03.13.08

GXS has a terrific set of clients in the retail industry, some of whom I have worked with for many years, so stories about the industry tend to draw my eye. The other day I was reading a widely syndicated piece from AP about retail retrenchment, when something caught my eye:

“Experts also say merchants are weathering downturns better because of new systems to control inventory and costs.”

I found this very interesting because this was not an article concerned with technology, enterprise IT, or B2B — and when you find statements like that in the general media, it is a good sign that the investments in technology are paying off where it matters the most. What I find interesting is that the article references the systems, but doesn’t really explain how a system can “help control inventory and costs”.

While there are many systems that can affect inventory and costs, I like to think in general that we are attempting to affect a couple of key business capabilities, regardless of the technology:

1. How far in advance we can see what is happening
2. How quickly we can react to changes in demand or supply

These are obviously related, and interact to create “uh-ohs” or “ahas”… First to the “uh-ohs”

The above diagram is my very simplistic picture of the situation when the range of vision is shorter than the range of action, meaning by the time I realize I need to do something, it is too late. This is akin to a ship relying on the sound of scraping metal to alert it that rocks are near, rather than a lighthouse. It is tempting to do focus entirely on the red — that is, seeing farther out — through event management, forecasting, etc — but we can also change the equation by reducing the amount of time to respond to change.

In the B2B world (and not just in retail), it turns out that similar systems and technology help out with both. As a start, companies that manage their supply chain more effectively are able to sense (visibility) and respond (action) much more quickly than rivals. While it is tempting to get excited about the new possibilities of technology, many companies are not even managing the basics, like functional acknowledgements, yet (FAs are an electronic document sent back in reply to an electronic document. Basically, if you don’t get an FA from a partner, they may not have your order/ship notice/invoice/etc). Insisting on B2B integration with your supply chain, and then handling the basics well will provide more rapid information and the ability to execute more quickly. Implementing B2B gives you productivity, but doing it really well helps you see farther and act faster.

Beyond basic B2B, capabilities like logistics tracking and visibility will substantially enhance visibility, and enable members of your team to react more quickly because they have more information at hand. A system like logistics visibility is constantly “watching” the stream of logistics B2B traffic between logistics providers, and watching for exceptions or incidents.

As much as I love the software and services we build and operate for a living, the key thing is really the goal — we have to see problems (and opportunities) early enough to have time to act. Leveraging people, process and technology can get us from “uh-oh” to: