The business world is becoming more data-driven as companies recognise the benefits of using real-time data to accurately run their operations. Within the supply chain profession, you may have noticed that the term ‘supply chain visibility’ is increasingly being put forward as a key factor in running and managing successful supply chains and logistics operations. But what is meant by supply chain visibility and why is it coming into greater prominence?
What is Supply Chain Visibility?
Supply chain visibility is conceptually exactly what is says – it’s about having transparency of, and access to, data relating to every transaction and demand trigger across the whole supply chain. Of course, it can be argued that data on transactions in the supply chain have always been available through a multitude of enterprise and trade systems. However, these transactions have historically been within a company’s specific part of the chain, covering at most their suppliers and customers transactions along with their own. Supply chain visibility as a concept is wider than this – it’s about visibility of data across every tier of the supply chain, and all the logistics movements in between. Supply chain visibility relates to having real-time and actionable data from the raw material stages, through processing, manufacturing, assembly and end delivery. Even more importantly, it’s not just about seeing the transactions in each tier, but also about seeing the demand triggers downstream in the supply chain that are driving those transactions.
Why is Supply Chain Visibility Needed?
Supply chain visibility is needed to make rapid decisions. Whilst the ‘big data’ coming from improved supply chain visibility will undoubtedly be useful for strategic and tactical planning, that’s not the key driver. Supply chains have historically been very slow to react operationally to changes in demand downstream, leading to the bullwhip effect and high levels of inventory through the chain. Addressing this is the key driver of supply chain visibility – being able to make real-time rapid operational decisions and effectively turn-on and turn-off the material flow through the supply chain quickly. Complete and real-time visibility over the supply chain means that you can have better appreciation of end-to-end inventory control which leads to efficient and cost-effective operations, meaning a more robust and fluid bottom line.
The Challenges that Supply Chains Face
In today’s socio-economic and political environment, having supply chain visibility is growing in importance and relevance as globalised chains are becoming more complex and upstream demand is growing more variable. Supply chains are comprised of so many parts that the risk of disruption is huge. Not only do supply chains have the challenge of the physical production and movement of material, but also the functions that administer those physical elements such as systems, regulation and trade controls. Thinking of all the disruptions and risk factors within a supply chain can be mind-boggling. With cybersecurity breaches, natural disasters, changes in customer demands, to name a few, a business’s supply chain needs to literally be prepared for anything. These disruptions can have major consequences and a negative effect which could result in loss of operating income, growth and share price. There has never been a better argument for a business to become proactive rather than reactive through supply chain visibility.
How is Supply Chain Visibility Achieved?
Having a complete appreciation of a supply chain, so that all relevant data can be gathered, processed and analysed in real time is not easy and indeed can be complex and convoluted. Data, such as orders placed, shipments made, invoices generated, inventory and stock levels, payments and product availability need to be captured from disparate systems. Integrating the disparate systems of all the companies and tiers in a supply chain, which are likely to have different data formats and definitions, is not a straightforward task. The solution comes from the new breed of integrated communication systems which can robustly analyse, clean and interpret the data. There are a growing number of such systems coming onto the market, from providers such as Manhattan Associates and Amber Road, that specialise in providing a platform to link companies with their global trade partners, suppliers, logistics providers, brokers and carriers.
Supply Chain Visibility and Business Success
Supply chain visibility is being positioned as one of the important business success factors this year. Even though achievement may be hard (and expensive), it will give a further competitive advantage in increasingly competitive trading environments. It will also help businesses apply discipline to the supply chain and understand changes in demand, supplier influence and product management as well as the effect of new competitors entering the market.
We expect supply chain visibility to continue to grow in prominence over the coming years. It not only provides valuable information to enable more efficient and proactive supply chains but it ultimately pushes forward the concept of using advanced analytics to improve business strategies. We also anticipate that the deployment of improved supply chain visibility will underpin the further roll-out of predictive analysis in the future.
If you are looking for powerful advice on your supply chain, then contact our supply chain consultants today. We work with clients across a range of industries helping them transform their practices and how they manage their current supply chain operations. We offer robust and commercial advice ensuring that the right management decisions are taken to grow your company.