Pier 1 Imports had a problem with "blind spots" in its supply chain. The Fort Worth, Texas-based retailer didn't have real-time information about inventory in its six U.S. distribution centers. "We were using paper processes to transmit information from the host [computer] in Fort Worth to our distribution centers," recalls David Walker, executive vice president of logistics and allocations. As a result, warehouse workers were moving inventory before up-to-date information had been entered into the DCs' information systems, he says.

Pier 1's problems are hardly unique. Many U.S. companies are struggling with "inventory blindness"—that is, they can't get a clear picture of incoming inventory, outgoing shipments, or even stocking levels within their own four walls. But unlike many other companies, Pier 1 took action to solve its visibility gap.

The retailer purchased software from Optum Inc. of White Plains, N.Y., that would allow it to "see" inbound inventory, from the moment a shipment left an overseas vendor's dock to the time it was unloaded at a U.S. distribution center. Now, Pier 1 gets detailed information at the stock-keeping unit (SKU) level from its vendors' agents as well as from ocean carriers for shipments around the world, says Walker. The result: Pier 1 knows exactly what's coming and when it's due to arrive. That lets the DCs plan their daily operations well in advance, Walker says.

Ultimately, the ability to view its inventory from end to end gives Pier 1 accurate, real-time information that allows it to effectively serve its stores. "Inventory visibility is the key metric Pier 1 was trying to improve," explains John Davies, a vice president with Optum. "The hot spot is knowing what to ship to the various stores and to let the stores know what's truly available for shipping."

It's not uncommon for shippers to encounter such blind spots when they seek visibility over goods in transit. "A lot of people have done a great job automating their own warehouses, but they have no idea what their suppliers are holding or what their customers are holding," says Chris Heim, president and chief executive officer of HighJump Software Inc. in Eden Prairie, Minn.

This problem takes on even more importance when a company owns the goods while they are residing at another company's facility, Heim says. "You own it, but it's at your supplier or your customer, and you can't collaborate with only 80-percent visibility."

That's what IMI BEVCORe Solutions Inc. of Osseo, Minn., an online exchange that sells equipment and supplies to beverage distributors, came up against. The company knew when an order had been shipped but couldn't track it after it left the dock. And it couldn't say for sure when the customer could expect delivery. That created some unacceptable information gaps. "Our customers needed valid ATP (available to promise) dates," says Mark Miller, vice president of exchange operations.

BEVCORe turned to HighJump Software for help. To create accurate ATP information, Highjump's collaboration product grabs data from several sources, including BEVCORe's PeopleSoft enterprise resource planning (ERP) system and carriers' information systems. The vendor also supplied a warehouse management system that it integrated with the PeopleSoft application.

The software assimilates order and shipping information from those sources and moves it into a secure Web site that customers can access by browser. "Now our customers can log in and see all their purchase orders, how their package shipped, by what carrier, and they can track their shipments," says Miller.

Some analysts believe that advance shipping notices (ASNs) can help eliminate some of the blind spots that exist outside a company's four walls. "The ASN is a visibility tool to get some idea of when things are coming in," explains Larry Lapide, vice president of supply chain management at AMR Research in Boston. "Most people only know when they've received [a shipment], but you need to know when it's coming in," he says. The ASN is the one of the best ways to get that critical information, he adds.

Although it's not surprising that there should be blind spots in areas that are outside a company's immediate control, shippers also find visibility gaps inside their own operations, says John Pulling, vice president and chief operating officer of Provia Software Inc., a WMS company in Grand Rapids, Mich.

One manufacturer that lost sight of internal inventory is photocopier maker Lanier Worldwide Inc. in Atlanta. Lanier's blind spot was returned goods. "We would get an order and if it was configured wrong or the customer decided they didn't want it, the copier would come back," says Greg Wilson, manager of U.S. service logistics. Although the company wanted to get some kind of return on rejected goods, it had no means of tracking their status. As a result, dozens of returned copiers costing as much as $10,000 each sat idle in warehouses, sometimes for years.

To help solve that problem, Lanier installed Provia Software's ViaView system. ViaView matches custom-configured copiers with upcoming orders. If there's a returned copier in stock that comes close to matching a new order, ViaView sends an alert, Pulling explains.

Sometimes companies know what they have, but they don't know where it's physically located within a facility. "One of the areas I see overlooked again and again is location identification," says consultant John Hill, a principal at eSYNC in Toledo, Ohio. "When you get into an overflow situation, people begin to store things in aisles. If the system doesn't know about those places, it can't do a good job managing them."

Blank spots, or black holes, often arise as goods move from manufacturing to distribution, says Scott Rishel, a vice president at Irista Logistics Solutions in Milwaukee, Wis. "Plant managers want to keep the line going. Once they're done, they don't have anything to do with the products. Distribution is worried about storing and shipping. The black hole is in the flow from one to the other, since they don't communicate."

That failure to communicate inventory data can hurt a company's bottom line, says Susan Rider, customer development leader at WMS vendor Red Prairie in Waukesha, Wis. "When inventory arrives from manufacturing, it is put on hold until it gets to the warehouse," she points out. "But if you know when it's coming, you don't have to put it on hold—and that can amount to millions of dollars."

Although the companies in this article relied on technology to alleviate their inventory blind spots, there's widespread agreement that technology alone isn't the solution. "If I'm doing bad things, technology just lets me do bad things faster," says Jim Talarek, a partner at Mercer Management Consulting in New York City. "Change has to be business-led and the focus has to be on the process. You get the process right, and then you bring in the technology."

Organizational change also has to be part of the visibility solution, many believe. Corporate Express, an office supplies distributor in Broomfield, Colo., found that simplifying its distribution network made it easier to keep track of the what, when, and where of inventory on hand, says Tim Beauchamp, senior vice president of distribution operations. "We went from 60 distribution centers to 30," he says. "It takes some time to really design your supply chain to keep it from getting too complicated. Sometimes you can eliminate the 'black holes' and other times you can deal with them better."

Noha Tohamy of Forrester Research in Cambridge, Mass., agrees that eliminating blind spots in the supply chain requires both inventory visibility and business-process change. "Visibility has to be panoramic, and once you get visibility, you have to do something with it to mitigate risk or improve the supply chain. Getting the data, in and of itself, doesn't give you a leg up on the problem."

Using every opportunity to solve the problem of "missing" inventory can help shippers take millions of dollars out of their supply chains. That's because as soon as a company loses track of its inventory, costs rise. "Assets in motion are value; assets at rest are costs, and I see a lot of inventory at rest," says Talarek. "People have taken their eyes off the inventory ball because cash is cheap. Manufacturers are not stores or distribution centers. They need to solve inventory black holes to get a cost savings."

Robert Spiegel is a freelance writer who covers technology and the electronics industry.