Supply chain visibility: Nothing but blue skies

Long after the Internet bust, one software company is making its mark as a stand-alone provider of visibility software.

By Bob Trebilcock, Editor at Large -- Modern Materials Handling, 8/31/2007

With apologies to Mark Twain, reports of the death of the stand-alone supply chain visibility provider may be exaggerated. That, at least, is the position of Blue Sky Logistics, a best-of-breed provider of visibility and business intelligence solutions founded by a team of executives who worked together at EXE Technologies, now part of Infor.

“We’re surviving because we’ve intentionally taken the path that we’re agnostic of the applications we report from,” says Steve Hensley, Blue Sky’s president and one of the founders. “We’re not tied to SAP, JDA, Manhattan or any of the other supply chain execution or ERP companies.”

In fact, Blue Sky counts several major users as customers, including Staples, who use their solution precisely because it will integrate into any number of different solutions. “Staples uses EXE as its WMS in the U.S. and Manhattan Associates in Europe,” says Hensley. “They use Manugistics for transportation management. They also have a data warehouse and a different ERP system. In all there’s 10 or 15 different applications that have information they need. We can integrate with them all.”

But to put this into perspective, take a step back. During the Internet boom of the late 1990s, few software spaces were as hot as supply chain inventory visibility, known back then as SCIV.

The concept was simple: A warehouse management system (WMS) provided static information. It knew what was in the warehouse, and where that inventory was located when it was at rest. But a WMS didn’t know the status of inventory, or an order, when it was on the move. That was true whether product was between modes in a distribution center, like on a conveyor between workstations, or between nodes in the supply chain, like between a manufacturing plant and a DC or a DC and a customer.

Visibility solutions, meanwhile, collected information from a variety of systems – WMS, TMS, automated materials handling systems – to provide information about the status of product between the nodes.

Venture capital poured into the space, funding a dozen or so visibility start-ups. It all went away a few years later when WMS, TMS and ERP providers incorporated visibility into their core applications, in essence giving the functionality away for free. Start-ups that didn’t get bought out by a bigger player went out of business.

Meanwhile, Hensley and his partners left EXE and started a consulting firm. “We started talking to customers who had visibility functionality in individual applications, but they didn’t have something that could sit on top of all those applications to pull out the data they were interested in and roll it up in some meaningful way,” says Hensley. “We decided there must be a better way to do this.”

The result: They created a matrix of all the different ERP, TMS, WMS and planning systems their customers had and engineered a solution that could pull out key data from all of them. “We started out focusing on warehousing and fulfillment with technical things, like notifying a supervisor that employees had been on break for more than 15 minutes or that a load of product had been received but not moved into the freezer,” says Hensley. Since then, they’ve expanded it to look at broader supply chain issues, like:

• perfect order rates,
• customer service levels,
• first pass fill rates, and
• optimization of transportation routes.

When something is amiss in operations, the system can notify a decision maker in real time, who can then address the issue.

While Hensley and his team see blue skies ahead, he understands that the market is just catching on to the benefits of visibility.

“Last year, one of my partners was saying that we need to move our technology from the nice-to-have into the have-to-have category,” says Hensley. “Fortunately, a number of the analysts have been producing white papers about supply chain visibility in the last few months.”