It’s been decades since the term ‘Supply Chain Management’ was coined to define the coming together of internal and external supply chain players, as well as the planning and execution teams within supply chain businesses. Early on, IT systems were launched that promised to deliver full supply chain management, and yet we are still discussing the importance of linking the end-to-end supply chain in driving efficiency and true effectiveness, with limited examples of this in practice.
Many supply chain players are still not operating on interconnected systems, or using a common end-to-end process to connect all of their partners. It’s not unusual for a company’s transportation management system (TMS) and warehouse management system (WMS) to not be fully integrated, or for a degree of manual processing or reprocessing to be necessary to process customer orders. This gap limits the opportunities to achieve excellent order fulfilment and negatively impacts the bottom line. Supply chain convergence provides an answer to this by standardizing across functional domains (such as transportation and warehousing) and integrating processes and systems, both internally and externally, to break down functional silos, going beyond collaboration to drive informed decision-making.
So what’s happening to bring convergence one step closer to reality? In a word – Cloud. Delivering a truly demand-driven supply network will require transparent visibility and candid collaboration from end-to-end. To achieve true supply chain convergence and therefore complete collaboration and visibility, both internal and external convergence of systems is required, both of which are infinitely easier to achieve using the Cloud model.
While it may seem somewhat counterintuitive, as enterprise class systems are elevated onto the Cloud, the barrier to entry for small to medium players — mainly upfront cost and IT support — are significantly lowered. As these supply chain trading partners increasingly adopt Cloud-based IT, a new path to connecting those previously disparate supply chain links is opening up.
Internal convergence sees people, systems and processes becoming aligned. Most businesses today have a multitude of IT systems – some old, some new. Many have been bought by different departments of the business over time to suit their own departmental needs. While these systems may be ‘talking’ to each other, the conversation is limited as they are not speaking the same language and are unsure which part of the conversation they are supposed to manage.
Many businesses take a single solution approach by adopting an ERP system that caters to all of their needs, but recognize that it is almost impossible to find one system that does everything as well as everyone in the organization would like. Therefore, most continue to utilize best-of-breed applications, such as multimodal TMS, WMS and trade compliance software to fill in the ERP gaps. In order to move toward our goal of supply chain convergence, we must ensure that these systems are connected to share information, and manage an overarching process from order to cash, and are utilized by empowered users.
External convergence goes a step further, requiring the people, systems and processes of all your trading partners to be aligned. The first barrier is the vastly differing systems capabilities of each partner. Larger partners will (in theory) be more developed in their IT infrastructure and may even be considering their own supply chain convergence program. Mid-range partners will have less systems capabilities and likely haven’t yet realized the benefits of internal supply chain convergence, while the smallest will have little or no systems and may have no idea what convergence is.
Benefits of Convergence
The benefits of supply chain convergence are clear and far-reaching and positively impact the bottom line:
- Improved Decision-Making – everyone is working on one shared set of data gathered from all supply network partners (where appropriate)
- Expanded Visibility – fewer information driven disputes based on agreed metrics using the agreed data set
- Increased Collaboration – everyone working on one shared set of data within one agreed process
- Enhanced Agility – maintaining flexibility increases the ability to react to business changes
- Competitive Advantage – compete on a larger scale and accelerate the growth of your business
The reality is, if we want to extend the supply chain convergence benefits across our entire supply networks, larger players are going to have to help their smaller trading partners better understand the benefits of connected systems and processes. They may even need to go as far as implementing systems that enable the smallest of their partners to easily connect with a minimum of cost and effort. This is where Cloud-based systems and devices offer real opportunities to make the supply chain initiatives we have been talking about for a decade – collaboration and end-to-end visibility – a reality.
As Cloud-based supply chain systems become commonplace, and as players in the supply chain become connected and manage their processes electronically, supply chain convergence — and faster, more efficient order fulfillment — will follow.
Evan is Chief Marketing Officer at Kewill. With nearly 20 years experience in the supply chain industry, Evan has assisted enterprises and logistics service providers in more than 30 countries, across 5 continents, with their supply chain initiatives. Originally a demand forecaster and planner for Castrol in the Asia Pacific region, Evan moved to a solution implementation role with Mercia (Supply Chain Planning) and then progressed to sales, pre-sales, marketing and global product management roles with Mercia and then Finmatica (Supply Chain Management). Evan has been with Kewill since 2004 in senior Marketing and Product Management roles, most recently as Chief Operating Officer for Kewill Asia Pacific.