IBM Order Management for Communications Inventory and Supply Addendum
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Communications providers have long put the physical fulfillment solutions on the back-burner compared to their network service counterparts – and while network performance and consistency is critical – CSPs are neglecting the cost and operational savings enabled by streamlining their CPE and accessory sales. Too often CSPs are tying up millions of dollars in inventory to ensure no stock out situations instead of streamlining and understanding their inventory picture to better allocated that capital elsewhere. Slow, inefficient, & costly supply chain responses to changing market dynamics Too many resources allocated to costly error-prone manual supply chain processes & poor customer service levels Knowing where to best place inventory; Over/under utilization of supply chain assets Lack of visibility and certainty over supplier spend and performance; Limited business intelligence for decision making However, its one thing to understand the need to change supply chain processes, its yet another to implement them successfully. Companies today still struggle with some significant challenges, and these challenges have substantial impacts financially. We already previously identified the fact that Retailers today see lead times as long as six to ten months, forcing vendors to make significant bets on inventory, consumer trends and distribution methods—bloating supply network with a stockpile of $1.2 trillion in excess merchandise. At the same time, retailers lose a staggering $93 billion in missed sales every year, simply because they don’t have the right products in stock to meet customer demand. Value of excess merchandise stockpiled in supply chains configured to account for those long lead times is over a trillion dollars.
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IBM Order Management for Communications Inventory and Supply Addendum
- 1. Smarter Commerce Order Management for Communications – Supply Chain Insight 1 © 2012 IBM Corporation
- 2. Communications services providers, like all retailers, face significant challenges in meeting modern multi-channel supply chain needs $1.2 Trillion 70% 60% Value of excess Of supply chain Of retailers lack merchandise officers state the the control over stockpiled in lack of visibility shipment status retail supply has a significant and cost for their chains configured impact on their inbound freight to for long lead supply chain be cost effective times health 2 © 2012 IBM Corporation
- 3. The evolution of the supply chain in communications is largely the same as in most other industries Technology is the Enabler of the Supply Chain Insourced (In House): – Low core competency in management of people and resources – High overhead and physical plant costs, inability to efficiently scale Outsourced (3rd Party Logistics Provider): – Efficiency in scaling and providing ‘over the top’ services extending beyond simply shipping the product or providing the service – Lack of control of the value in the supply chain – difficult to switch suppliers Hybrid: – Outsourced physical fulfillment and commodity services - Insourced control over the value of the supply chain – Fulfillment partner provides the physical resources to fulfill product using the software solutions provided by the CSP where all the customer experience value lies. – Relatively easy to add and/or switch suppliers 3 © 2012 IBM Corporation
- 4. CSPs and other multi-channel retailers are constantly having to support new and more varied fulfillment methods Multiple Enterprises Brands Multiple Catalogs Divisions Products Multiple Product Business Units Services Choices Acquisitions Configuration Guided Selling Multiple Fulfillment Methods Multiple Customer OUTSOURCED Multiple Channels Warehouse Store / Retail Segments LARGE PARTNER Big Box Retailers Consumer Catalog / Call Center VENDOR Suppliers Distribution Commercial / Contractor SMALL PARTNER Drop-ship Corporate Website OUTSOURCED 3PL Networks Kiosk INSOURCED Corporate Stores © 2012 IBM Corporation
- 5. Advantages of owning the ‘value’ of the supply chain – and letting the ‘commodities’ of the supply chain go No longer dependent upon a single point of failure in the supply chain – multiple sources for fulfillment mean less downtime and backlogs to customers Allows organization to push down requirements to its suppliers / partners and eliminate those partners that cannot meet organizational standards Receive ‘commodity’ services from 3PL and carrier partners such as backorder, shipment and delivery notification allowing the organization to make operational decisions based upon that data Ability to control the software and associated operating procedures used by supply chain partners thus driving up efficiency and driving down cost to an even higher degree. 5 © 2012 IBM Corporation
- 6. Order management gives all participants in the supply chain have equal access to all supply and demand information at all times CHANNELS: all channels, whether SUPPLY: global levels, status, detail and organic or third-party have real-time insight is available across all locations access to all sourcing information and regardless of the enterprise physically in logic, whether through native mobile possession of the inventory. integration or an extensive set of APIs app allowing simple integration to legacy channel sales systems. direct ship warehouse call center / retail catalog stock set top provider / partner order inbound management distribution supply center supply channels reseller kiosk on vehicle online / white label retail retail storefront 6 © 2012 IBM Corporation
- 7. Actionable insight into the global supply chain allows providers to make smart choices that better support their customer’s experience Inventory insight, analytics and intelligent sourcing allows order management to source optimally in real time from any supply to most optimally meet the customer need. Buy online, pickup in the store; drop-ship direct from partner or vendor; buy in one store, pickup in another store; etc. and more. Order Management Intelligent Sourcing order management global supply is supply is sourced and recognizes an issue evaluated for best fulfillment fulfillment option commitments are kept Global Supply Locations Vendor Supply Customer Direct Regional Flow-Through Back-of-Store VAS Center Centers & Enroute Warehouse Dist. Centers Dist Centers Stockrooms Returns/Repair… Supply 7 © 2012 IBM Corporation
- 8. Order management pipelines graphically manage entire fulfillment process Series of transactions and statuses that guide an document through fulfillment Rapidly incorporate fulfillment process changes without any programming effort Control and monitor external activity data flow and communication with partner fulfillment systems Real-time visual business process and fulfillment event management to minimize customer impact Quickly adapt to changing fulfillment models © 2012 IBM Corporation
- 9. Global inventory visibility creates awareness into available inventory Consolidate inventory information from multiple systems inside or outside the four walls of the company Flexible views of Inventory –Views by type of supply and demand Real-time promising of inventory – owned or un- owned Choose alternate location(s) when inventory not available © 2012 IBM Corporation
- 10. Intelligent sourcing engine determines complex fulfillment Splitting order as needed – Fulfill: – By Line – By suppliers etc. – By different internal systems Source from: – Multiple locations – Drop ship from partners – Service partners Source by: X – Priority – Geographical location Intelligent sourcing engine determines the most – Inventory cost optimal location – Handling cost Enable transfers in stock-out situations – Transportation cost Select new location if inventory is not available – Reduced no. of shipments (merge Source or drop ship from channel partner in transit etc.) 10 © 2012 IBM Corporation
- 11. Analytics-led intelligent applications will help CSPs to evolve beyond catalog-driven order management Intelligence “ON” the process – Enable users to respond to trends through dashboards and key performance indicators – Example: Backorders against the order promise date and alerting analysts ahead of time if backorder date may be missed so that service representatives can offer alternatives to the customer 11 © 2012 IBM Corporation
- 12. Reverse logistics improves efficiencies of managing the returns process Central Order Repository Return to supplier –Buy, pick-up and return anywhere Component put-away Directed Workflow –Return to stock • Exchange process • Inspection Stockroom / Sales Floor Warehouse Catalog Sales Records Customers Shipping Customer Service Returns Returns Staging Web Sales Destroy Records © 2012 IBM Corporation
- 13. IBM provides Comprehensive & Integrated solutions into supply chain insight which allow companies to… Optimize Supply chain planning by identifying the best options for sourcing, production, and inventory Automate Supply chain execution through extended supply chain visibility, collaboration and logistics Analyze Supply chain performance with insights from real-time and predictive analytics 13 © 2012 IBM Corporation
Notas del editor
- Communications providers have long put the physical fulfillment solutions on the back-burner compared to their network service counterparts – and while network performance and consistency is critical – CSPs are neglecting the cost and operational savings enabled by streamlining their CPE and accessory sales. Too often CSPs are tying up millions of dollars in inventory to ensure no stock out situations instead of streamlining and understanding their inventory picture to better allocated that capital elsewhere.Slow, inefficient, & costly supply chain responses to changing market dynamicsToo many resources allocated to costly error-prone manual supply chain processes & poor customer service levelsKnowing where to best place inventory; Over/under utilization of supply chain assetsLack of visibility and certainty over supplier spend and performance; Limited business intelligence for decision makingHowever, its one thing to understand the need to change supply chain processes, its yet another to implement them successfully. Companies today still struggle with some significant challenges, and these challenges have substantial impacts financially. We already previously identified the fact that Retailers today see lead times as long as six to ten months, forcing vendors to make significant bets on inventory, consumer trends and distribution methods—bloating supply network with a stockpile of $1.2 trillion in excess merchandise. At the same time, retailers lose a staggering $93 billion in missed sales every year, simply because they don’t have the right products in stock to meet customer demand. Value of excess merchandise stockpiled in supply chains configured to account for those long lead times is over a trillion dollars.60% - “Inbound Transportation Management: The Convergence of Planning, Optimization and Dynamic Execution” Aberdeen Group, February 2011
- The evolution of fulfillment and the supply chain is similar in most industries and telecom is no exception. When originally pressed to provide product fulfillment services, organizations usually attempt to handle it internally first. After some time they decide the hassle and effort isn’t worth it and they turn it over to an outside specialist. Finally, they realize that certain parts of that service are highly valuable and they move to re-acquire those pieces of the supply chain.The first pass at handling fulfillment of any equipment, including customer premise equipment (CPE), is usually to attempt to handle it completely within the four walls of the organization. There is usually a grass-roots effort to pull some capability together and over time many of these organizations evolve into groups with a considerably amount of efficiency. At some point though, the internal cost of managing custom software, owning or leasing facilities and managing part-time help get to be a burden on an organization that is focused on selling primarily, not shipping product.The second evolutionary phase introduces the idea of outsourcing, taking certain pieces of an organizations business and turning those over to an outside ‘expert’ who specializes in that piece of the business. In the case of fulfillment and shipping services these ‘experts’ are many times called Third Party Logistics Providers (3PL). In the telecom industry the outsourcing of CPE began to permeate in the early 1990’s about the same time that Caller ID boxes were coming into vogue. Sales of CPE equipment skyrocketed once invoicing for the equipment could be placed directly on the consumer telephone bill.The final phase tends to be re-examining the fulfillment end of the supply chain and looking for opportunities to bring the ‘value’ components of the supply chain back within the organization’s four walls without having to deal with the overhead and management issues that were encountered in the first phase. Technology is the ultimate enabler of this phase.
- Compounding the problem with the scenarios we’ve seen is that once control of the ‘value’ components of the supply chain is given away, the external partner(s) no longer has any incentive to continue to drive cost out of the supply chain. They are also now in control of the fulfillment end of the supply chain and will look to take margin wherever and whenever they can do so. Partners typically don’t possess the domain knowledge required to deftly handle the kind of decisional logic that a CSP has to manage. They also have sometimes hundreds of other clients that they are trying to become embedded with as well which sometimes divert their focus from the things a CSP needs to accomplish. Partners many times also need to add a large number of ‘client services’ personnel to work with clients like service providers in order to overcome their antiquated and stretched IT system capabilities. Bringing the ‘value’ back into the four walls of the CSP almost guarantees the ability to reduce headcount needed at the 3PL partner at the same time increasing order efficiency and accuracy.
- The order hub extends to physical inventory and asset management as well. Order management provides the core capabilities needed to implement this strategy. All participants in the supply chain are integrated through the order management hub making global supply visibility into global inventory levels, item and shipment details and advanced sourcing logic – regardless of which participant physically possesses the inventory.This capability is available across all sales channels and systems – even those outside the four walls of the enterprise including partners, resellers, suppliers, etc. allowing all participants in the supply chain to work at maximum efficiency.
- These capabilities enable the cross-channel order management solution to provide a real-time response to an allocation request and provide it based upon the most optimum method for fulfillment. And when an issue is encountered, it has the ability to re-prioritize and re-plan the shipment while providing notification and status back to the organization or even the end customer.This opens up all sorts of opportunities for cross-channel fulfillment – buy online, return to the store; buy online, pickup in the store, buy in the store, drop-ship to the home, buy in one store, pickup in another, etc.The customer doesn’t care where the inventory is – if it’s not in their hands. Being able to get it in their hands in the most expeditious and convenient manner is what the customer does care about.
- The benefits of IBM Sterling inventory synchronization include intelligent sourcing of the supply preventing stock out issues and allowing a complex fulfillment network from a combination of in-house, outsourced, partner warehouse, retail and drop-ship options to allow the highest possible customer experience level.Key capabilities of the solution include:Global, Multi-Site Visibility - View inventory at all network locations. Real-time Available-to-Promise - Provide accurate, global inventory availability in real-time through any order capture or customer interaction environment. Supply Chain Network Inventory Monitoring - Gain visibility of all supply and demand across variable time horizons. Monitor net availability positions and establish re-order points and manage back-orders. Supply Chain Network Inventory Updates - Receive and update inventory snapshots from individual locations and/or individual adjustments as they occur. Flexible Segmentation of Inventory - Easily configure inventory categories and flexibly model your distribution environment. Inventory Reservation - Manage inventory against user-defined segments and reserve inventory against quotes or draft orders to ensure commitment. Supply Chain Event Management - Flexibly manage exceptions in inventory levels, movements and late receipts; and proactively resolve problems. Analytics - Provide reporting and analytics infrastructure for defining, tracking and managing to metrics.
- While we have been discussing the automation and visibility of the supply chain, primarily within the automate section of this slide, IBM has extensive supply chain capabilities in optimization and analysis of the supply chain.Only IBM Supply Chain Management can deliver a Comprehensive, Integrated Solution to Optimize, Automate, & Analyze across the supply chainNo other vendor offers an integrated solution across the supply chain, including:Production Planning/Network Optimization, Inventory Optimization & Assortment Planning, Transportation Optimization/Planning, Order Lifecycle Management, & Inbound Transportation ManagementIBM combines the breadth and depth of services, software and hardware capabilities with the experience and ability to provide an integrated solution to manage and optimize all areas of the supply chainIntegrated with other Smarter Commerce Buy Solutions