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The Harsh Realities of not Integrating with Supply Chain Partners

Posted by John DiPalo on October 18, 2016

This is Post III in an Acsis Content Series on Supply Chain Visibility in an Outsourced World. Read the first post here and the second post here.

Because they aren’t truly connected, manufacturers are using a variety of costly workarounds, but they aren’t having much success.

In fact, these workarounds have significant financial and efficiency impacts in excess inventory levels, expediting costs, and staffing resources – as well as customer service, satisfaction and retention.

One of the most obvious workarounds – manual data entry – is an issue for 64% of respondents to a recent Supply Chain Digest survey. And it not only slows operations and requires additional hourly resources, but also increases error rates. If you take the average benchmark of a 1% error rate in manual data entry (or 1 in 100 keystrokes), and consider that a single SKU or item number can be as many as 40 alphanumeric characters, there is a lot of opportunity for data entry errors (and the resulting costs and customer service implications).

Many respondents admitted to playing it safe (and swallowing excess costs) by padding customer delivery dates (41%) or operating in “crisis mode” and paying expediting costs (67%).

There are immediate and long-term customer service implications for the 64% of respondents who admitted to stockouts. If a customer that typically buys Brand A is forced to buy Brand B because Brand A is out of stock, there is a chance Brand A may lose that customer permanently.

Manufacturers are overproducing and holding excess inventory and safety stock (like 35% of our respondents) because they don’t have the full picture in their ERP system. This can have a bullwhip effect on the entire supply chain. Let’s say the end customer increases an order by 10% – and then the distributor, warehouse and customer’s supply chain planning each increases the order by another 10% (because they don’t have visibility of what’s truly needed and what is already available); they will end up producing 34% overstock.

So why aren’t manufacturers able to effectively integrate partners?

Manufacturers are aware of the challenges they face from their disjointed communication and want to fix the problem. Eighty-one percent believe that improved supply chain visibility and collaboration would result in significant benefits, such as cost savings, efficiency improvements, increased accuracy and shorter lead times.

connectivity: expectations, results, and barriers

What’s not working with today’s common approaches to integrating partner data? The barriers identified by our survey respondents include technical capabilities, costs, security concerns and more.

With Acsis, there is no longer a need for expensive, inefficient workarounds. Our supplier integration solution breaks down the visibility barriers for real-time (on-demand) status of work-in-progress goods.

Automated: Manual data entry and processes are replaced with simple scanning and data capture to eliminate manual errors and redundant resources.

Synchronized: ERP is automatically updated as goods move through the supply chain and financial, inventory and other data is tightly integrated, at a granular level, in real or near-real time.

Actionable: You can only reap the benefits of partner integration if you have the detailed information you need, when you actually need it, to act on delayed or problematic items, ensure customer commitments are accurate, and make adjustments to match market conditions.

Contact us to find out more.

Stay tuned for next week’s post on Supply Network Integration: More than just visibility >>