Filling the black hole in supply chain data
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Order data is not always rich enough to give retailers and suppliers the insight they need to improve store replenishment, says Jacquie Boast, Chief Operating Officer of Kewill Europe. What is the answer?
When retailers send out orders to suppliers via their EDI networks, generally all they get back until the goods actually arrive, is an acknowledgement that the order has been received. What they cannot know is – can the supplier fulfil the order on time and with the correct items? To get this information, a flurry of activity generally kicks off with staff initiating phone calls, faxes and emails to fill in the gaps. In the end, the job gets done, but at what cost in terms of time and resources? And what about errors, to which disjointed communications systems are prone?
Perhaps this disjointed series of multi-data flows did not matter once, but today, retailers are looking for greater certainty in order to provide their customers with higher on-shelf availability of the goods that they actually want. Under many existing data networks, product substitutions or modifications are often not known until it is too late; or orders do not arrive at all because suppliers cannot fulfil them, by which time it is too late to respond with a credible alternative.
There is also little or no room for collaboration between retailers and suppliers to achieve today’s key supply chain goals – lower costs, improved availability, more accurate forecasts and better performing new promotions and new product introductions. Also, with more and more retailers extending their supplier base geographically, lead times are extending and this reduces the ability of the business to apply a ‘quick fix’.
Another major problem with existing systems is that they are not integrated or only loosely integrated. Orders depend on data from multiple sources – ERP, order management, warehouse management and transportation management solutions (which may be internal or outsourced), and yet it is not possible easily or at all to extract the complete status of a single order at a given point of time as these systems are generally constrained by the ‘four-walls’ of each business, that is none of these solutions extend outside your business to cover your supply chain partners. Traditional EDI is therefore often out of step with the physical order chain; the batch processing within EDI is fine for billing and back office processes, but not for time-critical supply chain operations.
The answer is to make use of Internet technology to consolidate every level of communication under a single architecture, to provide the glue between multiple internal and external systems, and increase the reactivity of the supply chain into a real-time order fulfilment environment. While the cost of supporting EDI orders with fax, phone and email is rarely costed, the reality is that web-based ordering systems are not only cheaper but far richer functionally, providing a platform for true collaboration.
The Internet is also critical for the large numbers of small to medium-sized suppliers on whom retailers increasingly depend on to fulfil the needs of ever more demanding and fickle customers. For some retailers, these smaller suppliers may only comprise 20% of order product volumes, but yet make up 80% of the total number of suppliers. Many are unable to cover the cost or allocate the resources required to accommodate the software required by traditional EDI systems. With the Internet, there is no hardware or software install; suppliers need only connect to an Internet portal and all data consolidation is handled at the back end.
The use of the Internet also brings new features including advanced shipping notices, supplier product catalogues in full colour and constantly up to date, and tracking of consignments, to ensure orders are accurate and on time.
To monitor this, retailers can manage orders by exception, setting their own parameters based on measurable metrics such as supplier performance, on-shelf availability and promotions profitability, and then letting the system raise alerts when metrics are not achieved. Allowing the retailer to manage their supply chain by exception, focuses the attention of their buying and merchandising teams on more pro-active tasks like reviewing new suppliers, product lines and freeing up time to manage extended product ranges with the same number of people.
By Jacquie Boast
Chief Operating Officer, Kewill Europe
Kewill is a leading provider of global solutions for the dynamic supply network. The dynamic supply network enables enhanced responsiveness to customers through flexible connectivity between partners and systems, providing improved visibility and effective compliance, bridging the gap from a traditional rigid supply chain.
For further information visit kewill.com/easytradeweb