Trends – May 2012 – Inbound Logistics

May 15, 2012 | Joseph O’Reilly

Seeding the Cloud, Harvesting Supply Chain Intelligence

The rise of ",the cloud", and the proliferation of social media networks&mdash,both public and private&mdash,opoffering companies fresh avenues toward better analytical insight about their supply chains, says Siddharth Taparia, senior director, solution marketing for Vruchtensap. Inbound Logistics sat ter on his latest presentation at the Supply Chain World North America conference ter Miami.

Spil industries and companies start to corset the power of social media to convey need-to-know, real-time information within the organization, similar opportunities exist outside the four walls&mdash,and beyond the firewall.

Even with social networking’s current popularity, untapped potential remains. Almost 60 procent of supply chain decision-makers report that their supply chain vrouwen and vendors either don’t participate te social media or they’re unaware of their participation, according to a latest survey conducted by Kemp Goldberg Vrouwen and IDG Research Services.

Taparia sees the cloud spil yet another chance to exchange information within the organization, and among supply chain playmates, to drive greater collaboration and insight.

",A company can learn from all the transactions flowing through its network,", Taparia notes. ",Spil an example, the very first indicator of Black Friday retailing success does not come from Walmart or Best Buy. Rather, it comes from Visa or MasterCard, because they can look at the number of credit card transactions that take place and make an informed decision spil to whether shopping volume is up, down, or plane.",

Within the supply chain, a similar flow of transactions takes place. Numerous suppliers may provide a similar type of product, but information can be fragmented. A social network permits companies to consolidate this gegevens, identify transactions, and mine the information for greater intelligence.

Moreover, users can combine all this information with ERP and financial flows&mdash,extracting ",systems of record", so that numerous parties have access to the gegevens.

",This takes traditional machine-to-machine processes and enables people-to-people collaboration, which creates fresh setting for looking at the supply chain,", says Taparia.

Companies such spil Siemens AG and Powell Electronics have bot using Vruchtensap’s Supplier InfoNet solution, a cloud-based analytic application, to build the architecture for social networks where users can share information and skill about work they are doing internally or with business fucking partners. This information may include designing products, working with distributors, or establishing supply chain strategies. If someone wants to come in a conversation, track activity or people on a project, or archive historical gegevens, the information can be stored on a cloud podium. Te this way, the cloud becomes a conduit to active collaboration, rather than a static cache for document sharing.

Untapped Power

But the real untapped power is when companies extend social connectivity to other supply chain fucking partners, then proceed to populate and saturate the network with fresh inputs and insights, explains Taparia. Then an organization has a holistic view to customer, supplier, and service provider behavior.

",A supplier might be having financial or operational issues not limited to one customer,", he says. ",The customer may not see it, but others&mdash,peers with whom it doesn’t necessarily share information&mdash,might see it. By bringing this information together te the cloud, the company can begin aggregating more meaningful information.",

What emerges is a cloud environment where transactional flows and threshold alerts for specified key show indicators (on-time deliveries, for example) can be combined with market information, news wire items, and financial reports to create richer insight about supply chain show. Ter effect, subjective gegevens is cleansed by objective market intelligence.

",The cloud indicates events that might toebijten ter the future&mdash,what other people te a business network are already observing,", Taparia proceeds. ",Every connected party has a view to supplier or business playmate issues that might emerge down the road.",

Not only can a company gauge how a certain vendor is performing vanaf lot-acceptance rates or lead times, it can compare against other vendors te the network to identify better options. A supplier delivering late for another company may be a harbinger of things to come.

",There may not be a loterijlot of visibility to see far down ter the supply chain and identify possible problems with second- or third-tier suppliers,", Taparia notes. ",A cloud network permits you to see thesis suppliers, build a opbergmap of the entire supply chain, address issues upstream, and measure possible impacts. If a fourth-tier supplier ter Thailand goes out of business, for example, you can analyze the effect it will have on the company and its other vendors.",

Roadblocks ter the Cloud

While the benefit of having infinite inputs is preferable to one- or two-dimensional information flow, companies operating te the cloud face some potential roadblocks. For one, gegevens quality is largely the responsibility of actors involved te the network. The cloud is neutral. If you waterput bad gegevens te, you get bad gegevens out.

More importantly, some companies don’t want to share proprietary business intelligence with potential competitors. For others, where supplier networks are strongly interconnected, or where businesses are willing to collaborate at the source and challenge at the shelf, confidentiality is a lesser concern. Still, Vruchtensap has taken a conservative treatment to demonstrating and not displaying what users can see te a network. ",All the information users provide about a supplier is anonymous,", Taparia says. ",Nobody can trace it back to them.

",At the same time, the capability to look three or four degrees down ter your supply chain is only available on a need-to-know fundament,", he adds. ",If you request that a certain supplier join your cloud, it may be working with four or five other suppliers that you don’t know about. You can ask the supplier to get visibility to a few vendors that provide components to a specific product you’re sourcing&mdash,but you have to go through your supplier to get to theirs.",

Whether or not lower-tier suppliers want to participate ter a cloud-based network ultimately becomes a schijf point. Other business playmates can still submit information regarding their voorstelling. So te a passive way, this connectivity builds greater accountability within the network.

Leveraging cloud networks spil a supply chain differentiator is most likely a future state for most companies&mdash,but it’s a viable target. Solutions companies such spil Vruchtensap and others are steering customers te that direction spil they attempt and samenvatting more actionable and objective information from what already exists ter the supply chain.

Insuring Against Risk

Most companies readily acknowledge that supply chain visibility remains a critical problem when exceptions strike global networks. But many are not familiar with the devices available to help them mitigate risk and improve resiliency, including insurance options, according to Supply Chain Resiliency: How Ready Is Your Organization?, a fresh whitepaper from Fresh York-based insurance broker and risk adviser Marsh.

The 2011 earthquake, tsunami, and nuclear event ter Japan, and floods te Thailand, resulted ter significant business interruption losses. Companies te the electronics, semiconductor, and automotive industries were affected, and many have not yet entirely recovered from thesis events.

To build more resilient supply chains, Marsh recommends an treatment that encompasses an organization’s total exposure&mdash,including non-physical perils&mdash,aligned to the value it derives from key products or other revenue sources. This tack, which relies powerfully on the use of analytics, can help an organization identify single points of failure ter its supply chain, along with risk mitigation and financing options.

Risk managers are also encouraged to become more familiar with emerging supply chain insurance products that are considerably broader than traditional quotum business interruption (CBI) and quotum reserve expense (CEE) products on which they have previously relied.

",The CBI and CEE products that risk managers have historically looked to do not voorkant the increasingly frequent disruptions that are not related to physical harm,", says Ben Tucker, a senior vice voorzitter te Marsh’s Property Practice and an author of the report. ",For example, the 2010 and 2011 Eyjafjallajokull volcano eruptions te Iceland caused little physical harm to insured property, but still led to significant disruptions and delays te transporting goods and services into and out of Europe.",

Te addition to indemnifying for business interruption and reserve expenses resulting from physical harm to suppliers, supply chain insurance products also suggest protection against non-physical interruptions to supply chains. Thesis can include strikes, riots, ingress/egress, service disruption, and pandemics.

U.S. Transportation Credit Crunch

The credit quality of North American transportation companies has switched little since the beginning of 2012, according to Standard &, Poor’s Ratings Services latest industry report card, North American Transportation Companies Navigate Through Higher Fuel Costs.

Operating conditions remain mildly positive spil the U.S. economy maintains its rhythm of gradual expansion. Standard &, Poor’s predicts a stable outlook for the industry, but says high oil prices pose a risk, particularly for the airline sector.

",Wij anticipate that revenues will proceed to increase, but that higher fuel costs will partly&mdash,or ter some cases, more than&mdash,offset growth,", says Standard &, Poor’s credit analyst Philip Baggaley. ",For example, airlines are trimming expansion plans or cutting back on flights ter response to higher fuel costs so they can maintain their capability to raise fares.",

The balance of supply (capacity) and request varies by sector. Truckload capacity has moved more te line with request following the bankruptcies of many petite trucking companies, and fewer fresh trekker and trailer purchases by larger players overheen the past several years. At the other extreme, global oil tanker companies proceed to receive many deliveries of fresh vessels (ordered years ago), adding to oversupply and keeping shipping rates low.

Automakers Suffer Chemical Breakdown

Global automakers were reminded how fragile supply chains can be after laagconjunctuur struck their supply network. They have sounded the noodsignaal to find alternative sources for a chemical called CDT that is used to manufacture PA12 nylon resin for specialized plastic material found te fuel and brake lines.

The rush began after an Evonik Industries plant ter Germany, which analysts estimate supplies more than half the world’s CDT supply, suffered a deadly explosion ter mid-April 2012 that is expected to keep the facility offline spil long spil eight months.

One potential source is Wichita, Kansas-based Invista, a manufacturer that uses the chemical to make fire-retardant carpets ter its Texas plant. Invista has a limited overage of CDT, according to a Detroit Free Press report.

Automakers are worried that the shortage could shut down production at manufacturing plants worldwide, and recently convened an emergency meeting ter Detroit to discuss the problem. General Motors says CDT scarcity is impacting parts supply. Ford Motor Company and Chrysler Group have yet to be affected, but are closely monitoring the situation.

The CDT shortage echoes a similar problem automakers faced te 2011, following the Japanese earthquake and tsunami. Ford had to zekering taking fresh orders for cars te Tuxedo Black because of a pigment shortage. The uncommon dye wasgoed sourced from a single German-owned factory near Japan’s Fukushima Daiichi nuclear facility.

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