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Companies that survived the recession by leaning down and becoming more efficient are reluctant to start adding employees at the first signs of recovery, says Riley, director of supply chain innovation at Software AG. They have learned that if they can see what is going on in their supply chains and effectively manage exceptions, they can handle more business without increasing payroll, he says.
The key is to have a high-level understanding of how the supply chain is functioning. This means knowing how much volume by unit, case and pallet is flowing through the supply chain at any given time and whether that volume matches sales; how fast things are moving and whether that velocity is sufficient to support sales; whether there is too much or too little inventory and what points in the supply chain continually demand attention. "If you are able to understand those metrics at a high level, you can solve any specific problems that arise," he says.
The first step to achieving this level of visibility is integration, he says. Typically there are not less than three applications managing supply chain functions - enterprise resource planning, transportation management and warehouse management - and different departments each looking to use these applications to optimize their portion of the supply chain, Riley says. "So the first step is to integrate those applications with an enterprise service bus to ensure that your data can pass between the applications and can be understood by people who are looking at it."
The next step is to be able to pull data such as vehicle GPS locations from partners' applications, Riley says. "Once you have gathered all that information, you then have to push it into an analytical engine that has the ability to make sense of all that data and compare it to "normal." Anything that is not normal at this point in time will alert someone to take a look.
"To efficiently deliver a high level of service, you have to see where things are going wrong in the supply chain," says Riley. Once you see where exceptions are occurring and recurring, the next step is to begin automating responses. "So instead of a simple alert, you trigger an automated exception-based process to deal with a specific issue. This will drive increased customer satisfaction and decreased cost year over year; it is not just a single hit," he says.
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