We need a software-as-a-service (SaaS) model which will enable community SCM (C-SCM) for both large and small companies that outsource manufacturing. We want communities of supply chain owners, customers and supply partners to use any public or private cloud environment. We want our community to take advantage of scalability, security and reliability of current cloud environments. Our goal is to centralize information and create real-time, cross-community visibility. Cloud is all about dynamic choice, ‘just-in-case’ computing power and scalability.
This year we have dealt with many topics leading up to Community SCM. First was “End of ERP”. We covered “Virtual Manufacturers”. Other topics that bear upon Community SCM are “Partnerships with Vendors, Suppliers, Customers” and “Social Supply Chains”. We have determined that to make a community supply chain work, one of the best tools is Software-as-a-Service (SaaS). We reviewed how Retail Universe (RU) can help companies collaborate with their other partners.
Management is backing us. I saw a some survey results on what IT executives said about SaaS. In brief, organizations will increase their use of SaaS or at least maintain it. They like the easy deployment and the cost effectiveness of SaaS. They are using SaaS as new applications or to replace in-house applications. Yes they admit to problems like linking up to legacy systems. An industry ranking high in its plans for SaaS is the wholesale trade. Manufacturing and retailing show up higher after 2012. Vertical-specific SaaS solutions vary across the survey. Currently retail has one of the highest levels of deployment.
Outsourced manufacturing and supply chain management can provide a lot of advantages in some industries. But outsourced manufacturing and supply chain management in a down economy has a risk of partner failures. It is critical to develop close relationships with suppliers even if that means direct investment as the ultimate weapon in collaboration. Consider SONY who depended on in-house manufacturing. Contrast that to the cost efficiency of Apple with their strategy of in-house design / outsourced manufacturing. Same industry, but Apple has been much more successful. Apple is ranked #1 by Gartner in their annual Supply Chain Top 25 study.
Let's get specific about our own “Community SCM” model. It is all about strategies for improving supply chain visibility with technology. Outsourcing and globalization are just how everybody works now days. We build Supply Chain Management Communities (value networks) that extend beyond one company; but our procedures are not as good as those of a company that does everything within its own four walls. We are used to forecast-driven planning and execution process. And that is not demand-driven which is where we want to be. In other words, lots of companies don't have visibility (collaboration), across their supply chain community.
When you think about collaboration, it’s easy to see that with an intricate supply chain, all the participants in the supply chain will need tools to share information swiftly. The “Social Network” of choice should be Retail Universe.
To improve our supply chain results, most companies really need increased visibility. Visibility of what? Well, here is a short list:
The SCM Community must start improving where it hurts the most and leading the improvements should be the C-SCM members hurting the most. This visibility thing is urgent because things in the C-SCM network are going like wildfire by region, by product, by customer, etc.
Outsourcing and importance of your partners is different by industry because of many factors including: government regulations of tracking/tracing from original source of raw material to the end product; regional economic disasters; protection of intellectual property.
Visibility is all about not having gaps in the information flows. It is about determining what data do I need that I don't have. Don't forget, most companies are at the novice level with collaboration skills. In a global environment, learning some of the cultural differences is challenging too. Our best answer to visibility is Electronic Data Interchange (EDI). Sharing transactions electronically with our trading partner so that everyone knows, for example, when an order is placed, a shipment is booked or a product has left a partner's facility.
There are things we cannot see so we need to be flexible and adjust for what we cannot determine from our orders and inventory. All kinds of things happen when products go through a distribution channel with no direct link between the manufacturer and the customer. Take advantage of the processes that exist today and build on them. Show everybody in the SCM chain that it is a win-win opportunity.