Friday, July 12, 2024

Supply Chain Visibility: All you need to know

Indepth

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Supply chain visibility (SCV) is a simple concept: companies need a detailed view of products and services as they move from the source or supplier, through manufacturing, and to the end consumer.

But attaining this level of transparency is harder than it sounds. Supply chains that once followed a simpler, beginning-to-end model have evolved into complex global networks including raw material suppliers, production partners, logistics providers, regional contract labor, and more.

The interdependent processes involved are all managed by technology used to create, store, sell, and deliver finished products.

With Supply chain visibility, companies can connect all that technology to quickly access data from every point in this supply chain network.

The resulting visibility allows supply chain professionals to quickly detect and respond to potential problems, such as raw material shortages, manufacturing glitches, inventory shortages, or shipment delays.

What Is a Supply Chain?

A supply chain is a network of people, resources, processes, and technology that lets companies move goods from point A to point B.

The supply chain can be divided into two parts

  • Upstream activities refer to procurement, particularly the processes by which raw materials are sourced, paid for, and received.
  • Downstream activities are the processes used to convert those raw materials into finished goods (manufacturing), store those goods (inventory), and distribute them (logistics).

Today’s supply chains are not linear entities. They’re complex collections of networks that can be accessed 24 hours a day online by all the actors involved. They can also be accessed at the front end by customers, whether in stores or via mobile apps.

Typical supply chains encompass functions such as designing products, procuring raw materials and parts, forecasting demand, arranging supply for selected sales channels, and providing customer support and visibility throughout the order process.

As a result of this complexity, there are more sources of data than ever that can be used to track and predict activity within a supply chain.

This includes internal data from across the supply chain and the business; second-party external data from suppliers, partners, customers, and even competitors; and trusted third-party economic, political, and environmental data that can impact supply chain operations.

What Is Supply Chain Visibility?

Supply chain visibility gives companies a detailed view, and therefore better control, of the complex movement of products from initial raw material procurement to the customer’s doorstep.

This view is possible due to the massive amounts of data created by the technology used to operate the supply chain.

Companies gain SCV by effectively connecting and managing that data to spot (or anticipate) problems in the supply chain, optimize the performance of operations, and plan more effectively.

For example, longer lead times from suppliers could cause manufacturing delays. Shipments could be delayed due to labor shortages. Vendor payments could be stalled if there’s a local bank holiday. And production could come to a halt if machinery needs maintenance.

Much of the data about these events may already live in existing information systems. Transportation management systems track logistics data, warehouse management systems track inventory data, enterprise resource planning (ERP) systems track financial and production data, and customer relationship management (CRM) systems track customer and sales data.

The most effective supply chains connect all this information—as well as external data such as weather patterns, market signals, and partner and competitor data—and make it easily accessible to business users.

They also use analytics to analyze massive amounts of data, uncovering trends and issues that help supply chain teams answer crucial questions, such as “Why are my goods delayed?” “How long will they be delayed?” “What’s the impact on customers?”

With the visibility required to effectively manage every part of their supply chain, companies can gain operational efficiencies that increase productivity, profitability, and customer satisfaction.

Key Takeaways

  • Companies gain supply chain visibility by collecting and analyzing internal and external data as their products move from supplier to consumer.
  • SCV employs a combination of data, technology, and processes. Data is collected using technologies such as the Internet of Things (IoT), which includes sensors that detect empty space on warehouse shelves.
  • SCV helps supply chain leaders identify when and how to mitigate supply chain risk, stay compliant with regulations, reduce costs, improve product quality, and ensure on-time deliveries.
  • Key trends in SCV include the increased use of IoT sensors, advanced automation, and predictive and prescriptive analytics.

Supply Chain Visibility Explained

Supply chain visibility refers to a company’s ability to get a detailed view of its products as they move from supplier to consumer. This view is achieved through the following:

  • Data collection: Data is collected from internal sources such as ERP, transportation management, inventory management, and CRM systems; external sources such as supplier data, weather patterns, customer reviews, and economic trends; and technologies such as radio frequency identification (RFID) tags, GPS devices on trucks, and IoT sensors.
  • Data storage and analysis: All the collected data is stored in a data repository or management system where it can be processed and analyzed. Advanced supply chain analytics can help companies uncover profitability drivers, understand costs, identify demand trends, evaluate order fulfillment and delivery performance, manage supplier risks, and assess the impact of economic, social, and environmental trends on their business.
  • Data display and sharing: Supply chain professionals can use real-time dashboards and on-demand reports to explore specific business topics and use cases. For example, they can see which procurement contracts are expiring, assess how much inventory they have on hand, or get the percentage of product orders that have been shipped on time.

By connecting these elements, businesses can get a complete picture of how efficiently their supply chains are running.

The technology needed to support SCV is evolving fast. IoT sensors can capture data from connected devices to record temperatures in warehouses, detect equipment malfunctions, and monitor products in transit.

Artificial intelligence (AI) can be used to find patterns in large volumes of data, helping supply chain teams anticipate demand fluctuations for certain products, or how supply and demand might shift in the near future.

AI-driven analytics and machine learning can help address problems before they arise by predicting costly interruptions (such as when a machine might fail) and recommending supply chain improvements.

Why Is Supply Chain Visibility Important?

In IDC’s 2022 Supply Chain Survey, 80% of respondents said they have projects underway to improve supply chain visibility. Why?

The global supply chain is in constant flux. New technologies, volatile markets, unstable geopolitics, and evolving industry regulations are all driving change, making it harder for companies to manage their supply chains and plan for growth.

In fact, in 2021, IDC had more inquiries about demand planning—the process of forecasting demand for a product and optimizing your ability to meet it—than in any prior year on record. Those inquiries continued at a steady pace in 2022.

Supply chain visibility allows managers to see challenges when they arise and quickly act. For example, supply chain managers can receive an alert if there are significant changes to demand or the flow of goods so they can react quickly to balance supply and demand. SCV also helps supply chain teams achieve the following:

  • Identify their most trusted suppliers so they can keep factories running
  • Uncover cost-saving opportunities and operational bottlenecks
  • Monitor driving behaviors in fleets and encourage fuel-efficient driving habits
  • Monitor work in progress across factories to maximize product quality
  • Gain visibility into the sales funnel to improve supply chain planning

All of these abilities help organizations compete in a rapidly changing market.

How Supply Chain Visibility Works

Manufacturers can achieve supply chain visibility using a combination of data, technology, and processes that help them track activities in real time.

That means integrating data from the upstream and downstream parts of the supply chain—procurement, planning, inventory, and fulfillment systems—with data from across the organization, including ERP and CRM systems.

Businesses should also incorporate external data such as market insights, regulatory changes, and weather patterns in their supply chain management.

This combined insight helps executives and their teams make decisions with confidence about raw material requirements, finished good inventory levels, transportation options, and more.

All this supply chain data is collected via various technologies. Consider the wide range of data an ice cream manufacturer needs to track. Procurement data, stored in their ERP system, tells them how much they’re spending, where ingredients such as milk are sourced, and which suppliers are most reliable.

IoT-enabled sensors on warehouse and retail shelves collect inventory data, alerting the manufacturer when certain flavors or product types are running low. RFID tags on shipping pallets and GPS monitors on trucks track shipment locations to detect delivery delays.

Meanwhile, humidity sensors monitor truck temperatures so the only place ice cream will melt is in a customer’s mouth.

Across the supply chain, CRM systems help the manufacturer track customer orders, service requests, and all customer communications, from procurement to delivery.

Supply chain teams can use blockchain technology to integrate and share all this intelligence along the supply chain, providing participants with a trusted source of information.

Once data is accessed, AI-powered analytics add context and insight to help companies understand key dynamics and trends, such as the impact of inventory availability and sourcing costs on customer satisfaction and profitability. Analytics can also predict potential materials shortages, or identify which suppliers are underperforming.

Supply Chain Visibility Challenges

In IDC’s 2022 Supply Chain Survey, industry analysts found that companies that successfully enable visibility, adopt advanced analytics, and employ new technologies such as AI across their supply chains can achieve a 50% reduction in recovery time and a 30% reduction in new product lead times.

No company would want to miss out on these benefits, but there can be obstacles to implementation.

Some of the biggest hurdles to achieve supply chain visibility include

  • Inconsistent data
    There’s no shortage of data when it comes to business operations. How companies harness and share that data, however, is crucial. Many companies operate in siloes, with their supply chain separated by function—sales, manufacturing, planning, logistics, or procurement—and distinct data flows. This disconnect can cause inaccuracies and make it harder for companies to get an end-to-end view.
  • Disparate business processes
    As companies gather data from various sources across the supply chain and the business as a whole, standardization across processes and systems is key. With disparate systems for planning, production, customer service, and other core functions, it’s difficult to track goods or quickly exchange data among internal teams, suppliers, and other partners. As a result, companies can’t plan as effectively, adapt as easily, or keep up with customer expectations.
  • Lack of downstream visibility
    The ultimate goal of any supply chain is customer satisfaction. To achieve it, companies need visibility into how their products are getting to customers. This downstream visibility includes not just end consumers, but producers, distributors, and retailers that purchase the products. Manufacturers need retailers to inform them about demand spikes, product performance, and other factors that influence procurement and inventory decisions. The most efficient supply chains have processes and tools in place to receive and act on this essential data.
  • Lack of upstream visibility
    Without upstream visibility, or a view of suppliers’ data and challenges, companies risk not getting the parts and materials they need to build their products. For example, a business needs to know if a raw material supplier has a production issue so they can take the necessary steps to prevent a domino effect. This requires open lines of communication, collaborative tools, and a common environment for data sharing.

Supply Chain Visibility Benefits

The benefits of supply chain visibility are extensive, and can ultimately drive higher productivity, happier customers, and greater profits.

With SCV, companies gain the ability to

  • Spot material and inventory shortages: With deep visibility into production and inventory, brands can spot weaknesses such as raw material and inventory shortfalls. They can also plan ahead to align with supplier lead times, pre-ordering components with longer lead times or higher demand.
  • Track goods in near real time: When supply chain teams have a detailed, up-to-date view of their entire product lifecycle, and tools such as AI to help them analyze the data, they can make better decisions that improve the flow of goods through their network.
  • Make faster decisions: With SCV, companies can get a clear understanding of their supply chain network at any given time. This allows them to make informed decisions about where to allocate resources, how to optimize production and inventory management, and how to identify inefficiencies, such as transportation delays, that may slow them down.
  • Reduce costs: Visibility into every stage of the supply chain helps business leaders identify opportunities for cost savings. They can spot workflow inefficiencies, identify the most cost-effective carriers and routes, and monitor inventory levels to prevent overstocking, among other possibilities.
  • Manage risk: Many different risks can impact a supply chain—such as unpredictable demand spikes, natural disasters, material loss, or even cargo theft. CargoNet estimates that $223 million in cargo was stolen in 2022 in the United States and Canada. With SCV enabled by IoT, AI, cloud computing, and other advanced technologies, supply chain teams can see potential risk indicators and respond quickly.
  • Efficiently meet regulatory compliance: Supply chains have more rigorous compliance obligations than ever, including global trade regulations and environmental laws, as well as greater scrutiny concerning human rights and child labor. Operations leaders must ensure that they, and their partners, are fully compliant, or risk serious financial and reputational consequences. And they need to achieve this compliance without excessive labor time and expense. To do so, companies are using collaborative tools and systems to easily share information, such as certificates of compliance and financial statements, within the supply chain network.

4 Tips to Improve Supply Chain Visibility

Visibility of your supply chain is vital to success in an ever-changing environment. However, given the complexity of today’s global supply chains, establishing supply chain visibility can seem daunting. Follow these four steps to set yourself on the right path.

  1. Understand your gaps: Start by looking at your biggest supply chain gaps and how you can close them. Where can your supply chain benefit most from better visibility, and what challenges will that solve? By identifying where you have the most to gain, you can take a phased approach to supply chain visibility to get some quick wins.
  2. Focus on your data: Collecting, analyzing, and sharing the massive amounts of operational data available is essential for effective supply chain management. Make sure you have access to quality data across your network and business, the technology to extract the right insights from that data, and a platform to share data within your customer and partner universe.
  3. Boost collaboration across your supply chain: Supply chain visibility and collaboration go hand in hand. Suppliers, manufacturers, distributors, retailers—everyone in a supply chain network—should be able to easily share data that impacts the flow of goods and their bottom line. This includes production delays, inventory shortages, demand spikes, and regulatory issues. Today’s cloud supply chain management (SCM) systems are built to facilitate this collaboration.
  4. Get closer to your suppliers: Collaboration doesn’t work without communication. You want your supply chain partners to be motivated to share crucial information with you—through your technology systems and other means. Communicate regularly and in other ways (phone calls, meetings, etc.) to make sure your views and goals are aligned and to address concerns head on.

3 Supply Chain Visibility Case Studies

With supply chain visibility, these three companies have improved demand planning, identified operational inefficiencies, and connected critical data across the business.

Hormel Foods
Hormel Foods—which encompasses more than 50 iconic brands—was on a mission to modernize their information systems across key business areas. To achieve this, Hormel deployed cloud-based supply chain, ERP, and human capital management (HCM) systems.

With all their procurement except for China and Brazil now on the cloud, it’s easier for Hormel to analyze vendors. For instance, the company discovered that some of its brands paid more than others for the same item. They also determined the number of vendors that are the sole source of items that their brands rely on. This insight enables them to explore alternative sources and be prepared if a vendor can’t meet demand.

Bonnell Aluminum
Poring over reams of data to find actionable information is no longer the status quo for Bonnell, a manufacturer of custom aluminum extrusions. With advanced analytics, all stakeholders—including plant management and key executives—have visibility into inventory, the production floor, and the back office with the click of a button.

Enhanced data analysis across the supply chain, finance, and HR means the company can identify problem areas in production that contribute to process inefficiencies and delayed orders. Managers can better optimize labor across sites and direct spending based on real-time insights.

Wavetronix
Wavetronix, a global manufacturer of traffic technologies such as radar, deployed cloud-based supply chain management software to increase visibility across its business. The days spent combing through multiple spreadsheets to check the accuracy of data—spanning order management, inventory, and more—are over.

The company also uses a cloud-based ERP system with analytics to connect ideas and information throughout the business.

The combination of cloud SCM and ERP gives Wavetronix the data access, control, and security to provide executives with key insights into the order-to-cash process to help reduce bookings, backlogs, and other shipping-related bottlenecks.

Choose the Right Supply Chain Solution

When choosing a supply chain visibility system, start by examining your current supply chain network. What areas can benefit from increased visibility? What are your most vital data sources? What processes and use cases need improvement? Then, consider the technologies and solutions that address these challenges. You’ll want to look for important features such as:

  • Goods tracking across the product lifecycle
  • Automated inventory management to simplify workflows
  • Visibility into supplier and partner supply chains
  • Cloud-based collaboration capabilities for data sharing
  • Advanced analytics to spot current and developing issues

Lastly, make sure the solution you choose can scale as your business grows, and that the vendor is committed to supply chain innovation, rolling out new capabilities and technologies on a regular basis.

Increase Visibility and Strengthen Your Supply Chain

In a fast-paced and highly competitive environment, supply chain leaders and their teams must be able to make the right decisions, quickly. This means having supply chain visibility across the entire product lifecycle to detect and manage changes in real time.

Oracle Supply Chain Management (SCM) connects supply chain and manufacturing processes via an integrated suite of cloud SCM solutions. Oracle SCM includes everything needed to bring new products to market and manage supply chain planning, procurement, manufacturing, inventory, and logistics.

Technologies such as IoT sensor data and blockchain help teams monitor the flow of goods and anticipate potential issues including product shortages, machine repairs, or delivery delays. Oracle Fusion Analytics for SCM leverages AI and machine learning to add context to the data and make predictions that help companies improve everything from procurement to delivery.

With end-to-end supply chain visibility, companies can elevate their supply chain maturity level and create cross-functional business processes to improve the quality and speed of decision-making. This concept, known as a supply chain command center, leverages connected data for analytics and intelligence in operations management to drive better decisions across finance, human resources, supply chain, sales, and other areas.

Supply Chain Visibility FAQs

How do you achieve supply chain visibility?
Companies can achieve supply chain visibility (SCV) with a combination of data, technology, and processes that track upstream and downstream activities throughout the product lifecycle in near real-time.

Why is visibility important in supply chain management (SCM)?
Supply chain visibility (SCV) lets business leaders see where and how to take action within the supply chain. Supply chain teams can be alerted and prepared if demand for a product surges or supplies get stuck in transit, rather than risk losing customers and revenue.

What is a lack of supply chain visibility?
If a company doesn’t have a detailed and continuous view of raw materials and finished products as they move from supplier to consumer, they lack supply chain visibility. This has a lasting impact on business performance, potentially damaging customer satisfaction and sinking profitability.

What is a supply chain command center?
A supply chain command center is a system that integrates internal data sources with external market signals. This can help teams improve decision-making around specific problems or scenarios that are likely to occur in a supply chain, providing a predefined approach to combine data, analysis, and recommendations.

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