tells me that the order will be late by a day. It may make sense to have certain functionality that spells out procedures and suggests that you notify the customer that the shipment is going to be late."

Such intelligence could mean that the computer program would initiate a contingency plan without human intervention. "If the carrier doesn't pick up the load in four hours, then the software passes that load on to a backup carrier," says Fontanella. "Today that would entail a lot of phone calls. But that could be managed automatically tomorrow."

Because delayed shipments often affect an array of trading partners in a channel, Gilmore believes that more work needs to be done on the integration of "alert" systems that will span the entire supply chain. "The messages and 'alerts' will have to go between the trading partners and not just stay within the four walls of a company," he says. "The original 'alert' may come from the WMS, but an ERP system needs to grab that information and compare it with other intelligence and decide whether the 'alert' needs to be communicated up the chain."

Although the deployment of "alert" technology promises to ease the burden on logistics managers, it's possible that the whole system could backfire. If all of the trading partners in an extended enterprise start transmitting "alerts" for every operational deviation, then logistics managers could find themselves overwhelmed with crises. "We're going to get 'alert system' chaos because virtually every logistics application provider is developing its own 'alert' and messaging capability," says Gilmore. "I'm concerned that we'll have too many systems rather than a common supply chain-wide system."

On the other hand, Gilmore also worries that logistics managers might not avail themselves of these new tools due to ignorance. "People will need a lot of help understanding the things they need to be monitoring," says Gilmore. "The vendors have been more focused on providing the technology to do this than on creating a methodology and training mechanism to teach people how to use this effectively."

A Tool for Mastering Change

Uchneat believes that logistics managers ultimately will have to determine the key trip-fault measures for monitoring distribution activities in their own companies. "The challenge is getting the organization to use ['alerts'] effectively," he says. "For people who have managed operations, there are usually one or two core metrics to be watched to make sure things are working."

Still, "alert" and the related event-management technology may give logistics managers the tool they need to coax optimal performance from their supply chains in a fast-changing world. "In a more dynamic and complex environment, there will be a higher value placed on this technology," says Talarek, "because there are simply more things to control."