Better visibility into complex supply chains translates to fewer disruptions, increased customer satisfaction and lower costs. A supply chain visibility (SCV) project empowers product teams to spot and fix weaknesses in the supply chain, such as inventory shortfalls or order fulfillment issues, before they become major problems.
Sounds great. But many companies have found gaining meaningful end-to-end insights a bigger challenge than they banked on. Let’s look at why that is and how to overcome common roadblocks.
What Is Supply Chain Visibility (SCV)?
Supply chain visibility (SCV) is the ability to track individual components, sub-assemblies and final products as they travel from supplier to manufacturer to consumer. The scope—for example, are raw materials included, and will the item be tracked with forwards and backwards tracing—depends on the product.
SCV is enabled by supply chain management technology, which provides near-real-time data about logistics and supply chain operations. That data helps companies maneuver around inventory shortages, avoid bottlenecks, meet compliance directives and track products through to delivery.
SCV may refer to visibility both inside a company’s own operational borders and across a partner network. The former is clearly less of a challenge—though still not trivial—because the company controls access to relevant data sources. To track movement of a widget from a factory in China to a U.S. assembly plant to a wholesale distributor and on to the customer or retailer is a multifaceted operation requiring integration of diverse partner systems.
The technologies, such as supply chain and inventory management software, to achieve this visibility are typically part of a company’s broader enterprise resource planning (ERP) system.
Goals of Supply Chain Visibility
The broad goal of SCV is to collect better information about supply chain operations, improve efficiency, reduce risk, boost customer satisfaction and increase profits. Companies achieve these results via the improved planning, insights and supply chain execution delivered by supply chain management software.
Success depends on access to real-time, shared data across every node in a supply chain network. Often, that means configuring a centralized control tower, or hub, where SCV software analyzes supply chain data, such as product demand, sales forecasts, material availability and more. It becomes a comprehensive source for decision-makers to review and manage all of a company’s supply chain activities.
4 Reasons Why Supply Chain Visibility is Important
Insights into the inner workings of a supply chain can inform operations, customer satisfaction, compliance and company growth. Other benefits boil down to four C’s:
Complexity: Modern supply chains are global. Extending insights across a diverse supplier network requires not just the right software and KPIs but a level of trust and transparency. It’s also the only way to head off logistical snafus that can damage customer relationships and erode profit margins.
Customers: Having the right products available at the right locations at the right time is fundamental to customer satisfaction, retention and acquisition. Moreover, consumers have been conditioned to expect fast delivery and to be able to track their orders from loading dock to doorstep.
Compliance: International supply chains face steep regulatory requirements, including changing trade agreements, procurement rules and governmental tariffs. Then there’s your brand reputation: Are you sure that all the partners in your supply chain are behaving ethically? SCV helps companies monitor and manage variables including volatile monetary exchange rates and extreme weather and political or social unrest that could delay shipments.
Competitiveness: The supply chain encompasses a significant portion of many companies’ operating budgets, so inefficiency directly impacts the bottom line. SCV allows companies to spot and fix inefficiencies throughout the chain and thus reduce costs.
3 Steps to Increase Supply Chain Visibility
To increase SCV, you must gather and disseminate timely, relevant supply chain data across the organization—and then make sure it’s analyzed and acted on. This is a three-step process.
Select and implement SCV technology: Full-featured supply chain management software automates production from raw materials to delivery of finished goods to the consumer. First, diagram your supply chains so you know which modules you need. If your manufacturing is fully on-shore, for example, you can get by without insight into exchange rates.
SCV software ranges from simple point products to suites with dozens of modules that natively integrate supply chain and logistics capabilities with core back-end systems like ERP and CRM.
Look for capabilities across four areas: customer demand, inventory control and warehouse and fleet management. Popular modules include supplier relationship management and the ability to process client orders and closely track shipping and delivery.
Focus on process improvements: If your processes need serious work, you may want to shift this step ahead of software selection.
Once you’ve selected SCV technology, work with your software provider or integrator to make sure your team gets the full benefits. Eliminate manual or spreadsheet-driven processes—they are usually limited, inefficient and lack scalability. Make sure all decision-makers receive relevant reports related to supply chain activities—and that they have the ability to act on that information.
Drive efficiency: This is where you get returns on your software and process improvement investments. As your team gains deeper insights into the supply chain, from material sourcing to manufacturing to end customer, they’ll inevitably identify areas where you could improve.
Supply Chain Trends in 2020
Supply chains are increasingly digital, cloud-based and agile. Here are six trends to consider as you update your supply chain strategy.
Digitization: If we learned anything from an almost overnight shift to remote work it’s that manual processes and paper records are no way to manage a modern supply chain. Spreadsheets aren’t much better. By digitizing the supply chain, you’ll significantly improve the ability of business leaders to make timely decisions using demand forecasts and better manage inventory, suppliers, transport and storage.
A move to the cloud: Along the same lines, the limitations of legacy on-premises systems and storage have become clear. Supply chain software delivered in an as-a-service model is accessible to decision-makers wherever they may be and is often easier to integrate with partner systems.
Focus on resilience: Modern supply chains enable adjustments in near-real-time to cope with disruptive events. Key here are end-to-end visibility and supplier relationship management capabilities paired with contingency planning and crisis management processes and incident response plans.
Nearshoring and reshoring: Companies are also increasingly looking to reshore parts of their supply chains to their home country or nearshore them, which is bringing the supply chain closer to, but not within, their home country. More than just a response to consumer demand, both processes can lower transit and shipping costs, allow for flexibility, decrease lead times and increase ability to detect risks and potential product defects.
Reverse and circular logistics: Today “end-to-end” doesn’t necessarily mean a linear progression from steel to sheet metal to carmaker to dealership. The concept of a circular supply chain is gaining popularity as companies look to make their manufacturing more sustainable by reusing and recycling stock. Similarly, reverse logistics is all about capturing value from, or properly disposing of, excess goods. As we discuss, in 2019, U.S. shoppers returned merchandise worth more than $300 billion, with a significant chunk of those items ending up back in the hands of distributors. Managing the reverse logistics process is critical to profitability.
Automation and robotics: Advanced automation and robotics—both on manufacturing lines and in software via robotic process automation (RPA)—enhance operational efficiency and reduce errors from repetitive manual tasks and data entry.
AI and machine learning: Artificial Intelligence (AI) and machine learning likewise increase supply chain efficiencies through trend-spotting and self-learning capabilities. These technologies will eventually be incorporated into top supply chain and logistics software to improve decision-making, planning, forecasting, advanced calculations and more.