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Web-based Supply Chain Management -
E-Commerce Overview Series -
Publication Date: March 2004
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Supply chain management provides supervision and direction for the
various parts of the distribution system including production
scheduling and inventory control, transportation, warehousing, wholesaling,
retailing and brokerage. It encompasses all industry sectors.
Global competition is putting business pressures on all supply chains
to reduce their costs while being more proactive. At the same time, Canadian
firms with their suppliers and clients are facing mounting pressure to
co-ordinate and increase collaboration in their business activities and
processes.
As all firms with their partners try to simplify their supply chain
operations, they are gradually adopting web-based supply chain management
technology. Key processes include sharing Product Description Catalogue,
Order Status Information, Inventory Data as well as Demand projections
over the Internet.
1) Sharing Product Description Catalogue over the Internet
An electronic catalogue is a centralized online repository for
item data. It includes all attributes that can be used to support business
processes across multiple departments and supply chain partners such as
merchandising, logistics and marketing 1.
One of the benefits of having product information in a standardized
digital format is the capability to exchange date with trading partners.
The frequent communication of product information is possible as access
to electronic catalogues may be via the Internet or through Electronic
Data Interchange (EDI).
2) Sharing Order Status Information and Inventory data over the Internet
Monitoring and managing the flow of inventory through a multi-party
supply chain is now possible with Web-Visibility capabilities. Web-Visibility
offers accurate and timely monitoring and managing of flow by all parties.
It is also a new way of cutting operational costs and improving customer
service. Supply chain visibility applications enable the enterprise to
extract data from multiple platforms and applications and share that up
and down the supply chain. Visibility tools do not necessarily create information;
they consolidate it into a central point and pass it on 3.
According to The Gartner Group, supply chain internet visibility is
one of the top priorities for SMEs 4. These systems let businesses monitor
and manage events across the supply chain to pre-empt problems (for example,
by sourcing material from another supplier to meet commitments, or by rerouting
and rescheduling deliveries dynamically based on customer requirements)
and plan activities more effectively.
Many let enterprises track and trace inventory globally by line item,
but they also submit plans and receive alerts when events deviate from
expectations, thereby giving reliable advance knowledge of when goods will
arrive. Having this strengthened insight into the status of orders, inventory
and shipments across the supply chain have become especially helpful to
senior management in refining strategic plans.
Discrete manufacturers have recently been outsourcing more of the manufacturing,
distribution and service processes of their businesses, illuminating the
need for improved visibility and collaboration. Because of these drivers,
visibility solutions (that is, Available to Promise (ATP), Capable to Promise
(CTP) and online inventory status) will continue to drive among SME through
2005 according to the Gartner Group 4.
According to Forrester Research, more than 71% of all logistics
transactions will be online by 2005 in the United States and the main value-added
solutions will consist of visualization tools for logistics tracking coupled
with basic and standardized technology, such as the Internet to connect
users 3.
More advanced applications enable firms to deploy Available To Promise
(ATP) solutions to their supply chain partners. ATP is a feature of high
interest across smaller manufacturers and of moderate interest among MSB
manufacturers / distributors who are probably looking more toward Capable
to Promise (CTP) capabilities.
ATP simply means that a product is in stock and can be promised to
a buyer, as opposed to CTP, which looks at the master schedule to determine
the capability to produce a product in a customer's time frame. At the
minimum, ATP enables customers or sales reps to book new-finished goods
or excess capacity, eliminating unnecessary key-in operations and the potential
for human error.
Supply Chain Event Management (SCEM) capability enables firms to optimize
internet visibility solutions. SCEM provides alerts to individuals in the
supply chain based on predefined alert resolution logic. When events fall
outside of a set of parameters determined in Supply Chain Planning (SCP),
SCEM provides notifications that enable companies to take action with the
appropriate SCE application 4.
Notification may be a negative event such as a late shipment or out-of-stock
item or an opportunity such as a profitable rush order.
SME must look at comprehensive and integrated monitoring, notification
and response capabilities. The ability to simulate a response to a problem
and its impact is also becoming a demanded feature/function but remains
visionary for most firms 5.
3) Sharing Demand Projections over the Internet
Internet based demand planning enhances SME and larger firms ability
to accurately forecast future demand for finished products, key components
and subassemblies, as well as spare or service parts.
If SMEs accurately plan for the specific materials, parts and products
that will be needed at a given location and given time, they can manage
inventory levels in a tighter fashion. Hence, demand planning is an area
where many SME begin collaborating, and is often the first Supply Chain
Planning (SCP) application implemented in a full SCP suite. Impressive
results on ROI make it a popular starting point.
Most SMEs still use manual tools such as Microsoft Excel to do demand
planning — but these tools lack the forecasting algorithms and analysis
capabilities of true demand-planning solutions.
Specifically, they should reconcile both recent and historic demand
activity, as well as established orders, point-of-sale data and industry
forecasts to generate clear graphical overviews of demand by item, location
and customer. Another important feature is the ability to publish reports
that provide feedback for managers so that they can increase the accuracy
of forecasts 4.
Conclusion
Internet based supply chain applications adoption across all industry
sectors is at its infancy stage. Only very few firms are fully embracing
this technology.
In order to achieve a global synchronized electronic supply chain;
firms, associations, government and information systems solution providers
will have to deploy a global strategy that enable all players to benefit
from the system 5. The elaboration of the Lean Logistics Technology Roadmap is a first step in this direction.
A - Sharing Product Description Catalogue Over the Internet, 2002
 d
- The internet-enabled electronic catalogue will become a basic requirement
for doing business and will have as great impact on firms as the introduction
of UPCs, bar code and Enterprise Resource Planning Systems (ERP). We are
at a similar juncture in time now with the emergence of data synchronization
of electronic catalogues 1.
- More than 43% of manufacturers and 46% of wholesalers are using the
electronic catalogue technology to share information with their customers.
- Only 15% of the firms involve transportation and warehousing are involve
in that particular practice. That can be explained by the fact that they
do not possess any good and their partners; manufacturers, wholesalers
and retailers, are taking responsibility for electronic catalogue capability.
- For retailers, only 12% are using electronic catalogue with their suppliers
and 27% with their customers 2.
- Electronic catalogues are the wave of the future and ensure data integrity
and cost reductions in communications between partners. More importantly
for SMEs, low-cost entry options exist today to start enjoying the benefits
of electronic catalogues 1.
B - Sharing Order Status Information Over the Internet, 2002
 d
- The leading organisations are now demanding the capability to look into
supply chain real time to assess what is in production queue, what is in
warehouse, what is on trucks for logistics and procurement decision making 5.
- Retail trade is leading the way with more than 29% of its sector embracing
the order status sharing technology with its partners.
- Transportation and warehousing firms are having the lowest score with
only 12% of firms that are providing internet order status to its partners.
Such a low penetration rate indicates that many supply chains are far from
being synchronized and connected together via the internet.
- Wholesale trade, with 21% of firms providing online order status capability
to its partners, are paving the way to new grounds while manufacturing
is lagging far behind its supply chain partners with only 16% 2.
C - Sharing Inventory Data Over the Internet, 2002
 d
- Sharing inventory data does not only imply technology compliance, but
also trust between partners and the willingness to synchronize and flows
on a supply chain basis.
- Not many firms are embracing the activity of sharing inventory data
over the Internet. Only 10% of retailers, 4% of manufacturers, 12% of wholesalers
and 3% of transportation and warehousing firms are embracing this technology.
- Transportation and warehousing firms usually do not carry inventory
on a long term basis, that could explain the low penetration rate. Providing
real time exception based order status and tracking is the key technology
for transportation and warehousing firms.
- For manufacturers, retailers and wholesalers, it appears that
inventory information is still an internal strategic information that can
not be shared at the moment 2.
- Data quality /integrity, global standards, and dealing with
multiple information systems at the same time are all key factors that
are slowing down the adoption of sharing inventory data over the Internet.
- With the larger buyers pushing their supply chain into collaborative
processes, we shall see a major shift in the near future 5.
D - Sharing Demand Projections Over the Internet, 2002
 d
- Very few firms are using internet based demand projections technology
in Canada.
- The leading sector is Manufacturer where only 6% share demand projections
over the internet with their trading partners.
- Only 3% of retailers are currently using these type of applications 2.
- On the other hand, large retailers are currently implementing
advance planning technology, Collaborative Planning and Forecasting Replenishment
(CPFR) trademark registered by the Voluntary Interindustry Commerce Standards
(VICS), that will have a major impact on all SMEs that are supplying them 5.
- Transportation & warehousing service firms are involved in the
process of delivering and managing the goods according to demand projections.
Very few, 1-2% are currently using those type of technology.
- Wholesalers are expected to play a key role with new processes such
as Vendor Managed Inventory, Just in time and Lean concepts.
- Only 6-4% of wholesalers are sharing demand projections information
via the Internet 2.
To do business and access new opportunities on the net, register your firm at:
For more information on e-business visit:
Source:
- A Retailers Guide to Electronic Catalogues, Industry Canada, Retail
Council of Canada and IBM, March 2003
- Who’s Sharing What With Whom?, Statistics Canada, March 2003
- Web Visibility Tool Kit, SCL & Industry Canada, March 2002
- North American SMBs Identify Supply Chain Management Preferences,
The Gartner Group, November 2002
- Lean Logistics Technology Roadmap, SCL & Industry Canada, April
2003
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