Cutting through the fog

by Array

FROM THE MM&D JULY/AUGUST 2011 PRINT EDITION: Supply chain visibility gives you the ability to act if cargo goes missing, gets tangled up at the border or otherwise slides off the rails. Not having this visibility can mean shortsighted decisions. What tools can help you to maintain visibility? What risks lurk when you don’t have proper visibility?

For Dan Georgescu, the risks of not maintaining visibility are huge. Georgescu, who heads up global sourcing for Ford Motor Company of Canada, notes the supply chain for the company is nothing if not complex. Ford has roughly 6,000 tier-one suppliers, and the number of tiers can be high.

“It’s very difficult to estimate the total number of suppliers in our supply chain,” he says. “Since the number of tier-one vendors is so high, our visibility is kind of restricted to those. We focus our resources to look at our tier-one suppliers and count on them to propagate our strategies deeper in the supply chain. So we’re putting policies in place to mitigate the visibility risk.”

To Georgescu, the greatest risk lies in quality issues and supply disruption. At thousands of dollars per minute, Georgescu notes, supply chain disruption is extremely expensive.

Such disruptions can seemingly come from nowhere. When the earthquake and subsequent tsunami hit Japan on March 11, Ford reacted fast to secure from Asia whatever supply it could, and develop alternative sources to replace those lost to the disaster. Luckily, Georgescu says, Ford was successful in seeing that none of its plants was shut down due to the crisis.

“In order to be able to do this, you have to have a structure that allows you to immediately dedicate resources to such an event,” he says.

Border delays

Cargo can also be delayed at the border and a lack of visibility in the supply chain means not knowing the reason for a delay, or how long it will take, says Candace Sider, Livingston International’s director of regulatory affairs for Canada. For example, a shipment can be delayed while crossing into Canada while the Canada Border Services Agency (CBSA) examines it. Or, other government departments may have release requirements that haven’t been met. If cargo is stopped at the border, the delay can be several days. “That can lead to assumptions that it’s delayed at one end of the supply chain but really it hasn’t even been released from Customs yet,” she says.

The solution comes in the form of a real-time tracking system. Livingston uses a suite of web-based tools for importers called Insight. Importers can log in and check where their cargo is. The system updates itself based on, for example, whether there’s a Customs release, if cargo gets pulled at the border for examination and so forth, Sider says. “It’s continually updated so it gives that importer or exporter visibility,” Sider says.

Organized information

It’s no longer only supply chain professionals within organizations who need that visibility, says Dan Carruthers, director of supply chain solutions at Oakville, Ontario-based Lakeside Logistics Inc. Other departments within an organization also benefit from access to the information. And providing those business areas with that intelligence helps to improve communication and break down silos within companies.

“But there’s all sorts of people within organizations that should be looking at the information,” says Carruthers. “We provide it so the financial people can look at it, customer service or sales can look at. We try to give them information so that each one of those functions can come in and get that information without having to chase it through the organization.”

Lakeside Logistics provides day-to-day information about a customer’s goods—what Carruthers calls transactional information. This includes data such as a shipment’s location, what time it will arrive and whether it will be late.

“The traditional way to get the information is, I’ll pick up the phone and call somebody,” he says. “You play telephone tag, or you send them an email and they may not respond or it might get sent it to the wrong person. They might be away. We force that information to them. They’ve got a job to do and they’re relying on some of that information either to make day-to-day decisions or to handle events that are going sideways.”

The company also provides customers with “executive management” information, Carruthers says. That information is organized to include a look at where their business sits in terms of costs, on-time performance, by customer, ship point or other KPI they want, he says.

“Distribution is very complex,” Carruthers says. “The information doesn’t come in a nice, convenient form. What we’re trying to do is put it back into the same unit of measure that they measure everything else with, so they can understand the cost impact of what they’ve done and see whether they’re making any money.”

For Keith Lambert, senior vice-president of The Forzani Group, integration provides visibility. His company is now blending together its software systems—such as its financial planning, open-to-buy, merchandizing and allocation-and-replenishment systems. That integration, which Lambert says will wrap up next year, will allow those systems to be viewed concurrently and in a consolidated form.

“No two systems are alike, so no two systems are going to give you the same information,” Lambert says. “Integration means you can get the visibility you’re looking for. You get the view into one as opposed to having five separate windows open, and you have to go back and forth into different systems to understand it.”

Information overload?

So can you have too much information? Is it always important to know exactly where cargo is?

When operating in a just-in-time environment, it’s tough to imagine getting too much information, says Georgescu. Any supply chain hiccup is immediately felt. And with so much information produced by technology and automated systems, it’s easy to retrieve and digest only the information one needs, rather than sifting through unorganized data. “A lot of information is handled by software,” he says. “That means, when a decision-maker needs that information he goes to the particular database and pulls the report he needs.”

Carruthers shares that enthusiasm for information. With people now looking for instant information access and instant results, it’s important to keep data as current as possible. But clients may need help understanding what information is available and using that information as effectively as possible.

“It’s not good if you throw volumes of data at them that they have to sort through,” he says. “You have to understand what they use the data for and put it in a format so they can quickly get at it and use it.”