end-to-end visibility: retail aspirations are high, is the...

End-to-End Visibility: Retail aspirations are high, is the supply chain foundation enough?

White Paper

Kurt Salmon and GT Nexus surveyed retail executives

to assess their goals and confidence levels for

supply chain visibility and fulfillment. Our survey report

identifies specific areas of improvement that can

deliver significant ROI.

White Paper End-to-End Visibility: Retail aspirations are high, is the supply chain foundation enough?

Winning in Retail is Difficult TodayWhen Nancy thinks of shopping today, she wants faster, better, newer and cheaper;

she also wants it “right now and right here.” A retailer who wants a share of Nancy’s wallet

better be prepared.

To win a share of Nancy’s wallet, retailers have prioritized Omni Channel, Speed to Market and

Supply Chain Agility/Flexibility. Great aspirations indeed but do capabilities exist to build and support

these goals? The numbers below speak for themselves.

41% 70% 90%

41% struggle to determine

inventory position

70% cannot predict

shipment delays

90% have no ability to measure

total cost of ownership

Retailers identify their essential priorities and goals:

Omnichannel

Speed to Market

Supply Chain Agility

Cost Takeout

88%

78%

72%

68%


Retail is a challenging battleground, both physically

and digitally. Retailers are battling on two fronts.

■ Traditional: Competition amongst retailers

■ Non traditional: Uberization and Amazonization of

commerce, CPGs going direct etc.

Today, this battlefield is dark. Information exists

but it is beyond the control of the organization. It is

invisible. 80% of the information that is needed to

make decisions resides with external parties such

as suppliers or 3PLs.

Think about the advantage that a company can get

if it were to deploy “night vision goggles” based on

true end-to-end supply chain visibility.

End-to-End Visibility = Actionable Information

■ Accurate

■ Timely

■ Decisive

■ Right level of detail

■ Right level in the organization

■ Right level of control

In Transit(Including Brokers/Customs)

Stores/Customers

Supplier

FactoriesOwn DC


During the past three decades of information

revolution, organizations have invested millions of

dollars in pursuit of actionable information — ERPs,

CRMs, WMSs are a few examples.

Unfortunately, many of these provide linear and

limited information. The end-to-end picture that can

dynamically tie cause and effect is still missing.

Multi-enterprise collaboration today is a market

winning capability. Tomorrow it is going to be

necessary for survival. Leaders must be willing

to embrace new ideas, disruptive models and

supporting technology. Traditional five year long

enterprise application implementation programs

won’t work. Speed is paramount. Organizations that

choose visibility platforms that are easily deployable

and broadly accepted trade entities (e.g. 3PLs,

vendors in Asia, banks, customs brokers etc.) will

have an advantage.

Retail Leader-speak: Current Challenges

“Information we can trust –

what is that?”

“I know, my vendors know –

but together, we don’t know”

“If only our systems could tell us that

a shipment was late”

“I am happy to make a decision to

reposition product – but it takes me

three days to understand the impacts

of that decision”

“Thoughtful urgency is critical –

if supported by data that I can trust”

“I cannot get you data in two weeks.

If I do, it will not be accurate”

“Until I call, I don’t know that

production at the factory is delayed”


We categorize supply chain visibility into four key buckets — inventory, product flow,

factory floor and performance.

INVENTORY

The Need ■ Understanding true inventory levels: in store, in DC, at the vendor, on water

■ Ability to dynamically decide inventory that can be committed

■ Confidence to reposition inventory and capture trends that pop up mid-season

The Problem

41% struggle to determine

inventory position

75% need more than a full

working day to do so

>75% have to rely on multiple

manual reports and phone calls

41% 75% >75%

The Impact

78% cannot reposition inventory 27% struggle with aged inventory

& resulting markdowns

65% doubt that they have optimal

inventory

78% 27% 65%


PRODUCT FLOW

The Need ■ Understanding product movement in different channels

■ Ability to “point and shoot” product as needed

■ Minimizing inventory buffers to compensate for lead time variability, missed ship windows, etc.

The Problem

46% take more than 3 days to

identify product location

78% rely on manual reports

or emails

70% DO NOT have any ability to

predict delays

46% 78% 70%

The Impact

55% su�er from high transit lead

time variability (> 1week)

<10% can reallocate or redirect

product in transit

Only 15% can take advantage of

low spot freight rates

55% <10% 15%


FACTORY FLOOR

The Need ■ Ability to predict bottlenecks in WIP

■ Measure against excessive bull whip

■ Understanding true factory capacity and cost of peak demand (e.g. holiday season)

The Problem

Only 21% have visibility to factory

capacity and bottlenecks

Delays discovered only when

calling the factory (>50%)

Delays uncovered after shipment

is delayed (~22%)

21% <50% 22%

The Impact

64% cannot predict bottlenecks Only 27% can continuously track

actual production against plan

64% 27%


PERFORMANCE & COMPLIANCE

The Need ■ Understand total cost of ownership for each vendor

■ Collaborating both pre and post purchase order

■ Managing VAS such as hold & flow, VMI

■ Understanding carrier, 3PL performance

The Problem

Less than 30% can determine

vendor performance across

functions

92% rely on multiple systems &

manual steps to determine vendor

performance

<20% can determine carrier

performance without manual e�ort

<30% 92% <20%

The Impact

>80% do not have visibility to

cost drivers

>90% cannot determine total cost

of ownership for vendors

>80% >90%


In a world that is moving towards autonomous vehicles, drone deliveries and 3D printed apparel, the

“Supply Chain Visibility” picture in retail is grim. While top quartile players tend to perform well on all visibility

dimensions, most others are struggling.

DimensionMax Possible

ScoreAvg. Top Quartile Respondent Score

Average Score for All Respondents

Percent Difference Between Max and Mean

(All Respondents)

Inventory 30 24 20 35%

Product Flow 63 51 43 31%

Factory Floor 21 17 11 49%

Performance & Compliance 36 32 26 29%

Inventory and Factory Floor are the biggest improvement areas

Retail Elite: A Major Gap Exists Between Top Quartile Performers in Visibility, and the Rest of the Industry

Key Gaps in Inventory and Factory Floor

Dimension ThemeAvg. Top Quartile Respondent Score

Average Score for All Respondents

Percent Difference Between Max and Mean

(All Respondents)

Inventory

Ability to determine inventory position accurately and timely

2.7 2.1 29%

Ability to use inventory optimally

2.7 2.1 31%

Automated/systematic determination of inventory

2.2 2.1 31%

Determining raw material inventory

2.1 1.5 51%

Factory Floor

Ability to predict bottlenecks and delays

2.4 1.6 46%

Ability to track product in factories

2.3 1.3 55%

Production lead time variability

2.6 1.9 37%

This is possible only when technology is available and can be easily deployed throughout the supply chain –

from the consumer way back upstream to raw material suppliers.


The reasons?

Functional vs. end to end focus: Production and

inventory data remain fragmented. Visibility is

sparse across the enterprise and throughout the

supply chain, despite the existence of collaborative

network tools that can overcome barriers and silos.

Supply Chain Visibility Lacks Clarity: Supply

chain visibility means diff erent things to diff erent

people and organizations. Many still think of it as

shipment tracking. The discussion remains to be

escalated from tactical to strategic in many retail

organizations.

Strategic Misalignment: It’s important for retailers to

recognize gaps that exist in their supply networks,

but there’s only value derived here if retailers and

their suppliers actually take steps to execute.

83% of survey respondents say that their suppliers

are at least willing to consider sharing capacity

detail, but only 25% have suppliers who proactively

collaborate on forecasts and capacity. While many

indicate great intentions, suboptimal execution

exists and much of it comes down to technology:

■ Limited agreement exists on outcomes of large

scale technology initiatives — e.g. supply chain

visibility is a grand project but what should we

aim to get out of it?

■ Investment is being made in a host of enterprise

applications but NO single end to end platform

connects it all

■ Over-dependence on vendors and 3PLs as it

relates to visibility and technology, continues

to be a hindrance. The VP of Logistics and

Distribution at a Fortune 100 brand commented,

“Our technology is great but our vendors and

3PLs are way behind the curve.”

Limited understanding of what supply chain visibility

means — to most it is still shipment tracking.

Tying supply chain visibility to tangible fi nancial

benefi ts is not a linear exercise.

Retailers who have invested in technology tend to have better supply chain visibility.


The Outlook: Not all is grim and dark

Retailers (many > $5B) have been investing in supply

chain visibility and have convinced their partners in

doing so too. The top performers have realized that

this is not a functional play. The focus is end to end.

In fact, average overall top performers turn out to

be leaders in visibility dimensions. Some aspects of

visibility have already moved online and retailers are

reaping strong benefits from this:

■ Communication with suppliers regarding

packaging information (60+% online; 80% get

system alerts about packaging changes/customs

requirements)

■ Customs documentation has been digitized and

errors reduced (>90% clear customs on time)

■ Factories are becoming “information savvy” and

while there is still opportunity to preempt issues,

in-factory variability is on the wane (91% have less

than 20% production lead time variability)

Retailers, it is time to sharpen your swords!

Every organization should map its information and

visibility requirements. It is imperative that visibility be

considered a strategic “Business Transformation” and

not a band aid to resolve tactical supply chain issues

such as “delayed shipment at the port.” Visibility

is the foundation that can support capabilities like

speed to market. A tactical approach, on the other

hand, will result in ad-hoc solutions that cannot scale,

are not well utilized and do not provide a good return

on investment.

Not all information troubles can be resolved by a

visibility platform. It is equally important to define

the need for visibility, the underlying enablers

(e.g. process compliance, org. discipline) and

the results expected from a visibility program.

Organizations would do well to understand specific

areas where information is either inaccurate,

unavailable or available but not acted on.

Constraints in these areas could be better tied to

processes and organization than to the information

platform(s). The time to start is NOW! A three

point plan for developing end to end supply chain

visibility can help in speeding up the process.

1. Understand: Collect inputs from different levels,

functions and geographies in the organization to

truly understand visibility needs. Visibility should

be a topic of discussion during vendor business

reviews, quarterly meetings etc.

2. Align: Use cross functional and global workshops

to agree on the “end to end true visibility needs”

and “successful visibility outcomes” for the

organization. These should typically be initiated

by C-level leadership and conducted by senior

(VP level) leadership.

3. Chart: Define visibility goals (What would a

successful visibility program look like? What is the

ROI?) and timeline (some organizations do well

with a big bang approach; others need a slower

iterative plan). Assign an executive champion

for the program and if needed, consult with

a visibility subject matter expert to help with

further planning and execution.

About GT Nexus:

GT Nexus provides the cloud-based collaboration platform that leaders in nearly every sector rely on to automate hundreds of supply chain processes on a global scale,

across entire trade communities. To learn more, visit www.gtnexus.com.

Copyright © 2017 GT Nexus, an Infor company. All rights reserved.

Authors

Akshay Madane

Senior Manager

Kurt Salmon, Part of Accenture Strategy

Praveen Kishorepuria

Managing Director


Jamie O’Halloran

Director, Strategic Alliances

GT Nexus

Research credit:

Taylor Jordan


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