Agile Demand-Supply Alignment – Part 2D

This article is an excerpt from the report Agile Demand-Supply Alignment — Part Two: Evaluating ASDA Solutions.
A copy of the full report can be downloaded here.

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.

Functional Scope

ADSA Solutions Have Vastly Varying Functional Focus, Scope, and Internal Integration

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.

Quality Functionality

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.

In the next article in this series, Part 2E, we look at demand management and analytics functionality required for an ADSA platform.

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¹ ETAs (Estimated Time of Arrival) are often based on an estimate from the forwarder or carrier, which is typically just the average transit time plus some buffer of time so that most trips arrive on time or early. A static ETA does not reflect any updates during the trip as conditions change. — Return to article text above
² There are a number of increasingly capable transportation tracking services that combine data from many sources to provide updates on the status and location of in-transit shipments. Examples include MacroPoint, FourKites, Project44, and MobileSTAR. — Return to article text above
³ Some solutions interface with various customs and border control agencies’ electronic interfaces for auto­ma­ti­c filing such as US AES, US ACE, US ISF, US FTZ, DE ATLAS Export, BE PLDA Import & Export, CN GAC (CTM), and others. — Return to article text above
⁴ FCR = Forwarder’s Cargo Receipt, aka FIATA Certificate of Receipt — Return to article text above

To view other articles from this issue of the brief, click here.