Functionality Requirements: Sourcing and Supplier/Production, Quality, Logistics and Global Trade
on May 13, 2021
Here we look at what is needed for a platform to provide Agile Demand-Supply Alignment functionality in supplier-facing functionality (e.g. sourcing, production management), quality management, and logistics and global trade. These include areas such as production visibility, supply risk management, quality management (detection and resolution), and logistics capabilities.
In the previous installment of this series, Part 2C, we looked at the characteristics of a multi-enterprise network architecture, as well as examining the differences between a ‘Visibility-only Control Tower’ vs. a ‘Supply Chain Application Network.’ Here in Part 2D, we examine supplier-facing, quality, and logistics/GTM functional requirements for and ADSA solution.
ADSA Solutions Have Vastly Varying Functional Focus, Scope, and Internal Integration
Functionality Potential Questions for Solution Providers:
What is the primary purpose of the solution? What problem(s) is it trying to solve?
What portion of the solution functionality was acquired and what portion was developed in-house? What is the approach to integration for the acquired functionality?
What sourcing and procurement functionality, if any, is included?
What outsourced production management functionality is included? How is production status tracked?
Is there any quality management functionality included? How are product quality issues addressed?
What logistics/transportation functionality is included?
Is any global trade management functionality included?
Are there capabilities for full traceability and chain-of-custody?
What is the scope of demand-side visibility, if any? Does the platform ingest forecasts, the user company’s own inventory, channel inventory, channel consumption, and endpoint consumption (such as retailer POS data, or stockroom withdrawals)?
Are demand forecasting or demand sensing capabilities included?
Does the platform support omnichannel business models, including ecommerce, physical store, consumer-direct, and distributor models?
Does that platform provide time-phased views of predicted shortages and overages? If so, how are those presented and what data goes into those predictions?
What collaboration tools are provided and how do they work?
The functional focus and scope of ADSA solutions varies widely. Some focus on supplier and production management, others are logistics-centric, while others focus on monitoring downstream end-point consumption. Some solution providers offer a complete suite of supply chain applications for planning and execution, while others are ERP companies that happen to offer ADSA-related solutions. Assessing the functional scope and integration of the solution provider is important. Even when seeking a solution for a specific problem, it is wise to step back and look at the bigger and longer-term picture, considering what else the solution provider and their platform have to offer and how well integrated the platform and its components are.
Some providers have grown by acquiring best-of-breed applications while others have built most of their capabilities inhouse. In general, solutions that are entirely or mostly developed inhouse will be better integrated with a more seamless workflow than those consisting of stitched-together acquired applications. However, amongst solutions that have grown by acquisition there are big differences in how well integrated the applications are. Some have become quite good at integrating the data, user interface, and processes of acquired applications. Some have even rewritten acquired applications from scratch, essentially building an in-house developed application that incorporates the domain knowledge and functionality learned from the acquired application.
Sourcing and Supplier/Production Functionality
Some solutions provide no visibility into the status of production at the supplier’s factories while others provide extensive, granular, near-real-time visibility, including visibility into the ordering and receipt of raw materials at the supplier’s factory, granular updates on work-in-progress steps, finished goods inventory movements, and packing and shipping activities at the factory. This is often accomplished via a supplier portal, but some platforms also allow instrumentation of the supplier’s factory, such as the use of RFID tags to track materials and processing steps at the supplier. The more capable platforms can often provide alerts when raw materials are late or individual process steps have fallen behind schedule.
There is also wide variation in supplier-enablement tools provided by platforms. Many (but not all) ADSA solutions have some sort of supplier portal and/or EDI capabilities to let suppliers negotiate and accept purchase orders, update production status, request pickups/book shipments, issue invoices, and in some cases receive payments.
This may include sophisticated transportation management tools for suppliers. For example, one platform we reviewed lets suppliers create requests for transportation for order lines ready to ship from their origin. An automated scheduled job can be run on an optimization engine that looks across multiple of these requests, considering carrier options, lanes, legs, service level, equipment type, transit time, rates, and mode constraints to find the least cost, best service level option respecting promised delivery dates on each order. While this may not strictly speaking be ADSA functionality, it is an example of the kind of additional, closely related functionality some ADSA platforms may provide, which will be part of the overall consideration of which platform best serves a set of needs.
Some platforms provide various supplier compliance tools, such as enforcing the packing requirements outlined in a P.O. by calculating carton weights & measurements, as well as enforcing the actual packing of the physical product during the packing process. Platforms that let suppliers request transportation may improve compliance by using the buyer’s enterprise’s routing guides and allocations, with routing guide rules and desired outcomes configured on the platform.
Some platforms provide sourcing and procurement tools, such as supplier discovery, RFQ management, contract management, PO management, invoice reconciliation, and payments/settlement. Advanced ADSA platforms allow suppliers and their customers to collaborate on orders, shipments, transportation, inventories, forecasts, and plans on a single network-based platform.
Supply disruptions and delays are sometimes caused by quality issues at the supplier. The timeliness with which quality issues are identified and mitigated has a huge effect on the financial impact of the quality problem. It is strongly preferred for suppliers to have robust quality processes and systems that catch problems before any components have been shipped, rather than after the component has been received and assembled into a finished good, or in the worst case already shipped to customers. Problems discovered at these latter stages can be hundreds or thousands of times more expensive to correct than if those same problems were resolved early on.
Some ADSA platforms include tools to help detect, identify, track, and resolve quality issues. These include a wide range of capabilities from direct connections into the suppliers’ MES systems to mobile quality applications for use by suppliers’ and buyers’ quality personnel to enter and track quality and compliance activities, capture and document quality defects on the factory floor, including sample photos, and upload that documentation for sharing and collaborative resolution. Some have approval and escalation workflows, as well as root cause analysis tools. Some let customers configure custom milestones for tracking such as when inventory is put on hold and quarantined, root cause discovered, fix proposed, fix tested and approved, fix implemented, material taken off hold, and so forth. Others have serial number and/or lot-level traceability capabilities to trace the origin and chain-of-custody handoffs for any ingredient, product, lot, or batch, as well as identify quality violations during transport such as temperature excursions for the food or pharmaceutical cold chains. This traceability can help in managing recalls, including commonality analysis algorithms to identify common points of failure and the associated lots.
Logistics and Global Trade Functionality
There is wide variation in the degree and granularity of logistics visibility and functionality included. Most platforms provide a basic ETA1 and many can ingest EDI data from LSPs or carriers with updates throughout the journey, though these data can be delayed by one to two days, or more. Less commonly, some platforms ingest IoT/GPS data or updates from one of the tracking networks,2 to provide a near-real-time view of where the vessel or vehicle is, and thereby a more dynamic ETA. The more sophisticated platforms use AI/ML to factor in other elements, such as weather, traffic, port congestion, and major events (e.g., conventions or sporting events) to develop a more precise dynamic ETA. This is an area of competition that many solution providers are investing in—trying to provide more precise dynamic ETAs, providing more advanced and reliable warnings about delays—and there is still room for a lot of improvement. More advanced and reliable warnings of late arrivals enable a broader range of mitigation options.
Beyond precise ETA, ADSA solutions offer a wide variety of logistics management functionality. Some offer full suites of tools such as RFQ and spot bids, contract management, booking tools, load boards and freight-matching marketplaces, rating, freight invoicing and payment, and freight audit tools. Some providers offer Global Trade Management (GTM)functionality with regulatory export and import compliance and transactional functions. GTM functionality may include automated harmonization code classification, country customs controls, restricted party screening, license determination and tracking, automated document generation, and automated filing with various government systems.3
Less commonly, a few providers offer Container Freight Station (CFS) functionality, such as receiving, comparison of receipts against Shipping Orders and FCRs,4 consolidating shipping orders, transportation/ shipping plan creation and approval workflow, and so forth. These can be used to run a cross-dock or transload facility while providing visibility to the inventory passing through. This added visibility can help provide more precision in the end-to-end tracking of goods and notifications when things are running late. A sophisticated CFS system can provide capabilities to modify in-transit shipment plans, such as changing the destination to a location that has a critical shortage, to help deal with demand-supply misalignments.