Executive Briefings

Manufacturers, Logistics Execs Recognize 'Black Holes' in IT Hinder Supply Chains, Move Cautiously to Invest

Because manufacturing and logistics executives remain cautious about the economy, they plan to invest in "smart network" capabilities that include more collaborative risk sharing, supply chain synchronization, and secure, compliant B2B commercial interactions.

So says a survey released this week by Sterling Commerce at the annual conference of the Council of Supply Chain Management Professionals. "Manufacturers know they need to be faster to new markets, to innovate with new products and to deliver on order commitments, but they also have to have very lean, agile supply chains," said Richard Douglass, global manufacturing and logistics industry executive, Sterling Commerce.

"Building a smarter dynamic business network is at the center of addressing these challenges, and this survey highlights that manufacturers face a number of obstacles in the collaboration needed for that network. They have identified both customer demand and supplier risks as key information black holes, further complicated by the fact that much of their collaboration both upstream with suppliers and downstream with customers is still very ad hoc and manual."

The survey, conducted by Edge Research, investigated the business concerns of 301 information technology, sales and supply chain decision makers in the manufacturing and logistics industries. It found 36 percent expressed concern about the risk of slipping back into a recession. Respondents' primary concerns were risk of losing customers/customer volume (46 percent) and demand/channel volatility (41 percent).

Other findings include:

--  82 percent indicated that managing volatile demand, specifically unexpectedly accelerating or decelerating demand, would be a priority in 2011.

--  The most prominent information "black hole" among companies was real-time demand (39 percent), followed by supplier issues/problems (34 percent).

A continued reliance on manual processes for both customer and supply chain collaboration hampers companies' ability to manage volatile demand and gain real-time demand signals. The survey found:

--  For both customer and supplier collaboration, half the respondents still use manual processes for monitoring changes, exceptions and disruptions to planned activity.

--  For customer collaboration, 24 percent of respondents had implemented highly automated processes for "visibility of order and shipment status" and 18 percent had done the same for "visibility of inventory and demand of their key customers' customers" (18 percent).

--  For supplier collaboration, "visibility of order and shipment status" was implemented as a highly automated process for 24 percent of respondents, with less than 15 percent of respondents indicating they had implemented highly automated processes for the other areas of collaboration.

The survey results indicated that as manufacturers and logisticscompanies look to 2011 and beyond, they are addressing the blackholes and supply chain volatility by focusing on implementing solutions that are much more precise and automated, enabling them to reduce risk. The survey found the following percentage of respondents plan to implement:

--  Supply chain synchronization solutions (40 percent) that enable them to provide seamless customer experience from the moment an order is placed, via whatever channel, to its ultimate fulfillment. Supplier relationship management, transportation management systems and multi-channel e-commerce are key components of any supply chain synchronization solution.

--  Risk sharing solutions (35 percent) like vendor managed inventory and available-to-promise capabilities that give them more precise views of inventory at multiple levels in the supply chain.

--  Process management and analytics solutions (32 percent) that enhance multi-enterprise process management, such as supply chain analytics and automated business-to-business (B2B) integration.

--  Secure network solutions (31 percent) that protect transfer of sensitive data and intellectual property, as well as that ensure compliance with ever-changing customer and regulatory mandates.

The survey also found that cloud computing continues to be an area of investment. Six in 10 decision-makers are currently implementingcloud solutions, with just over one third (36 percent) of respondentsimplementing two or more cloud solutions. Survey findings show that order management, supply chain visibility and warehouse management are the most commonly used cloud solutions among manufacturers today.

The full survey can be found at http://www.sterlingcommerce.com/PDF/Sterling_Commerce_Report.pdf

Source: Sterling Commerce

Because manufacturing and logistics executives remain cautious about the economy, they plan to invest in "smart network" capabilities that include more collaborative risk sharing, supply chain synchronization, and secure, compliant B2B commercial interactions.

So says a survey released this week by Sterling Commerce at the annual conference of the Council of Supply Chain Management Professionals. "Manufacturers know they need to be faster to new markets, to innovate with new products and to deliver on order commitments, but they also have to have very lean, agile supply chains," said Richard Douglass, global manufacturing and logistics industry executive, Sterling Commerce.

"Building a smarter dynamic business network is at the center of addressing these challenges, and this survey highlights that manufacturers face a number of obstacles in the collaboration needed for that network. They have identified both customer demand and supplier risks as key information black holes, further complicated by the fact that much of their collaboration both upstream with suppliers and downstream with customers is still very ad hoc and manual."

The survey, conducted by Edge Research, investigated the business concerns of 301 information technology, sales and supply chain decision makers in the manufacturing and logistics industries. It found 36 percent expressed concern about the risk of slipping back into a recession. Respondents' primary concerns were risk of losing customers/customer volume (46 percent) and demand/channel volatility (41 percent).

Other findings include:

--  82 percent indicated that managing volatile demand, specifically unexpectedly accelerating or decelerating demand, would be a priority in 2011.

--  The most prominent information "black hole" among companies was real-time demand (39 percent), followed by supplier issues/problems (34 percent).

A continued reliance on manual processes for both customer and supply chain collaboration hampers companies' ability to manage volatile demand and gain real-time demand signals. The survey found:

--  For both customer and supplier collaboration, half the respondents still use manual processes for monitoring changes, exceptions and disruptions to planned activity.

--  For customer collaboration, 24 percent of respondents had implemented highly automated processes for "visibility of order and shipment status" and 18 percent had done the same for "visibility of inventory and demand of their key customers' customers" (18 percent).

--  For supplier collaboration, "visibility of order and shipment status" was implemented as a highly automated process for 24 percent of respondents, with less than 15 percent of respondents indicating they had implemented highly automated processes for the other areas of collaboration.

The survey results indicated that as manufacturers and logisticscompanies look to 2011 and beyond, they are addressing the blackholes and supply chain volatility by focusing on implementing solutions that are much more precise and automated, enabling them to reduce risk. The survey found the following percentage of respondents plan to implement:

--  Supply chain synchronization solutions (40 percent) that enable them to provide seamless customer experience from the moment an order is placed, via whatever channel, to its ultimate fulfillment. Supplier relationship management, transportation management systems and multi-channel e-commerce are key components of any supply chain synchronization solution.

--  Risk sharing solutions (35 percent) like vendor managed inventory and available-to-promise capabilities that give them more precise views of inventory at multiple levels in the supply chain.

--  Process management and analytics solutions (32 percent) that enhance multi-enterprise process management, such as supply chain analytics and automated business-to-business (B2B) integration.

--  Secure network solutions (31 percent) that protect transfer of sensitive data and intellectual property, as well as that ensure compliance with ever-changing customer and regulatory mandates.

The survey also found that cloud computing continues to be an area of investment. Six in 10 decision-makers are currently implementingcloud solutions, with just over one third (36 percent) of respondentsimplementing two or more cloud solutions. Survey findings show that order management, supply chain visibility and warehouse management are the most commonly used cloud solutions among manufacturers today.

The full survey can be found at http://www.sterlingcommerce.com/PDF/Sterling_Commerce_Report.pdf

Source: Sterling Commerce