3 Replies Latest reply on Apr 1, 2012 3:00 AM by Ron Stappert

    Product Recall/SCM Visibility

    jgsmith Newbie

      Is this an achievable reality given the complexity/diversity of today's global supply chains?  Is the cost of deploying and end to end SCM visibility system have a significant enough ROI to off set the cost of acquisition and implementation?  What is the cost/risk of a large scale recall?  Interested in the communities thoughts

        • Re: Product Recall/SCM Visibility
          jwesterveld@kinaxis.com Apprentice

          Hi Greg...


          Are you asking whether global supply chain visibility is achievable?  Or visibility to the impact of a global recall?  I think I can provide an answer to your question, but I want to make sure I understand your question first.




          • Re: Product Recall/SCM Visibility
            Trevor Miles Apprentice

            Hi Greg


            Visbility on its own is unlikely to provide the ROI, but it is a question of the scale.  For example, everyday supplier decommits can be handled without too much difficulty, but the Japanese tsunami or the floods in Thailand were a major disruption and it would take very little effort to work out that the impact was likely to be in excess of 7-8 figures.


            The same is true for a recall. Last year there was a major recall for Maple Leaf Foods in Canada that nearly bankrupted the company. What about the cantaloupe recall in the US, or the peanut recall.  The costs of these are enormous.

            Supply chain risk is like any other risk, and visibility is a basic form of insurance.


            But there are 2 really important concepts from Lean:

            • Time to Detect
              • This is where visibility plays a big role becuase if you don't have the visibility you won't know that there is a problem until too late
            • Time to Correct
              • This is where the real value is created and software is only a portion of this related to technology, but technology is a key enabler. 
              • Technology enables the rapid evaluation of the financial and operational consequences and the detemination of the manner in which to respond profitably over a period of time




            • Re: Product Recall/SCM Visibility
              Ron Stappert Apprentice



              The answer to your question is that true end-to-end supply chain visibility is more achievable today than ever before.  Data is easily exchanged and the capabilities of todays systems to consolidate them is better than ever. But your next 2 questions really point to the meat of the solution:  "What is my ROI?"


              Trevor Miles' previous response points out that in assessing the ROI, you to weigh in the costs of delay (Time to Detect & Time to Correct).  You also have to weigh in the risk/cost of a defect and the risk/cost of supply shortfall.  Ultimately, these 4 areas will dictate where you invest in your end-to-end SCM visibility.  For example, if you were in the Auto Industry, the risk associated with a label verses a brake system would be dramatically different.  Which would you invest in?


              One more critically important piece is architecting your global supply chain visibility solution.  This takes into account a continual re-evalution of the 4 things above as well as the systems, data feeds, internal involvement, and external involvement needed to maintain it.  If you over-engineer the solution or make it too inflexibile, it will limit its usefulness over time and decrease customer and supplier participation.   When that happens, it's days are numbered.  In my 20 years of EMS industry experience, I have seen numerous examples of OEM supply chain visibility projects that were overly complex, the scope was too broad, the inputs were too rigid, or the solution was designed on the wrong systems platform.  As a result, these projects simply failed or warranted an expensive redesign.


              Here are my recommendations for any SCM Visbility Solution:

              1. Limit the focus to supply that matters (Risk/Cost of Defect, Risk/Cost of Supply Shortfall, Risk/Cost of Time to Detect, Risk/cost of Time to Correct)
              2. Keep it Simple Sam (KISS) - If you over-engineer it around complex B2B standards where it isn't warranted, you are unnecessarily adding cost and limiting participation.  In my experience, most of the time a tab delimited flat file exchange works just fine and is cheaper to implement and manage.
              3. Make the data relevant - If the data isn't updated regularly and/or it isn't needed/reviewed/reported/analyzed continuously by the organization, its data integrity will be garbage when you really need it.  If the data is relevant, the organization will use it, invest in it, and demand that it's accurate and useful.