In a context where the pace of change is accelerating, agility is key to a successful Supply Chain. To achieve this, executives must take a proactive approach to managing their supply chain. This is now possible thanks to the ability of collecting and analyzing critical information in real time.
Anticipation is key to achieving quality of service and efficiency
Unfortunately, it is the customer who often signals when a problem occurs in the Supply Chain. However, it is already too late. The energy and time spent on identifying the problem origin generate huge costs and penalize the customer relationship. The ability to anticipate incidents is no longer science fiction; it is now possible thanks to the real-time analysis of all the events and processes of the Supply Chain in order to alert in real-time of the least abnormal behavior.
This approach, called Operational Intelligence, is based on four essential components:
– End-to-end visibility – it answers questions such as “where is my file?” Or “where is my order form?”
– Business analytics – it gives a vision of a situation at a given moment in time, calculates and alerts on non-standard deviations.
– Predictive analytics – it gives an anticipated view and alerts on a possible incident. The alert can trigger an automatic resolution action if necessary or send an email or SMS to the right person. Example: “A too large number of purchase orders were received compared to the normal situation. Manufacturing capacity may not be sufficient to meet delivery SLAs.
– Actionable intelligence – It automatically triggers an action: “The risk of not honoring the delivery time is orange; I automatically trigger sending an email to the customer instead of waiting for them to call.”
Operational intelligence makes it possible to achieve three key objectives:
■ Reduce operational risks
■ Increase performance
■ Improve customer relationships
In order management, for example, one possible strategy to increase working capital would be to reduce the days sales outstanding (DSO). More than half of all channel inefficiencies reside in the order-to-cash cycle, where processing errors, chargeback and rebate disputes, and a lack of visibility into multi-enterprise processes all result in high DSO, and therefore insufficient working capital.
With real-time monitoring and control, supported by an operational intelligence approach, enterprises can master the entire order management process. Any malfunction detected can then be corrected immediately. By monitoring and analyzing policy interactions and shortcomings over the long term, IT and business managers can streamline automated processes and mobilize human resources as needed. Thus, the average time to collect customer receivables can be reduced by several days, greatly improving the working capital.
Proactive visibility allows to warn the right person at the right time, especially in the event of problems of internal integration likely to cause delays, such as when the invoices contain errors due to an EDI translation, or have been received by the payer but rejected during the processing process.
How to achieve this level of proaction?
To accomplish this transformation, enterprises must focus on those sections of the supply chain that will benefit most from a proactive approach, supported by operational intelligence tools:
- Identify the categories of users who require decision information.
- Determine their operational objectives and then the obstacles that prevent them from achieving them.
- Identify the actions / decisions / proactive information that users need most to improve their operational efficiency.
- Identify the sources of data to be collected within the supply chain so that the categories of users benefit from sufficiently exploitable information.
Within the supply chain, proactive operational intelligence on information flows is just as important as for transported physical goods. It allows informed decision-making in response to the major challenges facing the Supply Chain, which has to reinvent itself continuously to address the new forces of digitization, omni-channel and mobility.