beyond the visibility gap

A review of a global survey into delivery visibility in the consumer goods supply chain.

Beyond the visibility gap

By Jonathan Kittow, Director, Simply Supply Chain

Summary2013 marked a change point for many companies involved in the supply of consumer goods who wish to eradicate operational blind spots from their chains of supply.

Beyond the Visibility Gap research confirms a lack of visibility that impairs relationships between suppliers and their logistics service providers, and impacts service to customers who cannot be blamed for exploiting weakness that boosts their own cash flow.

Customer automation management comprises multi-format support, intelligent business rules, master data validation and accelerated exception management to manage diversity and bridge visibility gaps in order to cash process.

2. OmPrompt. Beyond the Visibility Gap Survey Review, December 2013

C-level execs46%

Managers44%

IT and analysts10%

Bridging the visibility gapWhen we ran the Beyond the Visibility Gap workshop earlier in 2013 it quickly became evident that both consumer goods suppliers and their logistics service providers (LSP) were working hard to provide a seamless view across their internal supply chains but often that is where the visibility ended.

Most suppliers have invested heavily in their own internal systems to provide good visibility of transactions within their own domain, but when an order is received from or transferred to a third party that visibility often diminishes.

Completed transactional information is relayed via established interfaces providing real-time updating, but incomplete transactions, delays or excep-tions need capturing and escalating between the involved parties – which is more often than not an ad hoc, off-system reporting requirement defined to meet an individual customer requirement.

In the analysis of this research we have pulled together some key insights from both sets of survey results and drawn some observations and conclusions that help us understand the challenges from both sides.

We know from the workshop that both parties are working hard to resolve a myriad of differences including interpretation of the definition of KPIs and timeliness, systems, resources and more.

Surveys were conducted between May and October 2013, fifty-five consumer goods and logistics service providers responded.


Moreimportant62%

Sameimportance35%

Less important3%

Moreimportant71%

Sameimportance29%

Discrepancy POD varianceRejectionRefusalClaims

Order processing Capture orderAllocate stockConfirm to warehouse

Fulfillment Plan transportPick orderCollectDeliver

Compared with last year, how important is delivery visibility to your business?

Where are the visibility gaps? With the increasing pressures of reduced lead-time and reduced inventory in the retail supply chain, the drive for greater accuracy and timeliness of infor-mation around deliveries placed upon suppliers by their retailer customers is intense. This pressure is transferred directly onto the LSPs – with the same level of expectation of costs being adsorbed that retailers have for their suppliers.

62% of consumer goods suppliers surveyed stated that visibility was becoming more important. For LSPs the sense of urgency was more dramatic, with 71% stating it was more important than a year ago.

Timeliness is the keySince the term ERP first came into our vocabulary, the pursuit of real-time information has become a goal that is pursued as heavily by retailer customers as it is suppliers and logistics providers.

The following diagrams (Figures I, II and III) are based on the interpretation of the term accurate data as meaning timeliness in the provision of data.

Consumer goods Logistics service providers


Mostly accurate51%

Patchy17%

Totally accurate30%

Not required2%

Mostly accurate70%

Patchy12% Totally

accurate18%

Acceptable22%

Patchy19%

Deliver the minimum30%

Very good19%

Fail to deliver10%

Acceptable83%

Very good8%

Excellent9%

Consumer goods: Rate the visibility provided by your LSPs.

LSPs: How would your customers rate the visibility you provide?

Figure 1:

Consumer goods: LSP visibility data

LSPs: How accurate is the data you provide?

Figure 2:

For consumer goods suppliers only 30% felt the information was accurate, whilst 81% felt data was mostly accurate or totally accurate. The LSPs were less confident the information is 100% accurate (18%) but more confident that the information is mostly accurate.

There was a difference of opinion as to whether data is used operationally.

Less than 50% of suppliers state they use the information for operational purpos-es without exception, with a third sometimes using it and 22% not relying on the information.

LSPs project even less confidence in the use of their information with over 90% their clients only using the information sometimes.

How do you rate the data provided?

How accurate is the data provided?


Yes46%

Sometimes32%

No22%

Sometimes91%

No9%

So what stops the operational use of the data?A number of factors come into play and drawing from the experience of the workshop one consistent complaint emerged from LSPs about the reporting formats and KPIs that they were asked to provide at the start of any contract.

Whilst this does not reflect all suppliers by any means, there was a wide-held perception that the contract negotiation of terms and SLAs was often concluded by logistics procurement personnel who went into great detail to prescribe the KPIs and reporting formats that would form the basis of an (often substantial) investment in IT development to create the required reports.

These reports are often NOT scoped by operations personnel, far less the cus-tomer who they plan to satisfy and they are open to change, if they are used at all. These changes are almost always ad hoc requests, a fragmentation into multiple variants or an evolution of the requirement – none of which are budgeted or resourced, and often result in the manual collation and develop-ment of bespoke reports.

Manually produced reports are a bane in all operations whether supplier or LSP but relied upon to provide the operational detail that satisfies the end-customers needs.

Is the data used operationally?

What information is provided and when?We asked what information was required or provided to enable reporting of a delivery through the key steps of an order, including those of a clawsed or unclean order.

Consumer goods: Do you make opera-tional use of the data LSPs provide?

LSPs: Do your customers make good use of the data you provide?

Figure 3:


When and what type of information do you require from your LSP?

Real-time <24hrs >24hrs 24–48hrs On request

Not required

Collection/arrival/load

Delays in transit

Delivery time

Clean/unclean

PhysicalPOD

Discrepancy/claims

What delivery information do you currently provide?

Real-time

Collection/arrival/load

Delays in transit

Delivery time

Clean/unclean

PhysicalPOD

Discrepancy/claims

24–48hrs On request

Not required

Consumer goods

Logistics service providers

The expectations of the suppliers are high, with 75% expecting information within 48 hours as a maximum for all categories and 50% expecting informa-tion within 24 hrs.

Delays in transit carry the highest level of expectation with 75% of respondents requiring real-time information and 85% no later than 48hrs.

In contrast close to 90% of LSPs claim to provide real-time delay in transit information. Everyone understood the need to report delays, but delivering accurate information in a consistent and timely manner – that is usable by the supplier – is the key challenge that most partnerships struggle to resolve satisfactorily.

What information is provided and when?


What is real-time and how do you achieve it?Until we have seamless integration of transport planning and load manage-ment systems, GPS fencing and a standard format of reporting across all fleets whether owned or sub-contracted, we are unlikely to resolve the conundrum of real-time delay reporting to the satisfaction of the retailers.

Standard is defined by the individual requirements of the retailers and inter-preted by suppliers.

The dilemma is how to provide as accurate a picture as possible in as timely a manner as possible, with sufficient information available for a supplier to convey to a customer. The customer can then decide its importance and whether to act upon it.

Often the LSP receives a variety of different inputs from his drivers via hand-held devices, GPS tracking or mobile, and trusts his sub-contracted drivers will conform on at least the important customer deliveries.

The information is collated in a format that the LSP can act upon before its transcription into the format that the supplier specified in the service level agreement (SLA).

On receiving the information the supplier decides what needs to be communi-cated to their customer, re-transcribing the information into the format that customer requires along with a recommendation on any action. The data is subsequently emailed and followed up with a phone call aimed at reaching someone in the supply team who can make a decision.

It is a process requiring multiple hand-offs and reworking of the same message and often means the information arrives too late and is not used to intervene. There is a huge amount of effort spent delivering information in a format that is not quite fit for purpose, too late to be of use and accompanied by the feeling of having failed to satisfy a customer.

The workshop concluded that the issue was to do with the diversity of formats required by end customers. If raw data collected by the LSP could be communi-cated in a timely manner, the suppliers could develop individual reporting formats for each customer, eliminating much of the re-work and speeding the process significantly (assuming the sub-contractor has advised the LSP).

The suppliers’ need for the real-time data for the remaining categories was below 30%. This will change as those companies who manage and measure order-to-cash are impacted by delays in POD (proof of delivery) recovery and discrepancy reporting. These delays impede their ability to raise a clean invoice at the point of assumed delivery (a time-lapsed version of invoice on despatch) or upon delivery (post-POD).

As with delays in transit some aspects are easier to resolve than others, but progress can be made by working together using a common set of definitions and an understanding of the expectations, requirements and challenges for both parties.

No-touch automation Suppliers have strenuously pioneered and developed the automation of the placement of orders and transmission of orders to their suppliers. They then focused on the automation of invoicing and remittance (the former being slightly more urgently pursued than the latter) and then more peripheral elements like PODs and claims and finally, visibility or alerts for delays.

For LSPs the order of priority is different with order processing being the priority, followed by transport instructions, visibility and POD management, then order entry and finally invoicing and payment remittance.


None 1–50% 50–90% Over 90% 100%

Remittance/payment

Invoice

Discrepancy/debit/claims

POD management

Delivery visibility/alerting

Transportinstruction

Order processing

Order entry

Consumer goods: What are your levels of no-touch automation?

Cash flow

Reduce penalties

Service improvement

New business

Cost reduction

Customerpressure

Reduce penalties

Service improvement

New business

Cost reduction

Customerpressure

Visiibility drivers: Consumer goods

What are the drivers of visibility?

Visibility drivers: The key drivers to improve visibility appear to be broadly the same with customer pressure and service improvement being the primary driver for both. If the common pressures of customer requirements drive both parties, where is the pressure greatest to improve?

Which areas of no-touch automation are most developed?


Increasedimportance

Sameimportance

Less important

Collaborative planning internal

Collaborative planning customers

7-day ordering

Improve timeliness/accuracy of data

Improve accuracy

Reduce headcount

Releaseresource

More information on delivery

Reduced deliverylead times

Increasedimportance

Sameimportance

Less important

Planning internal

Planning with customers

7-day ordering

Improve timeliness/accuracy of data

Improve accuracy

Reduce headcount

Releaseresource

More information on delivery

Reduced deliverylead times

LSPs: How important have the following become during the past 12 months?

What are the most relevant challenges?Consumer goods: How important have the following become during the past 12 months?

The immediate challenges for both parties are similar. Notwithstanding perennial pressures on headcount and resource, perhaps the most noteworthy are:

increased information on delivery, perhaps coupled with or driven by the need to reduce lead-times;

improved timeliness and accuracy of data;

(of greater import to the LSPs than suppliers) collaborative planning – perhaps highlighting an operational necessity for the LSP rather than supplier expectation?


Nothing

Lack of IT/resource

Diverse customer requirements

Subcontractor

Included35%

Expected35%

Negotiable30%

Phone-basedautomation66%

Hand-helddevices18%

GPS ring-fencing17%

What are the barriers to further visibility?LSPs: What prevents you providing delivery visibility?

LSPs: Is visibility data included within the contract?

What visibility is available?

We have highlighted the differences and the common challenges but progress is clearly being made in a number of areas.

The introduction of technology is becoming commonplace and the various solutions have capabilities that increase visibility to improve both the accuracy and timeliness of information. However there are still a number of barriers to change.

LSPs: What types of delivery visibility technology have you implemented?


LSPs have neither infinite resources or bottomless pockets and the challenges of managing sub-contractors is a perennial challenge, however the greatest challenge is the diversity of customer requirement.

The customer can play a fuller part in resolving the diversity issue, especially given the amount of time spent reformatting data that will never be used. It

Agree29%

Less time47%

More time24%

Agree57%Less time

35%

More time8%

Consumer goods Logistics service providers

My organisation has two years to fix delivery visibility issues.

How long have you got to fix the gap?


would be preferable for the supplier to be provided with raw data to format and have it result in customer-usable and actionable information. This requires a level of engagement often missing from those that set the standards.

The final inescapable challenge is budget with 89% of consumer goods suppli-ers stating that visibility is included or expected within the contract; only 6% suggested it was negotiable.

However, suppliers attending the workshop indicated they would be prepared to part-fund investment where they were able to see a return in improved service and reduced costs.

Time to change?Both parties recognise that time is running out with 92% of LSPs perceiving that two years is the maximum window available to fix the gap and 1/3rd expect-ing less time.

The final word goes to some major suppliers who attended the May 2013 workshop:

“For those LSPs who are agile and customer-centric (perhaps smaller), there is a real opportunity to offer improved visibility as a competitive advantage with access to the negotiating table for contracts from major suppliers. However this window of opportunity is relatively narrow and will disappear once the major LSPs provide visibility as part of their basic service offering.”

In summary The surveys reveal a growing realisation of the challenges in delivering improved visibility and that there is a time-fenced opportunity for the competitive edge greater visibility can deliver.Jonathan Kittow, Director, Simply Supply [email protected]

OmPrompt is helping both suppliers and LSPs close the visibility gaps that impact the order to cash process.

The conversation continues on the LinkedIn Customer Automation Management Group.

In a world where B2B suppliers have to support a diverse set of operational behaviours and preferences from customers, the Customer Automation Management Group delivers a forum for sharing the latest trends, requirements and justifications for automating transaction-based interactions in the order-to-cash process.


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