Last week I was fortunate to listen to the inauguration webcast of SCMWorld.org, a website devoted to sharing supply chain experience. The approach taken is actually quite interesting as it combines a 90 minute webinar with a two to three day forum discussion. The inauguration webinar consisted in a discussion between Martin Christopher (Cranfield),  Hau Lee (Stanford), Yossi Sheffi (MIT), Robert Blackburn (SVP SCM, BASF) and Reuben Slone (EVP SCM, OfficeMax) and focused on the better understanding of the  forthcoming supply chain mega-trends that will impact your business in 2009. Both the discussion and the subsequent forum turned out to be extremely interesting. I would like to share with you my thoughts resulting from listening in and participating to the forum.

Today, companies are focused at short term cost reductions, but as it turns out different approaches are taken. While some companies cut whenever they can without taking long term implications into account, others try balance the short term and the long term. It was interesting hearing Robert Blackburn talk about how BASF tried doing so, and how they saw closer collaboration with suppliers as a way to do this. There is indeed a natural trend to try reducing costs of supply by having the procurement department squeezing them a little more. However, this may have two implications, first put availability of supply in danger, and second, push the supplier to bankruptcy. On the latter front, both BASF and OfficeMax increase contact with their suppliers to better assess their financial situation and whether there is a danger of bankruptcy or not.

How to increase this visibility is really the question? It requires gaining information from throughout the Supply Chain. As this takes time to implement, you should start with the key partners, the ones that are essential for getting your product out in time because either they are on the critical path or they cannot be replaced easily. Building closer relationships with the suppliers, establishing trust, going for a win-win situation, and sharing information all help gaining access to key data that will provide this visibility. Companies should start by documenting the end-to-end processes across the supply chain and use that to list the key data required and define the key performance indicators that will establish the health of the eco-system at any moment in time.

By displaying the KPI's in real-time dashboards, potential issues can be spotted quickly. But more importantly, by analyzing the data over time, trends can be spotted and addressed early.

This data can also serve another purpose. Indeed, wouldn't it be interesting if you could simulate future scenario's and decisions ahead of time to understand how the eco-system would behave? Using simulation packages such as Optiant, By using the collected data to build the models and then use those to identify the implications of decisions, treads, problems etc. dramatically helps companies understand implications, plan changes carefully and identify problem spaces early. All of this can be done while testing out appropriate inventory and service levels to reduce the costs dramatically. By doing just that, HP has been able to save millions of dollars over the years. Combining visibility and simulation, closing the decision loop, is a very strong approach to survive the current crisis, to manage the eco-systems volatility effectively and to improve resilience drastically.