Supply Chain Software Special Report: The evolution of supply chain collaboration software
Are you on the same page, in real-time, with your trading partners? That’s the promise of today’s supply chain collaboration software.
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A fly on the wall of virtually every business meeting and in any corner of the corporate world right now would be hard pressed not to hear the word “collaboration” mentioned at least once. Defined as the action of working with someone to produce or create something, collaboration has floated to the top of supply chain managers’ minds in recent years thanks to an increased focus on how “working together” produces better results than trying to get tasks accomplished with fragmented, siloed systems.
Across the supply chain, collaborative software helps bring formerly disparate and disconnected entities onto the same page. With the emergence of cloud computing making this goal even easier, vendors are developing solutions that help optimize logistics and procurement, enable the exchange of data, and encourage collaboration among business partners. With the economy becoming more and more global every day, these innovations support a world where manufacturers, distributors, suppliers, and retailers can all literally be on the same page, in real-time, and at any moment in time.
Ellen Malfliet, marketing and communications manager at PearlChain in Antwerp, Belgium, says new innovations within the collaborative supply chain space, and shippers’ willingness to test out and adopt these systems, is driven in part by changing customer demands.
“Everyone within the value chain is focused on the customer right now,” says Malfliet. Take automobile manufacturing, for example, where raw materials suppliers, manufacturers, distributors, and dealers must all work together in a collaborative environment in order to turn out a viable end product.
“Across the automobile supply chain, everyone wants to ensure that they are taking the correct steps to fulfill their customers’ needs, and that they are doing this in such an order/sequence that they can achieve operational excellence internally,” Malfliet explains. “In the end, the successful customer experience translates into success for all parties across the supply chain—not just those that are actually facing the customer. Everyone wins.”
But what happens when companies don’t communicate well with all of the other players within the value chain? Those firms are left to rely on forecasts and historical views that don’t always paint a forward-looking picture. “When you use forecasts, you’re forced to determine upcoming demand based on prior demand, or maybe even the weather—depending on the product or service that you’re creating,” says Malfliet. “The good news is that when you have the necessary data from other factions further up the chain—who already know the real demand, and who share it with you—that’s where collaboration comes into play.”
In this article, we explore the evolution of supply chain collaboration software, show how it’s being used in the corporate world, and discuss the inroads that vendors are making in their mission to come up with streamlined, collaborative platforms that help companies interact effectively across their end-to-end supply chains.
15 years in the making
David Miller, chief security officer at Detroit-based Covisint, remembers the exact point when GM, Ford, and Daimler Chrysler decided that they’d had enough of trying to manage three very similar supply chains. The year was 2000, and the three large auto manufacturers were duplicating their efforts across their supplier networks, but lacked any ability to collaborate among OEMs for functions like inventory management. Miller, who worked for GM at the time, recalls that the Big Three were using anywhere from three to five different inventory management systems, RFP systems, bidding systems, and purchasing processes.
“Every one of those systems was being duplicated numerous times,” says Miller. Fifteen years ago, the three automakers came together to create Covisint—a platform that formed a single place in the cloud where suppliers would interact with their customers regardless of whether they were working with GM, Ford, or Daimler Chrysler. “We gave them a single portal to work from, even though all of the applications were separate,” recalls Miller. Concurrently, the auto makers built out a standard EDI messaging platform that enabled easy information exchange.
Fast forward to 2015 and Miller is seeing more and more applications moving into the cloud and enabling solid supply chain collaboration and other activities. He points to consumer-focused financial applications like Mint, which allow users to aggregate account information from various entities on a single platform, as potential models for even more robust supply chain collaboration.
“I may have three credit cards from three different companies, and while they aren’t sharing information among each other, Mint aggregates the data for me,” says Miller. “The same approach can be used to track critical information like inventory quality, failure rates, and parts per million (PPM) defect rates on a single dashboard. This will help companies more quickly pick up on and address problems, make engineering changes, and take other measures.”
Data is the new oil
Calling data “the oil of the 21st Century,” Malfliet says supply chain collaboration works optimally when it’s managed in real-time and when all interested parties are on the same page. At the heart of each of those relationships is a data-sharing process made easier by technology, software, the cloud, and even the Internet of Things (IoT). “These tools allow every individual part to be tracked online, including materials that are in transit, those stored in the warehouse, and those that the customer is using,” says Malfliet. “At the same time, every product or service is becoming more and more defined, all with an eye towards creating the right customer experience.” As this trend continues to evolve, she says it just “makes more sense to create flexible networks that can support the trend, and that can scale and grow accordingly.”
Gary Barraco, senior director of supply chain solutions with Amber Road in East Rutherford, N.J., says good supply chain collaboration is about building communication links and connections among the trading network’s various parties. Retailers who rely heavily on a network of suppliers to provide the goods and services that their end users want and need tend to reap the biggest rewards from solid collaboration. “Retailers require that collaborative and open conversation and visibility into their suppliers’ activities,” says Barraco, “in order to achieve goals like shorter cycle times, perfect orders, and minimal inventory stockouts.”
Suppliers also gain from the collaboration, says Barraco, particularly when their retailer-customers use their online portals to provide earlier-than-normal visibility into upcoming plans and forecasts. Pointing to one large shoe manufacturer as an example, Barraco says nine years ago the company was e-mailing and faxing purchase orders on a one-by-one basis before implementing its collaborative platform. The process took three staff members and about three weeks (including order acknowledgement and confirmation) in advance of the firm’s busy season. “Now it takes one person three days to issue and confirm all of the POs,” says Barraco. “That’s a pretty significant savings of time and human resources, all due to the company’s use of collaborative supply chain software.”
Creating a free-flow system
“One of the biggest problems that exists in the supply chain today is the fact that most tools and processes are built up around optimizing rigid hierarchies,” states Rob Cheng, head of growth at Elementum in Mountainview, Calif. “They are pre-defined, pre-planned taxonomies of how the world works.” Such rigidity just doesn’t work very well in today’s fast-paced business world, says Cheng, where everything is moving too quickly for those hierarchies to keep up.
“When we look at the problems that our customers are having in this area,” says Cheng, “a lot of them revolve around these issues and the fact that no one in the world—no matter how smart he or she is—can predict in advance what’s to come.”
The good news is that through solid information sharing and participation from the various players within the supply chain, foresight can begin to come into focus.
“The key is to create a system where information can flow more freely to the people who need it, and then allow everyone on the front lines to essentially ‘self-subscribe’ to the information stream,” says Cheng. “Only then will they be able to follow the relevant information—routes, ports, transportation options, carriers, shipments, supplies, and so forth— and enable teams to be more self-organizing and act more real-time on information that’s relevant to their jobs.”
What’s to come?
All of the experts interviewed for this article expect technology-based supply chain collaboration to continue to evolve and grow over the coming years. At the same time, automation will continue to gain in popularity, says Malfliet, as the use of drones in the warehouse for picking is projected to increase, and as the need to reduce the amount of physical labor and free people up to do more important tasks continues. Using software, for example, companies can now more easily match up the best supplier for every customer and/or order, based on overarching agreements established with both parties. “That frees up time for planners and operational employees,” says Malfliet, “and allows companies to more closely examine the strategic value of these workers.”
To companies looking to get the most out of their supply chain platforms, Malfliet cautions that the only way to effectively manage collaboration across the supply chain is by employing an end-to-end strategy. All of the players in the value chain need to be connected to one another, she says, and with no exceptions. And remember that the bigger the supply chain is, the more benefit you will get out of solid collaboration enabled by today’s advanced software programs.
Finally, everyone has to have access to the same data and it has to be in real time. “Sure everyone has their own little piece or ‘corner’ of the overall scenario to manage,” Malfliet says, “but in the end each has to have a global overview to be able to contribute and collaborate effectively.
About the AuthorBridget McCrea, Editor Bridget McCrea is a Contributing Editor for Logistics Management based in Clearwater, Fla. She has covered the transportation and supply chain space since 1996 and has covered all aspects of the industry for Logistics Management and Supply Chain Management Review. She can be reached at [email protected], or on Twitter @BridgetMcCrea
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