E-Business Commentary -- Not Ready For Real Time?

Dec. 21, 2004
Promises to deliver a transparent view of the supply chain have fallen short.

Unlike fine wine, business information doesn't age well. Unfortunately, too many companies run their operations based on vintage data. Sure, CEOs of manufacturing companies can access their company's share price at any given moment. But ask what's happening with a particular customer's order or companywide sales at that hour, and you might as well be asking for a forecast of next month's weather. Except for the usual reports that come their way -- often based on data that is days, or even weeks, old -- many executives don't have a clue as to what's going on in their operations right now. The idea behind real-time information is that managers could make better-informed decisions if they had constant access to systems that took the pulse of the company's operations. The only problem is, this promise of real-time information is late in being fulfilled. Fact is, few manufacturing enterprises have true real-time windows into their operations and those of their suppliers or customers. Not that the software industry hasn't tried to deliver on real-time's promise. Companies such as i2 Technologies and Manugistics have gone a long way toward providing manufacturers with sophisticated production scheduling capabilities and enhanced agility when it comes to revising their workloads. Valdero, a firm funded by Ray Lane, former president of Oracle Corp., develops software to analyze supply chains in real time. But there's real time and then there's real time. Too many software companies use the term loosely. The problem arises when the source of the data is the information contained in an MRP or ERP system, which is run -- read updated -- weekly or daily. For instance, some inventory systems that draw data from a large manufacturer's global sources may not allow a company to paint an accurate and timely information picture. Conversely, the logistics industry has taken the lead in this area, with the ability to track goods according to time and place. Federal Express Corp. and United Parcel Service have these capabilities, as do a number of larger third-party transportation and logistics providers. The point is that the value of their service lies not only in the transit of goods, but also in the knowledge associated with it. Likewise with the securities industry. The equities markets, whose nearly up-to-the-minute share prices once were the exclusive purview of the registered securities broker, today permit most anyone with a PC not only real-time access to this data, but also the power to act upon it swiftly while it's still meaningful. In manufacturing, up-to-date information may well offer the few who have it a clear edge over those who don't. As Federal Reserve Chairman Alan Greenspan told Congress last year, "New technologies for supply-chain management and flexible manufacturing imply that businesses can perceive imbalances in inventories at a very early stage -- virtually in real time -- and can cut production promptly in response to the developing signs of unintended inventory building." A leading proponent of the benefits of real-time information for manufacturing is John Layden, president and founder of Time Compression Strategies, a consulting firm in Indianapolis. "I've been driving the industry toward real time for 20 years," says Layden, who spent two decades in manufacturing before moving into software. Layden most recently headed up SAP America's supply-chain division before going off on his own in January. Widely recognized as a supply-chain expert, Layden touts a concept he calls the "network operation model." Basically, manufacturers should operate their supply chains in real time, getting rid of "the information time delays and taking the appropriate action where needed in the process," he says. In other words, companies should react to real changes in the supply chain and not try to second-guess it. Of course, as he points out, not all companies are ready to swallow data that comes fresh from the oven. "Walmart offers its vendors hourly cash register data," Layden says. "But most of them only use the information weekly." Doug Bartholomew is an IW senior technology editor. He is based in San Francisco.

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