Viewpoint: The great convergence

The terms “convergence” and “collaboration” have been popping up recently in discussions about improving logistics and supply chain management processes and the collection and synchronization of the data that can foster those improvements. In fact, the two terms form the foundation of LM’s 2014 Technology Roundtable, our annual feature and subsequent webcast (May 29).

When we discuss collaboration in terms of end-to-end logistics and supply chain processes, we refer to basics such as real-time contact with carriers, sharing long-term plans with our 3PLs, clearly communicating data through our own organizations, and improving freight visibility and inventory management through collaborative planning with our suppliers—but that just scratches the surface.

Putting these practices in place can reduce transportation rates and improve service and communication for all supply chain stakeholders. However, our 2014 panel says that the majority of logistics and supply chain operations are simply not built to truly collaborate and achieve these benefits.

In fact, a recent Gartner survey found that the inability to synchronize end-to-end business processes was named as the second biggest obstacle to reaching supply chain goals. As Gartner’s Dwight Klappich shares in this year’s roundtable (page 24), to get there, supply chain organizations need to do a better job of orchestrating and synchronizing the data and activities across warehousing, transportation, and manufacturing functions—a concept he calls “supply chain execution convergence.”

“Look at the way most supply chain organizations were traditionally organized:  They were broken down into functional silos like planning, sourcing, manufacturing, warehousing, and transportation—and at best they were loosely connected,” says Klappich. “Companies pass data back and forth between applications, but coordinating end-to-end processes across application silos remains elusive.”

To remedy that, Klappich sees the market evolving toward platforms that optimize end-to-end processes, and this will happen over time in phases that include rolling up data into a common analytical system, achieving tighter integration between supply chain applications, and achieving bi-directional communication between systems that will synchronize activities.

Capgemini’s Belinda Griffin takes that concept one step further. She uses the term “supply chain collaboration” for the next step in the technological evolution.

“Supply chain collaboration is a broader concept that includes not only supply chain execution, but also encompasses forward looking planning and forecasting activities,” says Griffin. For example, supply chain execution convergence brings shippers, 3PLs, and other partners together at the time of shipment to promote shipping efficiencies. “Supply chain collaboration is about going beyond this and allowing providers to see what capacity is going to be demanded of them during a key future shipping window so that they can develop mitigation strategies for inadequate capacity,” she says.

Chances are high that you have a full range of supply chain software and enabling hardware at your fingertips, yet you’re still facing significant execution issues. So, while the concepts our analysts share this month may seem more theoretical than practical, its time to give some thought to how you define collaboration and convergence in your operations.