Monthly Archives: July 2012

Synchronizing CPE in the Supply Chain (Part 3)

Ok, so we’ve talked about what it takes to synchronize the supply chain and bring back or retain the ‘value’ components of the supply chain within the communication service provider instead of giving it to fulfillment partners. In this final installment we’ll talk about what it takes to go the last mile and take ALL the value out of the extended supply chain.

Extending Supply Chain Synchronization Even Further
Even after the CSP’s fulfillment partner(s) are integrated into the synchronized supply chain and are interacting directly with order management system, receiving fulfillment direction, providing enterprise-wide inventory visibility and managing returns they still retain some ‘valuable’ pieces of the supply chain. They still own and control the software used to manage the pick, pack and ship operations within the outsourced warehouse facilities used to fulfill the CSPs orders.

By taking the next step and deploying a supply collaboration capability and a centralized network warehouse management system (nWMS) with associated operating procedures and facility processes that are streamlined to the business needs, the CSP becomes empowered to finally commoditize the entire last mile of the supply chain. By pushing inventory visibility out to the manufacturers and distributors (instead of relying on the 3PL to purchase on behalf of the CSP) and pushing the radio frequency (RF), RFID or light web client nWMS interfaces out into the 3PL partners, true multi-sourcing can take place and the same service level can be measured and expected across all supply chain network partners using the same methodologies and systems mandated by the communications provider.

A centralized supply collaboration solution helps organizations effectively manage the extended purchase order lifecycle, including all interactions with external parties.

It provides both internal and external users with immediate access to purchase/planned orders, allowing them to negotiate changes over the Internet; redirect orders and inventory; and resolve unexpected problems or delays. It further provides real-time visibility into all aspects of the inbound supply chain, resulting in improved communication with suppliers; lower processing costs, faster response rates on exceptions and ultimately, increased performance of their supply chain. Supply collaboration even offers the ability to promise goods that are inbound or still residing at the manufacturer’s facility. Since the complete CPE inventory life-cycle is visible selling against that inventory can happen anywhere in the supply chain based on business rules and conditions.

Key Capabilities:

  • Central PO repository – Aggregate and manage purchase orders from multiple internal systems and divisions.
  • Collaborative execution – Collaborate, negotiate and confirm order plans, shipments and notifications with suppliers via the Internet.
  • Supplier Compliance – Enforce corporate and industry standards for supplier compliance, reporting, label printing and document formats.
  • Flexible control of purchase order processes – Flexibly define metrics, track, and manage each supplier relationship according to business goals.
  • Proactive Exception Management – Respond immediately to unplanned events or potential issues throughout the purchase order execution lifecycle.
  • Analytics – Provide reporting and analytics infrastructure for defining, tracking and managing to metrics.

Business Benefits:

  • Increased Revenue – Top-line revenues can be improved through enhanced customer service by reducing stock-out risks. Improved responsiveness to customer needs by reducing order cycle times can be achieved and you can effectively up-sell / cross-sell with a solid fulfillment backbone.
  • Reduce Costs – Overall operational costs can be reduced by eliminating manual purchase order processing costs, through reduced fulfillment and inventory handling costs and by reducing labor costs with collaboration and exception-based management.
  • Reduced Working Capital – Achieved through reduced inventory levels by better balancing / synchronizing inventory across internal locations and trading partners. Monitors and alerts help to avoid and rapidly resolve problems (shortages, delays, etc.) Reduce material costs by leveraging more aggregated buyer data and reduced cycle times via collaboration.
  • Leverage Fixed Assets: Better utilization of logistics and warehousing infrastructure.

A networked WMS provides a central point of control over complex warehouse operations, across multiple facilities of varying types. With its service-oriented architecture and process-centric modeling capabilities, nWMS can be leveraged across all types of situations, from the largest facilities to the smallest stocking locations. It includes robust planning, execution and measurement tools for distribution managers, bringing operational discipline to the complex warehouse operations. The networked warehouse management system is process centric, notifying other systems or locations of critical events that occur within the network and make fulfillment decisions based on real-time information received from customers, partners and suppliers. Built to handle the most complex fulfillment requirements, it improves internal efficiencies through business rules-driven warehouse management.

Key Capabilities

  • Planning, Execution & Measurement Tools – Use powerful task planning, management and monitoring tools to improve asset utilization.
  • Business Rules-Based Operations – Leverage a full suite of business rules designed for high-volume environments.
  • Real-Time Operational Views – Make immediate operational improvements using “dash board” views of real-time warehouse activity.
  • Value-Added Services – Automate a wide variety of value-added services such as kitting, postponed manufacturing, packing and labeling.
  • Ability to bring up and down warehouses quickly and from a central location.

Business Benefits

  • Reduce Warehouse Operating Costs – Drive down labor and transportation costs by automating complex tasks and improving operational decisions.
  • Improve Asset Utilization – Maximize the productivity of manpower, equipment and space using planning and execution tools.
  • Improve Inventory Control – Gain tighter control over inventory and its movement, leading to reduced inventory levels and handling costs.
  • Increase Customer Satisfaction – Reduce order cycle times and improve fulfillment accuracy through enhanced control of warehouse operations

Regardless of how far an organization decides to go with it’s supply chain synchronization, it’s critical that they begin the process of taking back the ‘value’ of their supply chain if they expect to be able to provider exceptional service to today’s empowered customer.

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Synchronizing CPE in the Supply Chain (Part 2)

In the last blog we talked about the evolution many organizations take as they approach the physical supply chain of their organization and identified the benefit of bringing the ‘value’ components of the supply chain back into the organization. This time we’ll look at how to begin that process and some of the benefits we might expect.

How Is The Hybrid Phase Achieved?
By bringing ALL the valuable business logic, sourcing, fallout, and billing event information back within the four walls of the organization, Any CSP can maximize the value of outsourcing partners by rendering them a commodity service provider measured on price and SLA criteria. Since all of the ‘value’ has been removed from the outsourced end of the supply chain, a multitude of 3PL or other supply chain providers can be measured equally on their ability to deliver goods accurately and on time for the lowest price possible.

Supply Chain Synchronization
Execution of the final phase in supply chain evolution involves ‘synchronizing the supply chain’ and bringing value back inside the four walls of the organization by controlling the software solutions directing and ultimately being utilized by the commodity components of the supply chain. By allowing 3PLs to retain order and warehouse management components they are also allowed to retain ‘value’ and increase the dependency upon them.

In order to completely own the supply chain value, the CSP should begin ‘synchronizing’ its technology solutions into the supply chain environments. By deploying a net-centric distributed order and eventually, warehouse management solution, a service provider is empowered with complete inventory visibility across multiple 3PL partners, resellers, vendors, distributors and partners anywhere on the globe and reduction of the huge on-hand inventory quantities with just-in-time inventory planning (many CSPs still currently ‘rent’ up to $20MM in capital from a 3PL partner to purchase inventory that the CSP is ultimately responsible for – there is no risk to the partner. The CSP also pays good interest rates to the 3PL for this service) that allows drastic reductions in capital held hostage with 3PL partners because actual inventory numbers are not known, the 3PL partners are not efficient enough and therefore accurate forecasting cannot be planned.

The ability to multi-source fulfillment that this model provides has many other benefits as well:

  • No longer dependent upon a single point of failure in the supply chain – multiple sources for fulfillment mean less downtime and backlogs to customers
  • Allows organization to push down requirements to it’s suppliers / partners and eliminate those partners that cannot meet organizational standards (Wal-Mart continues to be the leading example of this methodology today)
  • Receive ‘commodity’ services from 3PL and carrier partners such as backorder, shipment and delivery notification allowing the organization to make operational decisions based upon that data
  • Ability to control the software and associated operating procedures used by supply chain partners thus driving up efficiency and driving down cost to an even higher degree.

Own the Value, Own the Customer, Control Your Destiny
Many communications providers have become dependent on a single CPE outsource solution provider by allowing the control of their customer data and billing events; value components, to be located within their partner’s systems.

Most eventually come to realize that they have essentially become a multi-channel retailer and part of that delivery is dynamically managing visibility and fulfillment of CPE goods across multiple fulfillment partners and organizations that are geographically and systemically diverse.

Inventory synchronization solutions captures, aggregates, and provides visibility to inventory quantities at all locations in a supply network- internal and external.

They provides visibility to and control over all inventories in the network, including in-transit inventory. They increase inventory turnover and supply chain flexibility through global visibility and synchronization of supply. With both overall and granular inventory visibility, an order hub strategy with inventory synchronization powers real-time global ATP, and facilitates accurate, rules-based order fulfillment while synchronizing, and monitoring all inventory levels and movements to ensure identification and resolution of  exceptions and anticipation of potential problems. It enables companies to accurately fulfill customer orders while optimizing inventory levels across their business.

Key Capabilities

  • Global, Multi-Site Visibility – View inventory at all network locations – whether owned or partners, etc.
  • Real-time Available-to-Promise – Provide accurate, global inventory availability in real-time through any order capture or customer interaction environment.
  • Network Inventory Monitoring – Gain visibility of all supply and demand across variable time horizons. Monitor net availability positions and establish re-order points and manage back-orders.
  • Network Inventory Updates – Receive and update inventory snapshots from individual locations and/or individual adjustments as they occur.
  • Flexible Segmentation of Inventory – Easily configure inventory categories and flexibly model your distribution environment.
  • Inventory Reservation – Manage inventory against user-defined segments and reserve inventory against quotes or draft orders to ensure commitment.
  • Supply Chain Event Management – Flexibly manage exceptions in inventory levels, movements and late receipts; and proactively resolve problems.
  • Analytics – Provide reporting and analytics infrastructure for defining, tracking and managing to metrics.

Business Benefits

  • Reduce Inventory Levels – Eliminate redundant inventory and improve allocation predictability with global visibility and rules-based sourcing.
  • Reduce stock-outs and overstocks – Manage customer demand against a broader and deeper view of inventory and initiate re-orders or markdowns based upon defined triggers.
  • Increase revenue – Maximize fill rates for greater revenue capture via global sourcing and rules-based allocation.
  • Reduce costs – Optimize spend on inventory storage across the network based on order geography profiles.
  • Improve flexibility – Leverage new fulfillment options that reduce costs and inventory levels, without losing control of inventory.

An order hub strategy with distributed order management helps to drive profitable sales growth by successfully managing order fulfillment across the extended supply chain — providing synchronization and control of all internal and external processes tied to order fulfillment. It provides the capability to manage orders from multiple channels and coordinate fulfillment across multiple inventory locations, suppliers, partners and business units. With distributed order management, you can dramatically improve supply chain efficiency, present a single face to customers and adapt to ongoing business evolutions. It makes the increasingly complex fulfillment process transparent and enables your company to harness its full growth potential while driving down supply chain costs.

A flexible, easily configurable process model system for order management and fulfillment automates the manual processes often associated with managing orders in an extended supply chain. Order management addresses the entire order process from order capture to settlement. Each order line easily follows a unique process based upon any order-related attribute or business rule. It automatically creates and tracks any processes that result from, or depend upon, the original customer order. Order management also dramatically reduces order fulfillment costs and significantly improves the quality of customer service.

It resolves the challenges of complex, distributed fulfillment of discrete customer demand, such as quotes, orders, replenish requests, etc. It encompasses all demand-triggered processes across the extended supply chain, such as drop shipping, procure-to-order, delivery and services. Order management enables flexible execution of the customer fulfillment life-cycle from quote and capture to source and fulfill to returns and settlement.

Key Capabilities:

  • Order aggregation and global sourcing – Leverage a multi-channel order repository for single source of information, and globally schedule and source orders based upon key business requirements.
  • Execute beyond the four walls – Model role-based relationships in the supply chain and coordinate fulfillment activity across all external participants.
  • Flexibly control fulfillment activities – Enable customized, line-level order fulfillment based upon any order-related attribute or condition, and adapt to dynamic variations in process.
  • Granular management of complex fulfillment – Automatically creates and tracks any order, resulting from the original customer request and manage all associated dependencies.
  • Receive inventory updates from external partner systems maintaining enterprise-wide inventory and service visibility.

Business Benefits:

  • Reduce Operating Costs – Eliminate manual processes, reduce error rates and exceptions, and efficiently execute distributed order fulfillment.
  • Drive Higher Revenue – Scale to meet growth objectives, and improve ability to reach new customers and offer complementary products and services.
  • Improve Order Fill Rates – Leverage rules-based sourcing, flexible fulfillment and event management to improve performance.
  • Increase Customer Satisfaction – Provide customers with reliable order commitments, increased fulfillment options and real-time order status even across disparate external partner systems.

CSPs should look to an order hub software platform to allow then bring the ‘value’ components of routing logic, carrier/service selection, event and fall-out management, enterprise-wide inventory visibility and billing event control. Additionally order management should maintain the dependencies, state and resolution of all lines of a customer order, from services to delivery to CPE product.

Next time we’ll look at taking value back in the last mile – by owning the software used within the third-party fulfillment provider’s warehouse itself.

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Synchronizing CPE In the Supply Chain (Part 1)

You know,

I first wrote a version of the following way back in 2005 for a very large telecommunications company in the US. If someone would have asked me then if CSPs would still be struggling with this issue in 2012 I would have flippantly dismissed the idea as absurd. I would have been wrong.

Supply Chain Evolution
The evolution of fulfillment and the supply chain is similar in most industries and telecom is no exception. When originally pressed to provide product fulfillment services, organizations usually attempt to handle it internally first. After some time they decide the hassle and effort isn’t worth it and they turn it over to an outside specialist. Finally, hopefully, they realize that certain parts of that service are highly valuable and they move to re-acquire those pieces of the supply chain. Certainly there are some situations where 100% outsourcing may make sense but for the majority of CSPs owning the value components of the supply chain is critical to success.

In-House
The first pass at handling fulfillment of any equipment, including customer premise equipment (CPE), is usually to attempt to handle it completely within the four walls of the organization. There is usually a grass-roots effort to pull some capability together and over time many of these organizations evolve into groups with a considerably amount of efficiency.  At some point though, the internal cost of managing custom software, owning or leasing facilities and managing part-time help get to be a burden on an organization that is focused on selling primarily, not shipping products.

Outsourced
The second evolutionary phase introduces the idea of outsourcing, taking certain pieces of an organizations business and turning those over to an outside ‘expert’ who specializes in that piece of the business. In the case of fulfillment and shipping services these ‘experts’ are many times called Third Party Logistics providers (3PL). In the telecom industry the outsourcing of CPE began to permeate in the early 1990’s about the same time that Caller ID boxes were coming into vogue. Sales of CPE equipment skyrocketed once invoicing for the equipment could be placed directly on the consumer telephone bill (this type of capability is a very strong ‘value’ component of many CSP supply chain partners).

Hybrid
The final phase tends to be re-examining the fulfillment end of the supply chain and looking for opportunities to bring the ‘value’ components of the supply chain back within the organization’s four walls without having to deal with the overhead and management issues that were encountered in the first phase. Technology is the ultimate enabler of this phase.

Commoditize the Supply Chain
The ability to commoditize the last miles of the supply chain is critical to driving out cost and driving up efficiency when working the external providers of fulfillment services in any industry, including telecommunications. By allowing outside integration partners and 3PL providers to control too much of the supply chain and its logical decision points they become ‘required’ components of the corporate supply chain.

Inevitably this is exactly what 3PLs and other supply chain ‘partners’ strive to do; their primary goal is to become so intrinsically embedded within the organizational supply chain that they cannot be extricated without much financial pain and business risk. This allows the 3PL to keep from becoming a price-based commodity partner and adds ‘value’ to their offering allowing them to many times maintain single sourcing and higher rates / margins on fulfillment services. In some cases external 3PLs are embedded in the CSP billing process, a highly valuable piece of the supply chain. The capability to interact with provider billing systems and drive billing events ties them explicitly to the CSP supply chain.

All of the value in the supply chain is within the supply collaboration, fulfillment routing, business logic, billing and fall-out or issue management. The box shipping out the back door is regulated to becoming a commodity offering measured by a Service Level Agreement (SLA) for on-time shipping / delivery, shipping accuracy and cost.

By allowing partners to control the ‘value’ components of the organizational supply chain they take on a role larger than a ‘commodity partner’. Traditionally the three key components necessary for success are people, process and technology. By giving one or more away to a partner we limit our capability for supply chain success.

Inefficient Partners
Compounding the problem with the scenario listed above is that once control of the ‘value’ components of the supply chain is given away, the external partner(s) no longer has any incentive to continue to drive cost out of the supply chain. They are also now in control of the fulfillment end of the supply chain and will look to take margin wherever and whenever they can do so.

Partners often don’t possess the domain knowledge required to deftly handle the kinds of decision logic that a CSP has to manage. They also have sometimes hundreds of other clients that they are trying to become embedded with as well which sometimes divert their focus from the things a provider needs to accomplish.

Partners many times also need to add a large number of ‘client services’ personnel to work with clients like service providers in order to overcome their antiquated and stretched IT system capabilities. Bringing the ‘value’ back into the four walls of the CSP almost guarantees the ability to reduce headcount needed at the 3PL partner at the same time increasing order efficiency and accuracy.

In the next blog we’ll look at how communications providers can begin taking steps to bring the value of the supply chain back into their organization.

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