The Candid Voice in Retail Technology: Objective Insights, Pragmatic Advice

What Is Old Is New Again: GT Nexus Bridges

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Supply chain visibility. A noble goal. One that I have been involved in pursuing in some way or another in retail since 1994, when I landed a job that involved haranguing buyers about keeping on top of their back orders and cancellation dates.

RSR has tracked retailers’ progress against achieving supply chain visibility goals since we were founded, almost exactly 8 years ago this week. How much progress has been made? Depressingly, very little.

There are a couple of reasons for this. One, “supply chain visibility ” is a lot like “big data ” – a term that gets thrown around an awful lot, without a whole lot of understanding about what the term really means. Supply chain visibility can be defined as narrowly as “seeing inventory within the four walls of my distribution center ” or as broadly as visibility into suppliers’ work in process inventory, or the GPS locations of ships carrying your containers of goods at sea, or the shelf location of a specific piece of inventory within a single store.

Two, retailers have struggled with how to make visibility into something actionable. Okay, so let’s say you do know the GPS location of a ship at sea. Let’s say you know that the ship is going to arrive three days later than anticipated. Are you really going to do something about that?

The answer is, it depends. How needed is the merchandise? How expensive would it be to expedite ground shipping once the product clears customs? How much control do you have over the resources available to make expediting something happen? Visibility is a great idea, but the reality is that if you are unable to act on that visibility, then what’s the point?

Three, retailers have historically had a hard time figuring out how to make mutual data sharing something less than a massive science project. Each retailer wants their information in a different way. Each supplier has a different level of technology capability, and has to deal with multiple retailers just as much as retailers have to deal with multiple suppliers. And retailers have historically been wary about sharing their data with others – and we’re not even talking customer data here, just demand and supply data. This wariness has only grown as retailers lose more control over the customer experience.

Some retailers have been big enough, and heavy-handed enough with their suppliers, that they were able to force essentially closed data-sharing ecosystems. But only the largest retailers can flat out mandate participation in a custom, closed solution, and even then there is an upper limit to the number of such systems that a vendor can participate in before the complexity becomes too much to handle.

From the first days of the internet, supply chain professionals dreamed of a day when there would be perfect inventory visibility. When retailers and vendors could integrate once to a community and have access to a world of data sharing, open, and yet protected based on role. The greater the visibility, the lower the uncertainty, and therefore the less inventory needed to support a smoothly flowing supply chain. EDI is expensive and cumbersome. The internet would be a game-changer.

I was a part of that vision – I spent about 3 years with a company called Viewlocity, which no longer exists. We were shooting for collaborative supply chain visibility, which extended to products, inventory (and its locations), orders, and shipments. With these four entities, plus maybe forecasts, you would be able to “see ” all there was to see about inventory across trading partners.

And if you layered exception management on top of that – alerting that gave you the opportunity to only surface the exceptions that were important, the things that you could do something to fix. If you did that, then visibility would become a very powerful thing.

There were a lot of challenges that got in the way of making this vision a reality. And a lot of those challenges exist today. However, at GT Nexus Brides, the conference I attended last week, I found both the same old problems, as well as a new sophistication in dealing with them.

Take on-boarding of new vendors, for example, especially in situations where the vendors are low-tech and don’t have access to a lot of technology infrastructure. Sure, you could mandate vendor participation, but even with mandates, the vendors struggled, and retailers grew frustrated – especially with data errors. Garbage in eventually turns the whole system into garbage.

But GT Nexus’s acquisition of Tradecard last year, and subsequent integration into the data-sharing network has suddenly made the on-board process a lot easier. Not because vendors suddenly decided to become tech-savvy, but because payment is now initiated from within the network, based on the milestones reported. So if a vendor doesn’t report, for example, that the fabric was dyed, then the retailer can’t validate that they should release funds for reaching that milestone.

But if the vendor records it within the network, they can even trigger invoice creation and receive the retailer’s acknowledgement of receipt of the invoice. Suddenly, participation is no longer that annoying thing that the vendor must remember to do, it’s the means to get paid. Makes for a bit different of a value equation than just “because I said so “.

I should feel depressed that 14 years on from my own days of directly going after the retail supply chain visibility problem, we are in many ways still talking about the same challenges and the same barriers. But actually, I’m encouraged. Retail supply chain visibility is not easy. While it may seem like a simple idea, the reality is complex, and challenging. And with such complexity, it’s no wonder that 2001′s vision of visibility is only now coming to fruition.

Maybe supply chain transformation based on perfect visibility didn’t happen nearly as quickly as we’d dreamed. But it is happening. The industry is learning. And the sophistication behind overcoming investment and technology barriers, behind encouraging willing participation, is encouraging.

With omni-channel rapidly bearing down on retail supply chains, the idea of system-wide supply chain visibility is coming back into vogue, with a vengeance. What’s old is new again. But this time, it seems like the retail ecosystem might finally have the right tools – and motivations – in place to make it happen.

Newsletter Articles June 10, 2014
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