What is Supply Chain Visibility?
Supply chain visibility is has gotten a lot of traction recently. Everyone needs it, no one knows how to achieve it and, in most cases, no one even knows how to define it.
Effectively managing your supply chain leads to, among other things, increased revenue, less costs on preventable problems, and time saved due to streamlined systems within organizations.
This blog post is a deep dive into supply chain visibility, and how your business can leverage new technologies to make your production more streamlined, cost-effective and easier across the board.
What is Supply Chain Visibility?
It’s incredibly difficult to manage a supply chain that you can’t fully visualize. For a business to grow in the 21st century, supply chain visibility is essential.
Tech Target defines supply chain visibility, or SCV, as:
”the ability of parts, components or products in transit to be tracked from the manufacturer to their final destination. The goal of SCV is to improve and strengthen the supply chain by making data readily available to all stakeholders, including the customer.”
Essentially, SCV makes the process of ordering, manufacturing, shipping, and inventory management visible and accessible to everyone involved in any aspect of the supply chain – from supply chain managers to manufacturers around the world, effective supply chain visibility brings efficiencies across the board. Without visibility amongst key stakeholders in the supply chain process, the system isn’t optimized and neither is your organization.
Why is Supply Chain Visibility Important?
According to Retail CIO Outlook, supply chain visibility is important because it allows you to rapidly respond to disruptions in the supply chain, optimizes your company’s processes, and makes it easier to manage global suppliers.
As any supply chain manager knows, problems arising from a company’s supply chain can come out of the blue and can get complicated quickly. The most common problems associated with a broken supply chain include:
Cost control – Inefficient management of energy/fuel and freight costs, a greater number of global customers, increasing labor rates and new regulations and rising commodity prices mean more costs and more headaches when attempting to deliver products to customers effectively, quickly and uninterrupted. In the 21st century, customers expect delivery to be quick and frictionless. An interrupted or delayed delivery can lead to a lost customer and less revenue coming in the door. This is obviously not good.
Supplier relationship management – Creating mutually agreed upon standards is essential to better understand supplier performance and opportunities for optimization. Having multiple processes for communicating purchase orders, shipping deadlines and costs, etc. with suppliers leads to confusion and inefficiencies across an organization. Supply chain visibility allows for consistency, accountability and better supplier relations across the board.
Planning & risk management – The reality of life is that things happen, especially across something as complex as a global supply chain. Orders are delayed, labor strikes interrupt deliveries, products are manufactured wrongly. Quick thinking and adjustments are needed to respond to problems such as sourcing, shipping and whatever else comes up. Risks need to be identified quickly to control and mitigate costs. Supply chain visibility allows for understanding and agility in dealing with any issues that come up in the product’s lifecycle. Supply chain analytics also play a key role in ensuring full visibility on the supply chain.
A study carried out in June 2017 found that only 6% of companies are able to offer supply chain visibility. A follow up survey of 623 supply chain professionals in 17 countries highlighted key challenges with supply chain visibility within their organizations:
-70% of firms described their supply chain as “very” or “extremely complex”
-6% said they have “full visibility” to their entire supply chain
-74% said they use four to five different transportation modes in their supply chain
-81% of firms are using one to three KPIs to assess supply chain performance
-84% outsource their transportation services
How to achieve Supply Chain Visibility within your organization
In short, the answer is supply chain visibility software. According to Gartner, “Supply chain leaders can improve performance and lessen risk by using multi-enterprise, collaborative software for real-time insights across the value network.”