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  March 2014

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GT Nexus

Assessing Assurance of Supply to Protect Your Business
Bryan Nella, GT Nexus

When retailers and consumers think of supply disruption, they usually look at the last mile of the supply chain - delivery of finished product to its end destination. Most of us think about the types of problems experienced this holiday season, when UPS miscalculated daily shipping volumes and was overwhelmed with last minute orders, resulting in thousands of gifts that didn't arrive. The damage was significant.

The impact of failing to deliver is severe. It impacts brand. It reduces revenue. It erodes customer loyalty. But how do retailers assess their exposure to the risk of supply disruption? What steps are they taking to assure the flow of supply? Retailers often have minimal track and trace capabilities. Some have portals to communicate with tier 1 suppliers and a few have team members tasked with monitoring trading partner risk. But ensuring the uninterrupted flow of inventory is a much broader task requiring a bigger outlook on the supply chain.


Here are 7 questions retailers can ask themselves to assess their risk and assure the flow of supply:

  1. How early and often are you collaborating with suppliers? Are you sharing forecasts?
  2. How are you placing and managing your PO's? Do you change quantities and deliveries after you have given your supplier a firm PO?
  3. Do you have true visibility into key events in the production lifecycle and into WIP?
  4. Do you have accurate information regarding inventory and raw materials?
  5. Do you have granular visibility into shipments to know exactly the location of packed items and the exact date they will arrive? What about as the shipment crosses borders or switches transportation modes?
  6. How are you handling invoices and settlements? Is handling supplier e-mail and phone calls still part of the common workflow?
  7. Do your suppliers have access to capital? At what rates are they borrowing? Are they leveraging your credit strength to eliminate capital costs? Are you aware of your suppliers' financial health?

The Big Picture
Hiring more staff in warehouses, adding more trucks, or opening offices overseas are short-sighted moves that address only a slice of the risk picture. Handling volume surges or a natural disaster are only a couple problems to be concerned about. The real challenge is the everyday hiccups that occur in the supply chain that impact the flow of materials.

Companies tend to dabble in collaboration. Some have planning collaboration or order management solutions. Occasionally, companies have limited production visibility into suppliers. But most companies fail to look at the full picture to assure supply goes undisrupted. Quite often, multiple departments within a retailer deal with different aspects of the supplier. Sourcing negotiates the price, logistics determines how to ship, supply chain tracks the shipment and finance determines when to pay. This fragmented approach to supplier management leads to haphazard reliability of supply. The status of each process is tracked separately and there is no way to look at the big picture.

A holistic alignment with suppliers is needed across the corporation to ensure a seamless flow of high quality goods to the right place at the right time. Looking at the big picture to deploy an agile supply chain that can handle the day-to-day questions and concerns that arise from things like order amendments or material shortages sets up a retailer to also address the natural disasters and e-commerce surges. Transparency in the supplier collaboration process is key to assuring supply. Partnering with suppliers to provide them with the information, tools, documentation and capital they need is essential to assuring success for the entire supply chain.

Retailers have to rethink the supplier management approach to one of supplier collaboration - where a network connects all parties and the necessary data, tools and visibility are delivered to everyone. That same collaborative approach has to take place internally at the retailer to assure the health of suppliers and the undisrupted flow of goods.

Bryan Nella is Director of Corporate Communications at GT Nexus, the world's largest cloud-based supply chain network. He has more than 12 years of experience distilling complex solutions into simplified concepts within the enterprise software and extra-enterprise software space. Prior to joining GT Nexus, Bryan held numerous positions in the technology practice at global public relations agency Burson-Marsteller, where he delivered media relations and communications services to clients such as SAP. In previous roles he has worked with clients such as IBM, MasterCard and U.S. Trust. Bryan holds a BA in Mass Communications from Iona College and a MS in Management Communications from Manhattanville College.