Shifting Up To the Real Time Supply Chain

The stakes for superior supply chain management seem to be higher than ever. Public scrutiny of a company's supply chain weaknesses can have an immediate, negative impact on its stock price, and ultimately on the company's very survival. A study by the University of Western Ontario and the Georgia Institute of Technology revealed that on average, supply chain glitches result in a 9 percent drop in stock price and stock devaluation of up to 20 percent within six months of the problem being publicly revealed.

Supply chain challenges are compounded by the growth in new sources of demand and supply, fewer limits of geographical boundaries, and increased product customization. The old methods of supply chain management, such as forecasting inventory requirements based on historical demand, just aren't good enough anymore. Today's challenges require that companies have real-time knowledge across every point in their supply chains.

But it's not easy. Many supply chains are a network of complex processes that often includes hundreds, even thousands, of partners--all of whom are outside a company's line-of-sight. The only way to gain full visibility and awareness is through a supply chain event management (SCEM) solution which monitors, exposes, and alerts managers to execution problems and performance patterns across the entire extended supply chain in real-time.

Companies are re-examining their supply chain strategies. The move to improve supply chain performance is going to consume the most significant portion of corporate IT spending since the ERP revolution of the '90s.

The Need for Supply Chain Event Management and Visibility
According to AMR Research, supply chain event management is forecasted to be the highest-growth sector of all supply chain applications by 2005. What is driving this explosive growth? One factor is the incredible complexity of today's supply chains. Today, companies rely on outsourcing and third-party suppliers, distributors, and other types of partners to gain the resources and efficiencies they need in today's competitive climate.

Supply chain event management finally gives organizations much-needed visibility across all points in their extended supply chains and helps companies answer real-time supply chain questions such as:

• Where and how much inventory is in my supply chain at this moment?
• If a key supply component is lost or will be late, how soon can I be notified?
• Which of my suppliers gives me the best price -- if I include metrics like on-time delivery as part of my total cost calculation?
• Can you answer those questions for your company? If you can, the resulting financial and operational benefits could be significant. Better information can drive problem-solving that helps reduce total supply chain costs by decreasing expenses including inventory carrying costs, order management, and shipment costs. With the use of SCEM solutions, organizations can ultimately improve their bottom line.
• Ultimately, the supply chain starts with the customer order. Providing a true link between demand and supply is the "holy grail" for many manufacturers and distributors. Running the operation in a smooth and steady state, and minimizing the peaks and valleys of inventories, is the key to efficiency and profitability. And by matching supply and demand, companies can create customer-focused supply chains that respond to the needs of customers in ways never before possible.
• Richard Vancil is CMO of Tilion Inc., a developer of solutions for better logistics and supply chain management. Vancil brings more than 15 years of experience in the information industry, primarily providing early-stage companies with business intelligence services. Most recently, Vancil was the COO for Shareholder.com, a developer of Web-based services for investor relations. In his three years at Shareholder, he was instrumental in leading a product transition from telephone and fax delivery services to a Web-based information delivery platform.
• Previously, Vancil was vice president of marketing and business development for Individual, Inc., a pioneer in the online news business. Vancil began his career as a market research analyst. In his final market research role, he served as vice president of marketing for Dataquest, Inc., a leading high-technology market research firm.
• Vancil has a BA from Connecticut College and an MBA from Harvard University. He is a board member of the Information Technology Services Marketing Association (ITSMA).
• He can be contacted at [email protected]