San Francisco-- Top management and supply chain managers alike are attempting to gain visibility in real time in order to better meet the needs of an ever-demanding customer while at the same time reducing costs internally, according to "Visibility: Tactical Solutions, Strategic Implications," the 11th annual report on trends and issues in logistics and transportation [issued jointlyby Cap Gemini Ernst & Young U.S. LLC, Georgia Southern and University of Tennessee.]

While visibility has become a strategic step in providing customer service and in most cases provides revenue lift, more than half (54%) of the 365 logistics and supply chain professionals who participated in the study report that cost reduction is their primary focus. In addition, 52 percent say their organization views logistics as a cost center, as the sluggish U.S. economy, terrorist attacks and corporate governance issues force many companies to reduce short-term costs at the expense of investments in new technologies or process improvements.

The study's authors identified six building blocks to achieve end-to-end visibility, and use it for seamless supply chain execution. Encompassed in the concept of Supply Chain Event Management (SCEM) those six building blocks offer the promise of truly adaptive supply chains through automated planning and control of offers, inventory and shipments:

• Extended Connectivity

• Enterprise Transparency

• Exception-Based Alerting

• Performance Metrics

• Event-Based

• Responsed Controls

• Enabled Control

"This year's study shows that visibility within firms continues to be a challenge, and a significant opportunity," said Alan Montgomery, vice president and global leader for logistics and e-fulfilment for Cap Gemini Ernst & Young. "End-to-end visibility is the desired state of an adaptive supply chain, but the required transformation efforts must overcome the soft economy and risks inherent with change itself."

Half of the companies who responded had less than $1 billion in annual revenue, while respondents as a group accounted for more than $25 billion in annual spending on transportation and more than half (58%) of respondents were manufacturers.

The 2002 study had a number of key indicators that speed of business has increased since last year:

• Inventory turns are up (from 11 to 15).

• Day's sales of inventory has decreased (47 days to 43 days).

• In terms of the time it takes to receive an order in days, the minimum expected time for materials to arrive has decreased from 19 days to 16 days, a drop of 16%.

• The average expected time for materials to arrive has dropped by 27% (from 30 days to 22 days).

"In addition to providing the vision of an adaptive supply chain that is capable of effectively and efficiently responding to changing environmental conditions, the study outlines proven outcomes in achieving visibility," said Dr. Mary Holcomb, associate professor of logistics & transportation and assistant dean in the College of Business at the University of Tennessee. "They include increased ability to do demand-driven replenishment, lower inventory levels, reduced cycle times and use of more cost-effective transportation of finished products."

Extended connectivity, the first building block of SCEM, is still in its infancy. Currently, more than half of respondents report they spend less than 10 percent of their time with suppliers (54%) or customers (56%), but a clear majority say they will spend more time with suppliers (56%) and customers (64%) in the future.

In terms of operational visibility, there still appears to be a gap on the data being collected for use. For instance, roughly four in ten (41%) inbound orders are bar-coded while slightly more than half (56%) of inbound shipments are palletized. This is contrasted with 56% of outbound orders, which are bar-coded, and 52% of outbound shipments, which are palletized.

Another interesting finding this year was that top management is increasingly focused on performance and operational supply chain metrics according to respondents, ranging from 90% for requests for cost variability at the top to 64% who receive on-time delivery reports at the bottom.

"The study tells us that managers are spending more and more time collaborating with customers, management is thirsty for meaningful operational metrics, and visibility tools can add such value now," said Dr. Karl B. Manrodt, assistant professor of information systems and logistics at Georgia Southern University. "While SCEM offers significant value as an enterprise-wide solution, most firms do not have the bandwidth to engage in large-scale, big bang transformational efforts to obtain overall adaptiveness. However, the trend appears to be one of using a step-by-step approach to operationalize SCEM, identifying the value-add scenarios focusing on core problem areas and then a roll-out to the entire enterprise."