JOHNSON, SeeBeyond: The point is to reduce supply chain costs and inventory obsolescence! There are suppliers and manufacturers who are now leveraging technology to have real-time access to product demand. Many market leaders are now utilizing eBI technology to also collaborate between organizations real time. The ability to quickly modify demand forecasts, send “out-of-stock” alerts, and send replenishment orders and shipments will dramatically reduce supply chain costs.
MARTHA, Mercer Management: If all is rosy, why have companies like Cisco had to write off more than $2 billion of inventory? Or, why has Nike invested millions in supply chain software that has not delivered benefits? Part of the problem is that as companies begin to collaborate, they are really changing their business models. What they have not done, however, is change key operating practices that deal with the added complexity that is associated with collaboration. Certainly supply chains have been compressed, but the margin for error has also been dramatically reduced. To be successful, companies must enhance visibility so that it is much more accurate, and find ways not to exclude human intervention. The opportunities provided by collaboration are great, but the need for enhanced visibility is even greater.
CICIO, Optum: We’re at the very early stages of a new frontier. I’ll give you a live example of a client, a well-publicized $40 billion telecompany. Their customer ordered something, expected to get it, and didn’t receive it. These are complex orders, with 150 line items and thousands of components, sourced out to dozens of suppliers, including their own internal manufacturing plants. The challenge was to establish the technology and the processes that could track each order from the minute the supplier received an order, and we tracked that order through its complex supply chain.
BUTZOW, C.H. Robinson: The transportation aspect is not yet fully visible. That’s because people try to make this a technology play, and it’s really an execution play. Technology is an enhancement to the process, not the process itself. And if you look at where the holes are, we’re still dealing with realities like the fact that there aren’t many Internet-enabled stations at the back door of receiving – it’s coming but it’s not there today.
We have customers with whom we’re actually seeing their real-time point-of-purchase data, and then replenishing those inventories. That gives us the ability to literally see what’s happening on an hour-by-hour basis. Nevertheless, there are transportation departments at many companies that still don’t know a product is shipping until it is 100 feet from the back dock. Yet, the order had been sitting there in that company for a period of three, four days. They still need visibility to plan an order cycle.
McCREARY, Order Logistics: If you knew well in advance the orders that are going to be shipped, then you could collaborate with your carriers to ensure that the lowest-cost carrier in that particular lane was consistently used. However, what we see happening, and other 3PLs (third-party logistics companies), is the fact that it shows up at the dock on Monday, and it has to be shipped on Monday. Then the transportation department is forced to find a carrier that has the capacity to handle it, as opposed to the lowest-cost carrier or lowest cost mode in a particular lane.
ROBERS, Cap Gemini Ernst & Young: We just completed our annual Logistics & Transportation survey of major shippers. One of the striking conclusions is the fact that many companies have just begun to climb the technology curve. For example, we asked shippers how they submit orders. Four percent submit by mail, 28 percent by fax, 30 percent by telephone, eight percent by sales rep, and only 11 percent by the Internet. There is still a tremendous opportunity in the area of B2B connections and real-time collaboration.
SHEPARD. Ryder: In my experience, larger Fortune 500 companies have more trouble embracing technology change, and being technology nimble. They have so much time, money, and resources tied up in legacy or outdated technology systems that it's tough for them to embrace new technology. Thus a general axiom: the bigger the Fortune 500 company, the worse the technology and the greater the technology challenge.