Supply Chain Blind Spots

Computerworld - U.S. companies are increasingly extending their operations overseas, looking for new markets, lower labor costs and better access to raw materials. Such expansion can bring advantages, but it can also introduce critical blind spots into supply chains as business and IT managers try to monitor activities thousands of miles away.

This lack of visibility can take many forms: Will we receive that shipment of repair parts in time to keep the U.K. plant running? Why hasn't that Italian customer received his order? Why do we seem to have too little inventory in our Ukraine warehouse? Why is the latest EDI transmission from Mexico missing data? How can we be sure that our Malaysian subcontractor is meeting our quality standards?

Companies attempt to enhance global supply chain visibility by a variety of means—integrating stovepiped systems, employing technical tools such as dashboards and alerts, outsourcing some supply functions and even resorting to manual systems. Technology is important, they say, but often what's needed is just better management.

AMI Semiconductor Inc. in recent years has subcontracted out an increasing amount of manufacturing and assembly work, mostly in Asia. The resulting partnerships, some 60 of them, have helped it cut costs and cycle times but have hindered supply chain visibility, says Roland Smith, director of information services at the Pocatello, Idaho-based chip maker. As the company has outsourced more of its manufacturing operations, its customers have demanded more and more detailed information on quality and tests, he says.

"The need for data from subcontractors has grown dramatically," Smith says. "We have our own data formats, and very seldom do they match up with the formats in our subcontractors' systems," especially systems in less-developed countries.

However, China, where AMI's business is growing fastest, presents unique standards issues, Smith says. "They are on the leading edge of technology. They are really heavy into XML, for example, but most of our other suppliers couldn't care less about XML. As far as China is concerned, EDI doesn't exist. We have found we have to accommodate some of this in our systems," he says.