A STRATEGIC IMPERATIVE FOR MANUFACTURERS

Increase Inbound Supply VisibilityHow to Minimize Inventory and Expediting through Detailed, Real-Time Visibility to Inbound Inventory

Today, manufacturers must maintain a delicate balance

between sourcing from cheaper production sites and

minimizing excess costs that occur along the supply

chain. Often, the measures taken to lower supply chain

risk will cost more to maintain than the savings gained

by sourcing from an affordable region. Faced with this

dilemma, manufacturers must find another way to

lower supply chain risk and know the status of their

inbound inventory.

When there is a black hole of information during lead

time, companies will expedite inbound components from

suppliers via expensive air freight to guarantee arrival in

time for production. This strategy doesn’t do much for the

company’s product margins — it accepts as the norm a

blind, reactive approach to inventory management.

Holding buffer stock contradicts a lean inventory

strategy, but manufacturers do so to lower supply

chain risk. Again, the results encroach on the bottom

line; excess inventory and obsolescence cuts into

any savings that strategic sourcing accomplishes.

Impact of Poor Visibility

As global sourcing requirements cause increasing lead

times and extra buffer stock in the inbound supply

chain, customers experience high levels of delivery

uncertainty and lead time variability.

In this scenario, manufacturers are forced to deal with:

• Increased COGS from expedited air freight

• Increased net assets from excess inventory

• Delay in production if components do not arrive

on time

• Difficulty planning production around variable

delivery times

• Customer dissatisfaction due to poorly estimated

delivery date

The Root of the Problem

Traditional software does not capture the data needed to

give accurate delivery estimates to customers without

raising supply chain costs. Managers mitigate risk by

spending more money on back-up plans. This strategy

may keep production on track, but leads to other

problems.

1. Loss of visibility in ERP/MRP after material release

(order placement)

Often, supplier EDI (ASN) compliance is low. EDI

connections break when the supply base changes.

With low visibility, shipment ETAs are static — they

don’t change during a 20-30 day ocean transit

period. This causes:

• Completely unreliable information

• Material managers that are firefighting

• Massive air freight (7x$> ocean)

• Increased landed unit cost

2. Bad lead time assumptions in Materials Resource

Planning (MRP)

When reliable information is not available, lead

times are buffered and standardized to “be safe”.

By gradually increasing lead times, companies

suffer from:

• Inventory growth and increased obsolescence

• Increased variability and an amplifying effect

The Challenge

Global sourcing requirements are at odds with just-in-time practices.

Manufacturers need a way

to respond to volatile demand

without increasing supply

chain costs.

Companies with traditional software systems and EDI

networks have struggled to find a way to balance

increasingly complex global sourcing with lean inventory

strategies. The only way to avoid a reactive approach is

to shine light into the inbound supply chain. However,

manufacturers can only do this by moving their supply

chain into the cloud.

A cloud-based platform for supply chain management

brings to the table full visibility into inbound inventory.

This allows in-transit goods to be counted as on-hand.

Instead of expediting shipments of product at the last

minute via expensive air freight, supply chain managers

can easily view inventory that will be soon be available

and rely on the arrival of those shipments instead.

Truckers

Events

ConsolASN

ASN

Events

TransloadASN

Events

Consol Deconsol TruckerAir/Ocean

Pre-Carriage Line Haul Distribution

Actual DynamicETA

At-Risk Delay

PlantsSuppliers

Plan

Cloud brings everyone to one network and allows for dynamic ETAs.

Monitor inbound activity on a cloud-based network

of your supply chain partners.

• Marry order, shipment, and event data to provide an

accurate view of inbound flows and dynamic ETAs

• Handle complex, multi-leg intercontinental flows

(origin consols, destination transload/JIT warehouses)

How to use it for inbound supply chain visibility:

1. Identify “at-risk of shortage” exceptions

2. Evaluate transportation alternatives, expedite

where needed

3. Determine reliable “realized lead times” planning

in MRD

Value Propositions

The value of inbound supply chain visibility lies in

the power to operate an agile global supply chain.

In the cloud, processes can be streamlined and

decisions made based on accurate data.

1. Achieve greater supply chain agility in order to

profitably respond to volatile global demand

• Gain full visibility into inventory supply, fulfillment

alternatives, and cost tracking

2. Reduce net assets of inventory and obsolescence

• Increase delivery reliability and control of inventory

• Eliminate in-transit inventory by reducing “dead

time” at hand-over points

3 Reduce COGS by lowering expedited freight

• Eliminate 90% of costly just-in-case expedites

4. Realize better performance of supplier and

LSP providers

• Use strategic KPI scorecarding to evaluate partner

performance

Inbound Supply Chain Visibility Innovation and the

Networked Company

To shine light on the inbound supply chain, companies

must transform themselves from silo-based, inward-

facing corporate operators to interconnected, highly

agile business network orchestrators.

NetworkConnectivity

Agility

B

A

Sense more accurately

Operate more e�ciently

Respond faster

Make better decisions

The SolutionHow can just-in-time, lean production

methods work in a world where your

suppliers are 40 days and thousands of

miles away? When the typical fixed buffer

stock and expedited shipments costs too

much, how can you make sure you can

ship on time?

GT Nexus provides the cloud-based collaboration platform that leaders in nearly

every sector rely on to automate hundreds of supply chain processes on a global

scale, across entire trade communities.

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