The success of any supply chain depends on visibility into the movement of material. All supply chain participants must execute this material movement effectively, whether manufacturing or distribution. Whether a supply chain has two nodes in the same city or hundreds of links that span continents, visibility is critical to success.
Maximizing this competitive advantage requires that managers have complete, end-to-end, real-time visibility into supply chain performance.
Manufacturers need to know what is coming in from suppliers and then carry it through their bill process and basically out the door to their customer. Once an order goes out, manufacturers must know where the order is, if the supplier has accepted it, if they have they started working with it, when are they going to ship, etc.
To put it in a nutshell, competitive manufacturers require real-time visibility into the goods, materials and participants in their supply chain. Answers to critical operational questions like the following must be immediately accessible and based upon real-time data:
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Compounding the visibility challenges, the supply chain insight that most manufacturers enjoy is provided by separate systems that are often out of synch with each other. Once aware that greater supply chain visibility is needed, manufacturers often look to ERP systems for answers.
Suppliers are rarely able to access a manufacturer’s ERP system and customers cannot see the data either. This data security is appropriate as manufacturers do not want to share access to sensitive financial and customer data, even with trusted partners.
Process execution supporting supply-chain visibility is not a capability of ERP systems. It is a complex and time-consuming process that often involves data entry into multiple screens, data extracts to Excel, manual analysis and manipulation of data, to make decisions on material replenishment transactions.
Adding functionality to an ERP system, even a simple new report, can be prohibitive and constrained by IT budgets. ERP consumptions are triggered by back flush or manual transactions that lead to data errors as well as latency.
At the heart of supply chain visibility is a clear understanding of customer demand. Unfortunately, many manufacturers rely on frequently changing sales forecasts as the primary means for tracking customer demand.
Such forecasts typically err on the side of optimism and create excess-inventory situations. As those forecasts become more realistic, customers frequently delay or cancel orders, changes, which can result in shuttering production lines, running expensive overtime operations, absorbing the cost of excess inventory and suffering penalties due to changes in shipping plans.
Achieving 100% visibility and collaboration requires manufacturers to deploy a standard system at every point across the supply chain.
This is particularly efficacious when manufacturers plan to grow through acquisition. Each additional company has its own business system, its own supplier base, and its own culture. Large manufacturers often have a great deal of variation between each division, in North America and globally.
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