Although companies have invested enormous sums on advanced planning and scheduling, forecasting, master planning and similar systems to improve supply-chain effectiveness, every day things still can -- and do -- fail to go according to plan. Historically, the weak link in all of these sophisticated planning tools was that they were just that -- planning tools. They generally were incapable of providing any warning when execution of the plans was failing, particularly in advance of the actual failure. These limitations are now being addressed by supply-chain event-management (SCEM) systems. Supply-chain event-management capability is enabled by technology solutions that monitor specific supply-chain-related events and alert operations personnel when conditions are outside pre-defined boundaries, such as delays in production operations or low stock levels. Supply-Chain Event-Management Marketplace Supply chain event management is generating a lot of attention these days. According to ARC Advisory Group, the SCEM market is projected to grow at a 50%-plus annual rate to $1.4 billion by 2006. Although some providers of SCEM solutions are familiar names in the world of supply-chain software, such as i2 Technologies and Manugistics, there are several niche firms that are being recognized for their unique capabilities and leading-edge solutions, including Descartes Systems and Yantra. Studies by AMR Research also indicate that supply-chain event management is growing in importance, as measured by the inflow of investor capital to the growing number of SCEM solution providers. In a recent survey of more than 30 companies using SCEM solutions, AMR reported that these companies believed SCEM solutions had a high degree of value. Application of Supply Chain Event Management Although the application of SCEM solutions can vary significantly by company and industry, some common themes emerge. SCEM solutions are most likely to provide significant gains for companies that must deal with large numbers of products, customers and suppliers. The enormous volume of data to be continuously monitored fits perfectly with the "manage by exception" philosophy of SCEM applications. Activities operating outside prescribed boundaries receive immediate attention because they are readily identifiable. SCEM also is appropriate for companies that must continually adjust the balance between supply and demand. Sophisticated supply-chain planning systems benefit from the constant monitoring of SCEM applications, enabling rapid responses to surplus or shortage conditions. SCEM provides the "early warning" capabilities to help effectively execute the established plans. Consider the following example: Assume your company has many distribution points, each receiving large numbers of inbound shipments and managing large numbers of outbound shipments each day. Your SCEM software monitors and analyzes the results of thousands of transactions daily, providing your supply-chain managers with early warning of exceptions. Analytical tools evaluate potential options and suggest solutions, helping your supply-chain personnel quickly determine answers to the following types of questions:
- What is the impact of a late receipt on customer commitments?
- What alternative freight options are available to rectify a problem?
- Should inventory in short supply be allocated to key customers?
- Can a shipment be delayed without adversely impacting your customer?