Friday, November 27, 2009

Why Is In-transit Visibility (ITV) in the Supply Chain Important

Picture this: a customer service representative (CSR) gets a frantic call from a customer asking about parts. In this scenario, the customer is waiting for the supplier to deliver critical parts for a product which is scheduled on the line in a few hours. The customer service department's initial step is to check the order status where the item will be identified as being delivered, en route for delivery, awaiting customs etc.

Usually, tracing the shipment to a particular order is more complicated than just opening up the order status screen. If a product is en route, the CSR should be able to connect the item with the delivery truck and provide an estimated time of arrival (ETA) at the customer's location. At times, it's very crucial for customers to have this information in order to figure out if they should reschedule a production line or just wait for the product. But the hurdle in answering this question is figuring out how far a truck driver is from the delivery location and if the inventory can be located in-transit with a third-party logistics provider (3PL).

More and more companies are trying to realign their supply chain due to competitive pressures, by identifying new areas for revenue and improving overall customer service by providing on-time delivery of products with fewer errors in shipments and fewer damaged goods. Usually an organization's supply chain creates the rhythm for the whole organization. Wouldn't it be great to see inside a truck at any given time during the transportation process to figure out which finished goods are being delivered and which items the organization will be receiving?

Having the ability to identify, change, and monitor shipments from origin to destination gives an organization reliability, flexibility, and transparency within the entire supply chain. With the use of in-transit visibility (ITV) capabilities an organization will be able to meet the challenges of rapidly increasing fuel prices and changes in regulatory requirements, and provide customers with premium services without increasing the total cost of operations.

To further explore ITV, it's beneficial to understand the origin of the concepts. The ITV concept originated from the U.S. Department of Defense (DoD) in the early 1990s. It was mainly used by the DoD to achieve better visibility to track goods within the supply chain in war zones. Now, the ITV concept is being adopted by many transportation companies to provide extended visibility for their customers and used for an organization's internal operations.

A technical report written by Asvin Goel on In-Transit Visibility provides a complete overview, defines the concept, and answers the following questions: How is ITV achieved? What value does ITV create for the organization's supply chain? How is value created by ITV's implementation to the overall performance of the organizations supply chain measured? In the next two sections, our main focus will be on the overall concept of ITV. We will examine how an organization's transportation operation benefits from ITV and how it can be integrated with software solutions.

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