Supply chain visibility is of utmost importance for multiple reasons. It enables companies to effectively manage and optimize the various stages of the supply chain, from procurement to final delivery. This article will cover the different aspect of it all.
In the ever-evolving landscape of logistics, freight companies face numerous challenges in adapting to new demands and expectations. Freight shipping and cargo shipping have become critical components of a successful business, and logistics service providers must continually innovate to stay competitive. One of the most significant obstacles to progress in today's supply chain is the reluctance of supply chain leaders to let go of outdated practices and embrace change.
The focus on functional excellence and enterprise transactional efficiency can overshadow the importance of developing a comprehensive, multi-tier supply chain visibility strategy. As a result, progress in this crucial area has come to a standstill.
It's crucial for supply chain leaders to break free from the constraints of conventional thinking and adopt new strategies for increasing supply chain visibility. Despite the growing uncertainty and variability in the logistics landscape, recent data suggests that supply chain visibility has not improved over the past decade. Addressing this issue is more critical now than ever.
To optimize their logistics operations, supply chain leaders must have access to real-time visibility across all modes and functions. While valuable data and signals are abundant throughout the supply chain, traditional Information Technology (IT) architectures often fail to utilize these resources effectively. Embracing innovative approaches and technologies can help logistics service providers unlock the full potential of their supply chain operations.
WHAT IS SUPPLY CHAIN VISIBILITY (SCV)?
Supply chain visibility (SCV) refers to the capacity to monitor individual components, sub-assemblies, and finished products as they journey from suppliers to manufacturers and ultimately to consumers. The extent of SCV—including whether it encompasses raw materials and employs forward and backward tracing—depends on the specific product in question.
SCV is facilitated by advanced supply chain management technology that offers real-time data on logistics and other elements of the supply chain. This invaluable information enables companies to navigate inventory shortages, circumvent bottlenecks, comply with regulatory directives, and oversee products until their final delivery.
The term "supply chain visibility" can encompass both internal visibility within a company's operational boundaries and external visibility across a network of partners. While achieving visibility within a company is comparatively less complex, it remains a non-trivial task due to the need for controlled access to relevant data sources. Tracking an item's movement from a factory in China to a U.S. assembly plant, then to a wholesale distributor and eventually to the customer or retailer, is a multifaceted process that demands the integration of various partner systems.
To attain this level of visibility, companies often employ technologies such as procurement, inventory, and order management software. These tools typically form part of a more comprehensive enterprise resource planning (ERP) system, which enables seamless coordination and enhanced supply chain visibility.
SUPPLY CHAIN VISIBILITY EXPLAINED
Over the years, as companies have increasingly outsourced various aspects of their supply chains, maintaining control over their operations has become progressively challenging. This is where the concept of supply chain visibility (SCV) gains significance.
SCV depends on a business's ability to effectively and consistently manage and track records of all raw materials and components, from suppliers and manufacturers as they advance through the supply chain. Companies need to monitor the movement of all products entering, circulating within, and exiting their facilities.
Frequently, companies invest in supply chain management technology that automates many error-prone processes, reduces operational and overhead costs, and makes information accessible across various departments responsible for managing the supply chain. By utilizing technology that enhances SCV, companies can gain insights into the status of raw materials as well as shipping and expected delivery dates of orders from both customers and suppliers.
Greater visibility into this network also proves valuable in refining internal business processes, as it can alert employees to inefficiencies and suggest necessary adjustments. Without access to this data, businesses face significant risks, including lost sales and dissatisfied customers due to inaccurate product availability and inconsistent or absent order tracking information.
GOALS OF SUPPLY CHAIN VISIBILITY
The overarching objective of supply chain visibility (SCV) is to gather more accurate information about supply chain operations, enhance efficiency, minimize risk, elevate customer satisfaction, and increase profits. These outcomes are achieved through the improved planning, insights, and execution provided by supply chain management software.
Success hinges on access to real-time, shared data across every point in the supply chain network. This often entails establishing a centralized control tower or hub, where SCV software analyzes supply chain data such as product demand, sales forecasts, material availability, and more. The control tower serves as a comprehensive source for decision-makers to review and manage all of a company's supply chain activities.
TYPES OF SUPPLY CHAIN
Supply chain visibility is a comprehensive concept, and the specific areas of the supply chain that warrant enhanced transparency may differ depending on the industry and individual company. When determining how and where to gain deeper insights into their supply chain, companies should take into account factors such as cargo location, rates, auditing records, and overall supply chain activities.
Real-time visibility into the location and shipment status of cargo represents a fundamental and crucial aspect of supply chain visibility (SCV). Knowing the precise location of an order enables businesses to plan product repurchase and delivery schedules, manage payments, and keep both internal and external stakeholders informed about the status of materials and goods. These enhancements can significantly improve operational efficiency. As customers increasingly expect the ability to track their purchases from the moment they leave the warehouse until they arrive at their doorstep, visibility into cargo location also fosters trust among clients.
Rates refer to the expenses associated with transporting cargo. Gaining visibility into these costs helps companies comprehend their expenditures on moving, shipping, and delivering freight. While this process used to be relatively straightforward, it has become increasingly complex as businesses expand their order volume and closely monitor the number of shipments, available carriers, and potential fulfillment locations. Comprehensive visibility into the diverse rates is essential for supply chain leaders to perform cost-benefit analyses and monitor company spending effectively.
Gaining visibility into the supply chain provides precise and in-depth information on historical transactions, documentation of freight activities, and more. This data is invaluable during the auditing process, as it enables businesses to thoroughly inspect, review, and validate previously completed orders. Enhanced transparency within the auditing process also simplifies regulatory compliance, which is particularly crucial for companies operating across multiple countries.
Supply Chain Activities
Transparency in supply chain activities entails monitoring documents such as quotes, order receipts, bills of lading, and proof of delivery, followed by sharing and managing all the relevant documentation. This process enables organizations to trace every supply chain activity, allowing them to better identify, locate the origin of, and respond to any issues that may emerge.
4 KEY REASONS WHY SUPPLY CHAIN VISIBILITY IS IMPORTANT
Why is supply chain visibility essential? Gaining insights into the inner workings of a supply chain can have a significant impact on operations, customer satisfaction, compliance, and company growth. The other benefits can be summarized by the four C's:
COMPLEXITY- Modern supply chains span the globe, involving diverse supplier networks. Gaining insights across these networks demands not only the appropriate software and KPIs but also a high degree of trust and transparency. This is crucial for preventing logistical issues that can harm customer relationships and diminish profit margins.
CUSTOMERS- Ensuring the right products are available at the right locations and at the right time is fundamental to customer satisfaction, retention, and acquisition. Additionally, customers have come to expect swift delivery and the ability to track their orders from the loading dock to their doorstep.
COMPLIANCE- International supply chains are subject to stringent regulatory requirements, including evolving trade agreements, procurement rules, and government tariffs. Furthermore, maintaining your brand reputation requires confidence in the ethical conduct of all partners within your supply chain. SCV enables companies to monitor and manage variables such as fluctuating currency exchange rates, extreme weather, and political or social unrest that could result in shipment delays.
COMPETITIVENESS- The supply chain constitutes a significant part of many companies' operating budgets, so inefficiencies directly impact the bottom line. SCV allows businesses to identify and address inefficiencies throughout the chain, subsequently reducing costs.
WHAT DOES A HIGHLY VISIBLE SUPPLY CHAIN LOOK LIKE?
Supply chain transparency can revolutionize a company's operations by fostering improved interactions and relationships with external suppliers and customers.
A highly visible supply chain is essential for businesses that need to monitor supplies and products at various levels, including tracking safety, legal and material certifications, order and supplier information, supplier locations and statuses, and manufacturing dates.
A top-tier supply chain integrates data from both internal operations and suppliers' systems, enabling businesses to maintain a comprehensive overview of each component used or sold. This level of transparency ensures companies are promptly notified of any issues, allowing time to address the problem or find alternative solutions.
A manufacturer with this degree of visibility can initially track the movement of raw materials from the source to a sub-supplier or supplier. The company can then follow the materials or components as they arrive at the manufacturing plant and become finished products. Complete documentation of raw materials and components used in the production process serves as a future reference and maintains accurate inventory records. Once the goods are completed, businesses can monitor the exact location of the finished products. As the goods leave the plant, purchasing companies can track their movement via ships, airplanes, or trucks through customs or other checkpoints. End customers can also monitor the location and shipping status of their purchases up until delivery.
If a customer initiates a return, reverse supply chain visibility allows a company to track the returned item, receive it, and document its arrival at the fulfillment center. In an ideal and highly efficient supply chain, a constant flow of communication and information is exchanged between all players, ensuring everyone has access to the most up-to-date data.
3 STEPS TO INCREASE SUPPLY CHAIN VISIBILITY
To enhance supply chain visibility (SCV), it is crucial to gather and distribute pertinent supply chain data throughout the organization, ensuring it is analyzed and acted upon. This can be achieved through a three-step process.
Choose and deploy SCV technology Comprehensive supply chain management software automates the production process from raw materials to the delivery of finished goods to consumers. Begin by mapping out your supply chains to determine the necessary modules. For instance, if your manufacturing is entirely on-shore, you may not require insight into exchange rates. SCV software varies from straightforward point products to extensive suites, integrating supply chain and logistics capabilities with core back-end systems such as ERP and CRM. Seek capabilities across four key areas: customer demand, inventory control, warehouse management, and fleet management. Popular modules include supplier relationship management and the ability to process client orders while closely monitoring shipping and delivery.
Prioritize process improvements f your processes require significant enhancements, consider addressing this step before software selection. After selecting SCV technology, collaborate with your software provider or integrator to maximize the benefits for your team. Eliminate manual or spreadsheet-driven processes, as they are often limited, inefficient, and lack scalability. Ensure that all decision-makers receive relevant reports concerning supply chain activities and possess the capability to act on that information.
Promote efficiency This stage focuses on realizing returns on your software and process improvement investments. As your team gains deeper insights into the supply chain, from material sourcing to manufacturing to the end customer, they will inevitably pinpoint areas for improvement.
The evolution of supply chain management necessitates a shift in the mindset of supply chain leaders, moving away from traditional practices and embracing innovative strategies. Freight companies, cargo shipping, and logistics services are all critical components of this changing landscape. To overcome stagnation in multi-tier supply chain visibility, leaders must unlearn old methodologies and adopt new approaches that leverage data and insights more effectively.
The challenge lies in overcoming the resistance to change and adapting to the increasing levels of uncertainty and variability in the global market. By embracing a holistic approach to supply chain visibility that encompasses all modes and functions, supply chain leaders can gain valuable insights and improve overall performance. Ultimately, the success of modern supply chain management relies on the industry's ability to evolve and adapt to new technologies and data-driven strategies.