Supply chains have come a long way from being simple, internal systems to an increasingly intricate network of people, processes, and technologies. The modern enterprise relies on collaboration with multiple partners, manufacturers, and suppliers to deliver goods and services to consumers. However, managing a complex supply chain while keeping costs under control and quickly adapting to demand fluctuations can be daunting without a transparent supply chain.
What is Supply Chain Visibility (SCV)?
Supply chain visibility is the ability of a business to track individual parts or products from the manufacturer or supplier to their final destination at any given point in time. The main goal of supply chain visibility is to improve data availability to stakeholders and customers. Having a transparent supply chain ultimately strengthens and enhances the supply chain.
Achieving a transparent supply chain means that a business should have near-real-time visibility into its supplier’s availability of parts, components, and resources that can impact the production and delivery of goods. A transparent supply chain must also have systems and processes to flag any delays or issues almost immediately. In other words, suppliers and manufacturers would act as an extended ecosystem of the business.
Why is Supply Chain Visibility Important?
The Complexity of SCM
Modern supply chains operate at a global scale and use a complex network of suppliers and logistics partners. Without having visibility into the supply chain, it would be nearly impossible for businesses to adapt to demand fluctuations and make quick decisions.
Meeting Service Levels
Consumers today expect shorter lead times and are less tolerant of errors and late deliveries. Managing such high expectations can be a challenge without a transparent and effective supply chain. A holistic view of the supply chain and better flow of information is vital to ensuring that businesses can meet customer demands within the shortest lead time possible.
Regulatory Compliance
Supply chain visibility is becoming increasingly important in the context of continuously changing government regulations. To ensure compliance and respond to new legal requirements quickly, businesses need to have end-to-end visibility of their supply chain.
How to improve supply chain visibility?
There is no one-size-fits-all solution to enhancing supply chain visibility. However, there are a few fundamental steps you can take to build a transparent supply chain.
Consolidate Data onto a Unified Platform
One of the first steps in increasing supply chain visibility is to digitize your entire supply chain workflow into a platform that gives you instant access to every shipment and process. A cloud-based supply chain management software is an indispensable tool for any business looking to enhance its supply chain visibility.
Keep Internal Teams in the Loop
When dealing with a complex supply chain, your internal teams need real-time visibility of products, parts, and components across the supply chain. This level of visibility is easier to achieve when every department of your organization, from purchase to logistics to sales, makes decisions based on a single source of truth. For example, visibility into purchase activities can help your logistics and warehouse team plan and prepare for incoming shipments. Similarly, your sales team can better manage customer expectations if they have visibility into customer lead times and get notified of unforeseen delays.
Keep your Customers Close and your Suppliers Closer
Establishing and maintaining close communication with your suppliers is critical to achieving exceptional supply chain visibility. As much as having visibility into your supplier’s schedule and lead time is crucial for supply chain management, you also need to increase your supplier’s visibility into your operations and expectations. The best way to achieve this is to be transparent about your requirements and expectations with your suppliers. It is a good idea to create a vendor manual with clear packaging and labeling instructions and the contact information of your purchase representative. Setting up regular reporting and follow-ups with your vendors will also help in improving supply chain visibility and keep you informed of possible delays.
Shorten the pipeline
Supply chains with many partners result in more time for data and information to flow from one end of the pipeline to the other. Your supply chain visibility in a complex pipeline with many partners would depend on the upstream visibility of each partner. Shortening your supply chain can give you better supply chain visibility since information can flow much quicker and more efficiently. An effective way to trim your supply chain is by using intermediary companies to communicate with intermediaries and serve as a hub. Another way to shorten the pipeline is to supply base reduction or supplier consolidation.
Set KPIs to Define Success
You can’t improve what you cannot measure. To improve supply chain visibility, you must set up goals and KPIs to measure the success of your processes and systems. However, many businesses fall prey to setting up the wrong KPIs to measure supply chain visibility. The wrong KPIs are just as effective as “no KPIs.” For example, using on-time shipments as a KPI to measure the success of your purchase and logistics team would be a bad idea. Such a KPI will most often lead to these teams expediting shipments unnecessarily when you still have several weeks’ worth of inventory before impacting production. A more rational approach is to set KPIs based on the business impact, such as production stoppages, overstocking and understocking.
As we have seen, increasing your supply chain visibility is possible by setting up suitable systems and processes. However, make sure you build your strategy around the design of your supply chain and the competency of the internal team.
