technologyreview
seeing is
believing
As supply chains become increasingly
complex, trading partners seek end-to-end
visibility to provide the confidence they
need to make collaboration work.
WHEN THE GLOBAL RECESSION
hit last year, companies around
the world found themselves stuck
with inventory that suddenly
stopped moving. Within days, the repercussions for cash flow started to
become apparent. All that inventory
meant lots of working capital was tied
up in product—and was not available to
pay the bills, says Rick Becks, senior vice president of E2open, a company that offers Web-hosted supply chain visibility tools.
Few could have predicted the extent and depth of the recession, but it’s a good bet that
companies that had good visibility across their supply chains—that could see actual
orders, production, goods in transit, and so on—fared better than those that did not. As
for the source of their advantage, it’s a simple matter of exposure. The companies with the
best visibility were less likely to have amassed vast stores of inventory as a hedge against
uncertainty—demand fluctuations, forecasting errors, supplier failures, and the like.
Visibility into their own and their suppliers’ stocks gave them the confidence to keep global inventories as spare as possible.
The argument for the importance of supply chain visibility is hardly new, and technology
that can provide it has been around for more than a decade. But the financial exposure created by the recession sheds new light on just how crucial visibility can be in managing risk.
The imperative to create a clear, near real-time view of the supply chain has only become
more pressing over time. Professors Hau Lee of Stanford and Martin Christopher of the
U.K.’s Cranfield School of Management argued in a 2004 paper in the International Journal
of Physical Distribution & Logistics Management, that a number of forces were combining to
