Organizations are continuously expanding their footprint regionally and globally, making the supply chain professional’s life challenging. This continuous change is tied to an organizations desire to explore low cost production centers and reduce overall costs by placing warehouses and assembling units closer to their customers in order to meet the demand of being faster to market. This activity has resulted in an increase of volume of cross border transactions which makes an organization’s international supply chain more complex.
In a complex global supply chain, organizations are required to work with various parties within and outside the organization in order to meet the customer demands, and yet reduce costs. Having end-to-end Supply Chain Visibility becomes imperative for an organization’s success in meeting these objectives.
The 2014 Strategic Road map for Supply Chain Visibility research conducted by Gartner describes the current state of maturity as it relates to visibility, as follows
“Most supply chain organizations are at Stage 2 or 3 of supply chain maturity, and thus have an inside-out view of supply chain plans, events and data. Their current visibility capabilities are most likely departmental or functional and focus separately on data and processes for planning and execution.”
So, let’s take a look at the reasons why Supply Chain Visibility is so critical for Organizations.
- Customer Satisfaction: A demand driven market where customers are looking for a faster response rate requires organizations to improve their supply chain visibility in order to meet the customer and market requirements. Aberdeen research stated that 65% of companies bypass their own distribution centers and ship directly to stores in order to be faster to the market while meeting their customers’ expectations in satisfaction. In our current digital era, consumers expect the right product at the right price in the right place at the right time with the right quality. Visibility allows an organization to pre-emptively act on disruptions in the supply chain, by identifying any potential disruptions in advance and taking immediate actions. So in essence, Supply Chain Visibility is needed for organizations to monitor the flow of finished goods to make it available for consumers.
- Inventory Management: Organizations that manufacture are exploring options to keep their inventories low to improve the working capital. The “Just-in Time” (JIT) manufacturing concept has enabled organizations to keep inventory at a lower level to keep their production running and reduce their inventory costs, resulting in better working capital. Achieving the JIT concept provides organizations with opportunities in designing reliable supply chain processes to better support their customers and meet their bottom line finances for their supply chain. Supply Chain Visibility helps the manufacturer achieve the objective of fewer inventories and still meet market needs. It also provides up-to date information on the status and availability of materials and products. Per the Gartner’s survey, companies having end-to-end Supply Chain Visibility results in inventory savings of 20% of value and a decrease of inventory on stock from just over 10 days to fewer than 7 days.
- Supply Chain Costs: Supply chain processes in organizations require maintaining transparency of ongoing processes from the customer order, shipment planning, container booking, current location of the container, etc. Visibility to this kind of information is needed for better planning of the supply chain process and tracking costs such as:
- Cost of Freight and Transport
- Cost of Clearance
- Detention and Demurrage charges
- Advance payments
All of these elements are critical in order to have a complete control on the finances and take necessary actions to avoid any financial leakage such as duplicate charges by service providers, not utilizing complete container space in the movement of goods, and controls around free detention periods. To better control finances in the supply chain, by having historical information on these costs, with all relevant data, an organization can effectively plan and implement better controls over freight negotiations and service levels. According to Gartner’s survey, end-to-end Supply Chain Visibility helps organizations in reducing their Freight Charges from 5% to 3.5% of volume and 10% through a reduction in workforce.
- Risk Management: Supply chain risks generally fall into two categories: Compliance and Operations. An example of a compliance risk can be a late filing of an import or export transaction resulting in a late declaration to the government. An operations risk can occur when there is a lack of coordination between departments resulting in delayed goods arrival to a warehouse. To address both of these risks, an organizations supply chain processes should possess a complete transparent system which enables the flow of consistent, reliable, complete and validated data all through the supply chain process. Supply Chain Visibility provides complete transparency in the supply chain process and alerts the company to take the necessary mitigation steps to avoid risks in a timely manner.
The need for Supply Chain Visibility is quiet strongly felt among supply chain professionals, with the primary reasons for lack of visibility as:
- Fragmented Supply Chain Functions: Organizations going global means materials move across geographies before it reaches the customer as a final product. When several internal departments and external functions operate in isolation, this makes it more complex to achieve complete visibility of the supply chain. Per the Aberdeen Report on Supply Chain Visibility, 44% of companies responded that their biggest struggle is to synchronize and integrate data across various management systems and internal groups.
- Lack of Systems to provide Supply Chain Visibility: With multiple functions involved in the flow of goods, the systems and processes developed are largely to address the requirements of respective functions. The system limitation does not help organizations in achieving end-to-end Supply Chain Visibility to collaborate between functions.
Given the impediments in achieving Supply Chain Visibility, the strategic actions organizations should be implementing to increase Supply Chain Visibility are outlined in the graph.
Ultimately there are 5 important steps that an organization can implement to achieve Supply Chain Visibility:
Step 1: Build an organizational definition for Supply Chain Visibility:
Visibility means different things to different functions. The first step is to define what is critical for the organization with regards to end-to-end visibility. The requirements of data may be different. For example:
- Logistics needs to know the goods movement status
- Finance needs to know the cash flow projections
- Production needs to know the arrival status
Step 2: Define the Key Performance Indicators (KPI) to measure the success of Supply Chain Visibility:
Define the KPI’s in order to measure the effectiveness of actions taken in achieving Supply Chain Visibility. As the saying goes, “what you can’t measure, you can’t improve”. It is very critical to define the organizational KPI’s with an operations definition for each metric to ensure everyone has a common understanding.
Some of the KPI’s that can be considered are:
- Order delivery to customer completed and on-time
- Supplier orders delivered completed and on time
- Savings on total landed cost per unit
- Frequency of out of stock inventory
Step 3: Invest in Technology:
Technology is the only way to achieve the desired objective on end-to-end visibility. Organizations should adopt technology that follows a Control Tower concept. In the 2013 Aberdeen report on “Supply Chain Control Tower”, the report explains this concept as including all processes, people, planning engines, data and connections necessary to solve a problem. Ultimately a much more complex solution than simply providing alerts. In the Aberdeen report, 50% of companies adopting a Control Tower concept have better capabilities in managing their critical end-to-end relationships and 40% of the companies stated a Control Tower provides them with the ability to view their supply chain holistically.
Step 4: Enable Right Data access to the Right People:
By implementing technology, this solves the critical necessity for visibility in providing the right information to the right people at the right time. An added element for data is the process of providing the required information and adding controls of the data and this technology to users who need the information, and controlling access to those who do not.
Step 5: Build Analytical Capabilities:
Data churned out from the system should be useful and diligently used. By building analytical capabilities to make the data useful, an organization can derive business intelligence for strategic planning and decision making. This also provides companies with an opportunity to generate a higher level of intelligence by comparing their incoming process data to their expectations of both the process’ performance, as well as the process’ outcomes. Intelligence is all about knowing where a company is versus where it wants to be.
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Supply Chain Visibility is imperative for organizations to sustain, be competitive and meet their customers’ needs. In order to achieve an end-to-end Supply Chain Visibility, organizations have to move to Stage 4 and 5 in Supply Chain Visibility Maturity. The improvement in maturing levels for an organization can be achieved by adopting the right technology to focus on the external events in the supply chain and ensuring collaboration at all levels is implemented.
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- 2012 Aberdeen report on Supply Chain Control towers – Concept & Impact at:
- 2013 Aberdeen report on Supply Chain Visibility – A Critical strategy to optimize Cost and Service http://www.gs1.org/docs/visibility/Supply_Chain_Visibility_Aberdeen_Report.pdf
- AEB Whitepaper – Supply Chain Visibility at: http://www.supplychaindigital.com/supplychainmanagement/3873/Five-problems-and-solutions-for-end-to-end-supply-chain-visibility-from-AEB-International
 2014 Strategic Road Map for Supply Chain Visibility Initiatives by Gartner- https://blog.kinaxis.com/2014/12/end-to-end-supply-chain-visibility-overcoming-the-challenges-to-achieving/
 Reference only: http://www.inboundlogistics.com/cms/article/how-to-gain-supply-chain-visibility/