We hear a lot about supply chain visibility and how manufacturers are committed to improving it, but what does it mean and will it bring desired end goal?
Supply chain visibility
Supply chain visibility is knowing where is your freight at any point of transit from manufacturer to final destination. It also means tracing parts or components back through multiple tiers of suppliers back to raw materials.
The benefits of supply chain visibility are:
Measurable KPIs– The prevention of last-minute logistical interruptions that have an impact on profit margins may be achieved by monitoring the supply chain in real-time with relevant key performance indicators (KPIs).
Forecasting– The real-time data of the entire supply chain ensures that supply and delivery times for a product are adequately forecasted.
Customer satisfaction– Through inventory management and supply chain visibility help increase customer satisfaction by quickly meeting their needs.
Compliance– Global supply chains are subject to many compliance obligations related to procurement, distribution, and taxation on the goods, and it is essential to make sure goods are monitored in a compliant way.
But what are the problems of supply chain visibility, and why isn’t it enough? Let’s say SCV allows you to locate that some truck in Arizona carrying your freight will be late because of a supply shortage, can you do anything that will solve that problem, or you can just be aware of it? This example illustrates why supply chain visibility isn’t enough.
Supply chain transparency
What you truly need is a complete insight into how this delay will affect all the linkages in your network, including your customers, not simply in terms of part lead times. The reason we refer to it as a supply chain is that each link is connected to the others; as a result, if one link rattles, the entire chain rattles.
But it is not true another way around- if you optimize one link, you have not optimized the entire supply chain. Because of this, even knowing exactly where in Arizona the truck carrying your freight is going and when it will arrive at your factory, doesn’t inspire you to do much more than knowing the problem. The production, sales, distribution, and other processes are all disrupted by this delayed freight. Additionally, trade-off choices will be necessary to determine which client is most critical to fulfilling with the few products in stock and whether manufacturing capacity has to be reassigned. The answers to these questions will subsequently have an impact on additional clients in your rattled supply chain.
Supply chain transparency provides the following:
- It helps to achieve the optimal level of inventory.
- Restore the healthy bond between inbound supply and outbound demand.
- Makes sure that the vendors are selling only approved components.
- Analyze the products of the company and its environmental footprint.
- It helps to identify invalid supply chain elements and ensures operational improvements.
Agility to act on transparency
You need to be able to effortlessly change plans in order to remain responsive, in addition to being able to fully understand the effects of events and choices on your supply chain. Agility relies on having transparency, through concurrent planning, so you aren’t waiting on analysis and a report from a link up or down the chain. Latency kills agility because, by the time you get the document you need, the situation has possibly already changed. If all the links can see the same information at the same time, they have both the transparency and agility they need to act collaboratively. Collaboration is necessary, to make sure solving one problem doesn’t harm another link.
Analytics inform decisions
You must weigh the potential effects of your late freight since their effects are not isolated. You can evaluate alternatives by evaluating the consequences of potential changes using scenario analysis. You need powerful analytics to be able to show how each scenario you consider addresses, not just your metrics, such as those of a materials planner, but also those of the entire supply chain, for this what-if capacity to be sufficient.
By staffing yourself with the right talent, and establishing a culture that enables everyone to meet your goals, you can take a proactive approach to uncertainty. Make specific forecasts for where you will be in three months, six months, one year, and two years. Next, create a set of scenarios for what could happen. Having these in place will help you stay agile when the market does indeed change so that you can respond quickly and effectively to a changing market.
Companies that choose supply chain transparency almost certainly run into difficulties as they collect data. Problems such as determining the precise data they need to gather, how to verify it, and how to store and evaluate the data. Companies have been battling for years to manage distributed data and gain access to it for external providers.
Supply chain visibility is insufficient to capture the customer’s full attention. Customers should receive all necessary information because they are paying in full for the products. As a result, supply chain visibility alone is insufficient. Complete transparency is required.
As it is said in the article, complete transparency of the supply chain can prevent many problems, allowing one to foresee and solve the existence of problems before they even arise. This not only prevents losses but also helps to increase customer satisfaction.