Nimble, Quick Supply Chains In Demand

In such precarious times--amid war, economic uncertainty, and terrorist threats--global companies are working to develop nimble supply-chain operations that can be adjusted on the fly.

Mitsubishi Caterpillar Forklift America Inc. is better prepared to handle supply-chain disruptions today than it was last fall, when a dispute between shipping companies and the longshoremen who load and unload their cargo halted work at 28 West Coast ports. The company's shipments from Japan to its Houston assembly plant slowed to a trickle, nearly shutting down production. It had to reroute shipments through the Panama Canal and bump up its inventory. "That cost us some money," says Kent Hornbacker, manufacturing materials systems manager.

Today, thanks to enhanced supply-chain planning software from i2 Technologies Inc., Mitsubishi Caterpillar is better prepared. "Now if something happens that shuts down a supplier, we can model them in the system as not being available," Hornbacker says. The planning software runs a new delivery schedule and matches that against forecasts, so the company knows what steps to take, such as expediting existing parts orders.

Mitsubishi Caterpillar's scenario planning is just one way companies can create flexible supply chains. "It's literally a commercial war game," says Al Delattre, a partner in Accenture's supply-chain services practice. "Scenario planning tests and stresses an organization's deci-sion-making ability in the event that something happens."

Owens Corning's tactic is to standardize on just a few IT vendors' products, including SAP enterprise resource planning and supply-chain applications and Provia Software Inc.'s warehouse-management apps. That lessens integration headaches if circumstances require that the global manufacturer switch production from one factory to another. Still, it could take the $5 billion-a-year company a couple of weeks to relocate manufacturing, even if the capacity is available. "The primary barrier still would be data," says Barry Burnham, team leader for logistics information systems. The company has common naming conventions for all the parts it uses so that data can easily be shared between facilities and systems, but manufacturing specifications or even lead times may be modeled with different data elements.

Software makers are acknowledging that not every company can or wants to cut the number of vendors it works with. I2 this week debuts i2 Six, a version of its supply-chain management software. The foundation is a set of operating services that includes a common data dictionary, Web-services support, workflow, and a tool that synchronizes data changes to help integrate i2's apps with other systems. Commerce One Inc. is launching its Conductor Web-services-based integration software, which has the Central Registry as its key component; any change that alters a supply network process is maintained centrally and dynamically updated. "The applications don't talk to each other, they talk to the registry," says VP of marketing Sanjay Chikarmane.

But, Burnham cautions, getting the technology right isn't all that's required. Owens Corning also has standardized business processes. If companies fail to do that, he says, "moving one operation to another location could be much more difficult."