Guest Commentary: The 4 Building Blocks of Inventory Visibility

Achieving inventory visibility across the enterprise and extended supply networks has been a goal for supply chain professionals for over a decade, but achieving true visibility is no easy task. As recent analyst research indicates, while supply chain visibility is very important to almost all companies, there is a large gap between the importance of visibility and their ability to provide it to their organization.

Most attempts have failed when trying to bring together all of the disparate data sources that comprise today’s supply networks into a single, actionable view. As I detail below, there are four co-dependent capabilities required to achieve the desired visibility and the ability to react in a timely manner: internal, site-specific inventory views; external multi-enterprise inventory views; communication vehicles; and execution capabilities.

Internal Sources
At first blush it would appear that visibility to internal inventory would be easy to achieve. After all, it is all under our control, right? Well, yes and no. The problem: too many different places where inventory resides and too many systems that track it.

Many enterprises have one or more ERP systems that track inventory at a high level for financial purposes, but those systems do not track where the inventory is physically located. Often, multiple distribution systems – WMSs and TMSs, primarily – track inventory at, or in-transit between, specific locations. But these systems often aren’t integrated to provide a single consolidated view of enterprise-wide inventory. Additionally, there may be many small storage locations that are not automated. For example, many food and beverage companies have small storage facilities near retail markets for fast, easy access by delivery drivers. And of course, retailers have the bulk of their inventory on store shelves, but often not good visibility into what is actually in each store and where.

External Sources
It is rare today to find vertically-integrated corporations where all inventory resides within the enterprise. Most companies have many suppliers who provide finished goods, components or raw materials that all need to be monitored and tracked. Many also use contract manufacturers, co-packers and/or third party logistics providers as integral parts of their extended supply networks. And companies that supply retailers have much of their inventory tied up in those retail locations.

Unfortunately, the inventory located in all of these external locations is usually not visible across the supply chain. Each external company or site typically tracks their own inventory using their own systems. These external systems come from a plethora of sources, built upon different technologies and communication protocols, and hence they do not readily interact with each other. Therefore, trying to pull together a single consolidated view of inventory across the supply network is very challenging. Yet achieving consolidated visibility is essential for management to make intelligent sourcing, order management and fulfillment decisions — as well as to quickly react when disruptions occur.

Thus, having communication capabilities that can gather and translate inventory information from all internal and external sources is crucial to a successful inventory visibility program. Success requires a means for gathering data from multiple internal and external sources, which may include direct computer-to-computer communications, input from web portals, or EDI network transactions. Cloud-based connectivity applications can be especially helpful in gathering inventory information because they enable simultaneous input from many sources, such as from your network of tier 1, 2 and 3 suppliers. Mobile devices can be used to gather inventory data from small, non-automated locations.

As you gather the data, you will also need translation technology that can recognize the disparate input formats and protocols and translate them into a common input stream for use by your processing systems. The translation technology becomes the hub of your trading partner network, synchronizing data and workflows so all parties can leverage the information to better serve customers.

Execution Capabilities
Companies require supply chain visibility so they can react to changes quickly, whether those are evolving market conditions, supply disruptions, or demand volatility. Supply chain executives are now looking beyond the basics of ‘right product, right place, right time’ and are looking to develop responsive and resilient supply networks.

Responsive and resilient supply chains demand execution systems that are built to be adaptive, beginning with event management and alerting capabilities for immediate, proactive response to disruptions or other supply problems. Next, WMS and TMS systems must be able to quickly react by resourcing or repositioning inventory and re-optimizing shipments. Finally, near real-time analytic systems are required to uncover supply network trends and sources of problems for immediate action by decision-makers. It is only through this ability to “see” across your supply network and take action accordingly that inventory visibility becomes an effective business tool.

Jim LeTart has over 30 years of sales and marketing experience in the systems technology field. He has spoken at numerous national and regional trade events and his work has been published in many industry publications and blogs. For the past 13 years Jim has been Director of Marketing for RedPrairie, a leading best-of-breed supply chain, workforce and all-channel retail solutions provider, where he has responsibility for corporate messaging and content development. Jim has an Industrial Engineering degree from Marquette University and an MBA from the University of Michigan.