The business value of supply chain visibility

The business value of supply chain visibility

Natalia Figas
December 23, 2020  | 3 min read

The ideal supply chain is resilient, sustainable and agile. But without visibility, these things are out of reach. What actual values supply chain visibility adds to a business?

Supply chain visibility (SCV), understood in a narrow manner, is simply just tracking and tracing products, assets, people, information, and money flows. But there is much more behind the idea.

Providing necessary data and information in the right timeframes and with the right events is essential to achieve visibility. OEMs, 3PLs, distributors, carriers, suppliers etc. need to continuously exchange information in order to prevent disruptions, delays or blind spots.

In 2017, only 6% of companies achieved full SCV, according to a GEODIS Supply Chain Worldwide survey. In 2020, end-to-end visibility is still a wish, waiting to be granted and – for many – a blocker to move towards agility, sustainability or even resiliency.

1st value of supply chain visibility: it lays the foundations for agile management

Lack of synchronisation in workflow often affects activities of other chains in a given supply chain. But having and sharing proper information with other entities lays the basis for agile logistics management.

What information can be shared?

For example, changes in transport or warehouse regulations, progress in delivery, market feedback, stocks in warehouses, delivery place change, significant personnel shortages etc. Each piece of information influences the supply chain flow.

If organisations distribute information both vertically and horizontally, they have better chances to cope with dynamically changing environments, increase operational speed and build an agile supply chain. But this can be achieved only with overall visibility of the entire logistics process.

What other impact do supply chain visibility have on agility?

Well, monitoring the market expectations will allow you to discover critical dependencies. It means that you will be able to adjust the appropriate amounts of stocks or import raw materials on time to manufacture new products. Also identifying problems on the fly becomes easier with analytical solutions, which are an integral part of supply chain visibility.

Moreover, these tech solutions allow you to estimate performance and increase or decrease it at appropriate times, such as at Christmas when sales explode.

The tech compendium to supply chain visibility

2nd value of supply chain visibility: a step toward sustainability

Because of climate changes and increasing market demand for sustainable logistics, green logistics is one of the top industry commitments.

Many organisations focus on reducing the carbon footprint for the sake of a clean and greener planet. Without solutions such as fuel monitoring tools or mobile applications reporting on drivers’ behaviour, there would not be an option to set and measure KPIs. And these are, of course, important elements of supply chain visibility.

Besides greener logistics, the other important factor for customers is the answer to the question “does that product come from a sustainable, ethical source?”. And the primary means to discover any unwanted incidents is, of course, visibility.

Being aware of your suppliers’ practices, you can make conscious decisions upon data about further cooperation. You gain the ability to analyse situations in a context, which is crucial for running an ethical, sustainable business.

3rd value of supply chain visibility: strengthening the resilience

Obtaining End-2-End supply chain visibility significantly reduces the risk of operational failure. It is crucial, especially for global supply chains, in which there are many more operations and are much more complicated, compared to local chains.

Of course, this applies not only to an operational aspect.

Resiliency also means that you cope with unexpected events such as abnormal weather conditions, natural disasters, factory fires or – on a small scale – goods destruction during transportation.

By utilising IoT devices with e.g., shock sensors, you can avoid fragile cargo damages and reduce the risk of financial penalties or loses. There are plenty of other solutions to improve visibility through a transportation process. You can learn about them here. The most mature technologies are in the road and rail transport sectors.

When the pandemic of COVID-19 occurred, there were plenty of surveys conducted that showed weak points in different supply chain areas.

Capgemini Research Institute surveyed 1,000 supply chain executives at director level or above from an organisation reporting revenues of more than $1 billion between August and September of 2020.

Over 80% of them reported a negative impact of the pandemic.

Among aftereffects there were things like delayed shipments and longer lead times (74%), difficulties in adjusting production capacity in response to fluctuating demand (69%), and difficulties planning amid volatile levels of customer demand (68%).

Capgemini found that only 9% of respondents have the necessary levels of supply chain visibility.

A food for thought: If more of the respondents were aware of supply chain visibility values, less of them would be harmed during the pandemic.

Summary

Only 9% of companies can admit that they are fully aware of what, where and when is happening to their supply chains. This means that supply chain visibility can give your business a great advantage over your competitors.

Your business can grow with adopting a SCV idea. By acquiring contextual data on every level, sharing information among your partners horizontally and vertically and reacting to events, your company can become agile, run sustainable business and build a resilient supply chain.

What is the difference between visibility and transparency? I covered the topic in this article.

 

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