Supply chain automation tends to come in waves, with each wave bringing more technology and benefits to companies that implement it. Early supply chain investments, for example, focused on automating transactional processes. With each improvement supply chains gained more flexible sourcing options, achieved leaner inventory carrying costs, and became more responsive to demand fluctuations.

While many companies are still automating transactions using sequential waves of supply chain integration technologies, the shortcomings of early automation are now increasingly apparent. A big one is the greater risk and cost of handling exceptions to the processes that have been automated. Despite the many benefits of automating transactions, people today need the right tools to manage process exceptions. Many experts believe such tools will drive the next wave of supply chain efficiency.

A new wave of real-time tools aims to fill the gap. These new tools will help people shift their focus from reactive decision-making to a more proactive form, according to Mike Romeri, lead director for the business technology innovation practice at management consulting firm PRTM. "Most organizations today react. They go back and examine their performance in the prior month," says Romeri. "Having true visibility into supply chain processes allows you to monitor your performance in real time and then begin thinking about the root causes of service failures."

Many employees today still receive business performance information through backward-looking monthly reports. The typical reporting cycle is nowhere near fast enough to give companies a competitive advantage. As a result, employees are mired down unraveling daily snags. Arming people with up-to-the-minute information allows them to head off problems before they become crises. "The objective is to link operational results to strategic business goals in real time," says Romeri.

One of the first tasks in Operational Performance Management (OPM)—a term PRTM coined that equates to supply chain visibility and collaboration—is to link operational key performance indicators (KPIs) with strategic objectives. These KPIs might be things like "What percent of my commitments for delivery this week are in jeopardy?" or "What adjustments should we make to our production schedules if my customer's demand forecasts are 20 percent too high?"

"Monitoring and controlling operational processes is where the value lies," says Romeri. What exactly to monitor and control is up to the individual company, and the possibilities are endless. "If you know that one of your suppliers is a key factor in your being late on delivery, you could to talk to that supplier and require that they give you safety stock of certain key components." This approach unleashes the creativity of all the different people playing a myriad of roles up and down the supply chain. "Now, they can influence the outcome of the supply chain in real time," says Romeri.

PRTM recently helped a midsize contract electronics manufacturer empower its employees to solve problems more creatively thanks to easily accessible, rich real-time data. Nu Visions Manufacturing LLC of Springfield, Mass., is a $200 million USD provider to the defense, medical, life sciences, and industrial markets. According to CEO Steve Pudles, Nu Visions aims to partner with suppliers and customers to continually improve its processes and the quality of its product. That goal requires a creative, engaged work force with access to fresh data.

Toward that end, PRTM worked with Nu Visions on a portal-based, business analytics-driven system using Microsoft technology. The portal allows management to set thresholds for acceptable operational parameters and includes automatic notification of personnel if benchmarks such as on-time or on-budget product delivery are threatened.

A sophisticated workflow allows Nu Visions' people who are assigned business tasks to route them on to colleagues during busy periods. If the covering employee fails to do the work requested by the first worker, an event detection and management function then routes the request to the covering employee's supervisor. This way, nothing falls through the cracks. Equally important, it empowers people to use their creativity to continually improve processes, says CEO Pudles.

That notion is the heart of the people-ready business concept from Microsoft, says Robert Meshew, solution architect for Microsoft Entertainment & Devices supply chain and operations group. "Information empowerment is proactively providing a set of tools to allow people to focus on the 'value added' part their jobs," says Meshew. "With a people-ready solution, employees shouldn't have to go through a laborious process to get the information they need or assemble workspaces to enable active collaboration. Working with seamlessly integrated and intuitive systems allows them to focus on innovation."

Working together, employees throughout the supply chain can improve business performance by proactively handling exceptions to processes. The following example illustrates a possible scenario.

Employee	Real-Time Scenario
Truck Driver	Uses a smartphone to report unexpected shipment damage to a third-party logistics system (3PL). The 3PL automatically notifies the shipment back-end system of in-transit status.
Material Handler	Receives a short message alert on her mobile phone. An event management system notifies the buyer with an e-mail alert containing clickable URLs.
Buyer	Clicks the URL and logs in to an issue resolution portal where purchase orders, in-transit status, and Advanced Ship Notices (ASNs) are presented. The buyer issues an expedited order using the portal.
Supplier	Receives notification of the expected delivery date. The event management system then notifies the customer service representative (CSR) of the shipment impact on customer orders.
CSR	Alerts the customer with a predefined e-mail template.

It's easy to see how stopping potential problems before they affect business performance is a major benefit of OPM. But PRTM's Romeri says there are other, more subtle benefits as well. Employees with fewer repetitive tasks to perform—and who have the tools they need to intelligently solve problems—not only avoid the chronic pitfalls that plague many organizations, but they are also more productive and more satisfied with their jobs, he says.

Giving employees better, more timely, and more targeted information frees them from being stuck in perpetual fire-fighting mode. "Trying to solve the same problem over and over again with no visibility into underlying factors is very frustrating," says Romeri. "Being able to avoid some of those problems by setting up thresholds to monitor—now that's going to make people happy."

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