With hurricanes bearing down on the Gulf Coast and Southeast United States this fall a number of America retail giants revved up their supply chain management tools to address what their managers knew would be urgent needs in those regions.

Lowe's, Home Depot and Wal-Mart reportedly were able to redirect products ranging from building supplies to diapers to meet customer demand “at the right locations for use at the right times. And they were able to do it without missing a beat,” says Harold Friedman, Senior Vice President of Global Corporate Development at Data2Logistics' Princeton, New Jersey office, an organization that processes freight bills and provides business intelligence to large companies.

This anecdote illustrates both the fragility and strength of today's super lean supply chains. It shows how technology-particularly supply chain management or enterprise resource management (ERP) tools-can make a difference with supply chains stretching across the globe that are vulnerable to natural disasters, terrorism or even a regional war.

Most experts put great stock in technology. “I'd say supply chain technology helps immensely, especially in terms of real-time transparency of shipping data and transport equipment. This helps assess the best course of action to take as soon as possible. Without timely information on what and where transportation and inventory are available, few decisions can be made,” says Larry Lapide, Research Director for the MIT Center for Transportation and Logistics.

Whether a corporation is employing a warehouse management system or advanced planning tools, ERP or transportation management systems, experts like Lapide say mitigating risk all boils to providing visibility throughout the supply chain. “It's a question of finding the right balance between cost reduction and risk mitigation,” agrees David Simchi-Levi, professor of engineering systems at MIT and CEO of LogicTools based in Chicago, Illinois.

Finding that balance may mean carrying slightly more inventory or reallocating it, but not a return to the old days of “pushing” inventory onto the market. “Companies are rethinking inventory, but not raising inventory rates. They're assessing where to locate warehousing and inventory, but they aren't building more warehouses,” says John Caltagirone, Vice President and Global Practice Leader, Supply Chain Strategy, for The Revere Group in Chicago, Illinois.

“It's a matter of developing IT systems that connect the dots in your extended supply chain model to ensure visibility to planned events, enabling the alerting of unplanned events that allow dynamic exception management and collaborative problem solving,” says Chris Sykes, principal for supply chain solutions at SAP's Charlotte, North Carolina facility.

World Trade asked supply chain experts and others to provide examples of how their customers are utilizing a variety of supply chain solutions to protect extended supply chains. The following is a list of tools these experts recommend as the most effective for this purpose:

Warehouse and Transportation Management Systems

When time equals inventory and that adds up to cost, the key is knowing what inventory is on hand in real-time and knowing where to ship it for maximum benefit. The tools that count most in this case are warehouse and transportation management systems (WMS and TMS).

Harold Friedman cites a 3PL client with global distribution facilities, whose WMS allows them to “see what inventory they have on hand by SKU in any location. In addition to the buyer having visibility to inventory levels, their suppliers have visibility also. This allows the suppliers to start manufacturing the product in ample time to meet the needs of their customer, which in this case is the 3PL,” he says.

On the risk mitigation front, Friedman says the WMS allows the 3PL client “to react more quickly and conduct inter-facility transfers” of inventory from one facility to another when one facility is short and another has too much. The WMS “is helping this firm establish excellent customer service levels, while at the same time not having their dollars tied up in excessive inventory levels,” he explains.

Supply Chain Optimization and Planning

Simchi-Levi believes technology can allow for “subtle changes” in inventory and raw materials allocation that can make a huge difference to supply chain flow at any time, especially during a crisis. For example, an auto industry supplier of metal components with a global supply chain became concerned with forecasting errors. Under Simchi-Levi's guidance, they deployed a supply chain solution optimization and planning solution, which revealed that the problems were with inventory allocation not forecasting.

“By being able to model their supply chain, we were able to better position their inventory. Our analysis showed that their inventory needed to be allocated in two places in the supply chain-raw materials at the manufacturing site and more inventory at the regional distribution centers (DC) rather than a county DC,” he says.

Noha Tohamy, principle analyst for supply chain at Forrester Research in Cambridge, Massachusetts says many manufacturers are using supply chain tools for network design and supply chain inventory to better grasp which of their products are in highest demand. She cites Canadian Tire in Toronto as an example of a retailer that is heavily investing in supply chain tools to improve efficiency. The company recently announced a deal with Fujitsu Transactions Solutions Inc. to supply retail point-of-sale hardware systems and services as part of an extensive store renewal program. The technology is expected to deliver “capabilities from point-of-sale, moving off of an older, aging platform,” according to a company spokesman.

John Caltagirone tells of a chemical company client that was slipping with customer service, forecasting and promotions as its sales/marketing team was losing money in the process. After analyzing their demand and how to meet it, they purchased a software suite that included demand and forecasting management as well as supply, inventory, procurement and transportation management. The end result has been “visibility across the supply chain. And this is true, they've turned their business around and are profitable today while carrying less inventory,” he says.

Applied to the delivery side, Harold Friedman is finding that optimization and planning tools are making for more efficient loading of trucks, which cuts down delivery times. This means that manufacturers and retailers “can be very demanding about when they need a product delivered because they have a high degree of certainty that the product will show up on time. They're carrying costs are reduced,” he says.

Supply Chain Visibility

From Web platforms to supply chain execution tools, there are a variety of technologies in use that provide visibility to shipping and inventory data. These allow companies to respond quickly in a crisis and mitigate risk, along with promoting more efficiency, says Noah Tohamy.

“Visibility and predictive analytics allow you to know where your inventory is, which brings balance to your supply chain. Dell Computer and Best Buy stories, for example, have made lots of investment in technology that promotes visibility so they can know what's happening on their suppliers' side. They can be confident they have the inventory to fill orders,” she says.

Tohamy also points to the emerging transport Web platforms like INTTRA and GT Nexus' GTN that allow members or customers “to operate seamlessly because they've established uniform connections for all supply chain partners, which reduces the cost of doing business.”

Web platforms can prove invaluable during a crisis. When port workers struck the West Coast several years ago, the truckers, shippers and freight forwarders connected to INTTRA-a Web platform backed by 20 of the world's largest ocean carriers-had a real advantage, according to Ken Bloom, INTTRA's President and CEO. Through INTTRA's track and trace capabilities, truckers were able to get real-time information on the containers they were hauling and make contingency plans for those shipments, he says.

Enterprise Resource Planning (ERP)

Enterprise resource planning (ERP) tools that help a company manage back-end information can play a more subtle role in keeping supply chains flowing and inventories relatively lean, says Larry Ferrere, chief marketing officer for Manhattan Associates, a key supply chain management vendor based in Atlanta, Georgia.

Ferrere says ERP systems provide a “common backbone for managing your back office and high level distribution requirements, master production schedules, associate aggregate inventory positions and financials.” Along with Tohamy and Friedman, he agrees that ERP provides a company access to internal data necessary to make supply chain decisions.

“A robust ERP system will allow you to connect the dots between an invoice, the client and the corresponding order,” says Tohamy. And she and Ferrere point out that an ERP system can assist with Sarbanes-Oxley regulations because it will provide the detailed financial data required.

However, Ferrere argues that supply chain planning and execution solutions are more suited to the many functions that go into “optimizing overall supply chain requirements.” He recommends companies seek “today's integrated best-of-breed solutions that enhance existing systems, including ERPs, and provide integrated transportation, warehousing, labor management, as well as all the planning and replenishment functions.”