SUPPLY CHAIN VISIBILITY CAN EASILY CHANGE THE PROFITABILITY EQUATION

It is commonly remarked that supply chain professionals plan in the perfect world, but execution often happens in the real world. Supply chains are operating in an era that is pregnant with uncertainties. The only known constant in today’s world is relentless change. The new normal will become the only normal. The illusion of a perfect and stable supply chain network will continue to be ripped apart by black swan events. They are at a historic high. Previous black swan events have offered teaching moments to supply chain professionals. Despite the said teaching moments, procurement personnel continue to work in a supply chain ecosystem that is in a state of flux and highly unpredictable.

The fluid business environment is further complicated by today’s customers who seem to value instant gratification at all times. We continue to witness the emergence of a time sensitive consumer. The amazon effect is upon every customer. The need-it-now mentality is pervasive everywhere you go. Customers are wired towards an order-to-delivery mentality of now or never. Supply chains are therefore witnessing progression towards time-based competition. There is an alarming thirst for immediate use of products at short notice. Today, consumer demands are sky-high. They will remain sky-high. Supply chains are being called to action to operate at that sky-high level. The court of public opinion will judge you harshly should your supply chain fail to operate at the optimum level. Social media has given consumers the power to mete out instant justice to those who fail, all to a limitless audience.

Supply chain visibility has therefore been hailed as one of the best rewarding realities to mitigate the effects of supply chain failures. This strategy has significantly ascended in ranks as one of the most critical success factors in the last couple of years. As supply chains continue to shape the dynamics of world trade for many years to come, it is important to prioritise supply chain visibility by giving it the attention it deserves. It has been demonstrated with unprecedented clarity that the supply chain landscape will remain a known unknown. There is need for supply chain professionals to understand the continual flux of the global trading environment which calls into action the need for visibility and agility. Supply chain visibility could easily hold supply chain professionals in good stead as we continue to trade into the known unknown vagaries of world trade.

The need for an organization’s supply chain to achieve real-time visibility is a compelling one. The level of supply chain visibility in the business has got the potential to either spell success or failure, especially where the supply chain network heavily relies on downstream and upstream supply chain partners. The supply chain network is ordinarily composed of various touchpoints which could be multi-enterprise, multi-tier, multi-modal and or multi-directional in product flows. The supply chain business environment is also characterized by extreme weather conditions and or social and political unrests, factors that can easily disrupt the smooth movement of cargo. Supply chain visibility is therefore just as good as product availability.

The question we may more profitably ask is whether supply chain visibility adds value. Yes, it does. In a big way. Supply chain visibility can be relied upon for the enhancement of internal business processes. Benefits associated with this concept include superior visibility into the entire supply chain which enables ?seamless collaboration with other functional areas, partners and suppliers. Supply chain visibility will give supply chain practitioners greater control, better ability to respond to customer demands, reduce potentially high operational costs while putting the business in a vantage position to minimize risks. It can also assist in identifying employee inefficiencies, enabling management to take course correction measures before it gets out of hand. Supply chain visibility has also been associated with the benefit of providing access to vital information instantly, which enhances process efficiency making it easy for supply chain partners to view blind spots. This will allow improved responsiveness to customer requirements when so required.

Supply chain visibility is also associated with many other benefits such as the optimization of logistics and transportation efficiency enabling agility and resilience, boosting customer satisfaction, lowering risk and enhancing compliance in the chain. Supply chain visibility will also improve efficiency of end-to-end business processes, reducing operational blind spots, bringing more complete understanding of customer needs and reduction in data inaccuracies. With visibility, there will be fewer product stockouts, effective inventory positioning, better cargo tracking, more on-time and in-full deliveries as well as seamless order deliveries. Benefits such as shorter cycle times, improved worker efficiency and productivity as well as the availability of precise data to make smarter business decisions will help to make the supply chain robust and resilient.

Supply chain visibility will also give supply chain professionals track and trace capabilities to monitor the movement of goods and services as they move through the chain. Supply chain professionals will also take comfort in the knowledge that they will be able to trace their raw materials and packaging materials both backwards and forwards. The node to node or door to door or origin to destination tracking capabilities will allow supply chain professionals to give proactive shipment status updates in real time as products and information move through the value chain. This will allow customers to know in real time the location and position of their cargo, making procurement planning much easier. Supply chain visibility will provide a contextual insight into how upstream and downstream product flows may affect the whole supply chain ecosystem.

Supply chain visibility requires all partners within the value chain to have greater control of inventory by allowing supply chain practitioners to confidently turn-on and turn-off the material flow of inventory supply lines. By so doing, real time information flow can actually be used as a substitute to inventory. Failure to have forward-looking inventory visibility into the supply chain network will inevitably result in increased inventory levels at different touch points. Inventory is meant to match and mirror the demand requirements of its customers. Supply chain visibility promotes inventory predictability which is the hallmark of consistent lead times. Real-time insights on product availability enables the business to keep accurate tabs on the flow of adequate raw materials or finished goods thereby promoting shorter delivery cycles.

The supply chain track-and-trace inventory facility will allow supply chain professionals to react faster to changes in demand downstream, allowing greater control of inventory and reaction speed in the event of shortages. It enhances the capturing of granular and global detailed view of product movement giving a glass pipeline view of the inventory levels at every supply chain touchpoint. It will assist supply chain professionals to become more efficient and responsive to ebbs and flows in the supply chain ecosystem allowing the efficient management of inventory in motion. Speedy movement of inventory will also assist supply chain professionals to hold down costs by reducing the working capital that could be tied up in the inventory pipeline. Without inventory visibility, supply chain professionals will be forced to maintain high levels of safety stock to mitigate supply shortages.

Supply chain visibility can only be functional where there is data. Procurement data is certainly the pillar on which the bigger picture of visibility is built upon. Data is generally regarded as the fuel of modern supply chains. It must be recognized as new money. Supply chains must monetize data to create sustainable competitive advantages. But the data has to be current. Relying on data from prior hour rather than prior day or week is therefore a strategic imperative. Data enables business decisions to be rich in context and purely analytical in depth. It is therefore generally regarded as a staple for supply chain visibility. Data can be mined for actionable insights that improve transparency and accountability, creating a single source of the truth. The availability of clean data will assist in laying bare valuable data on consumer demands and consumption patterns making it easier to identify shortages and or bottlenecks.

Leveraging the use of supply chain data requires collaboration. Whenever data is siloed or not readily available, it remains valueless. But data in a centralized repository can be relied upon as the ultimate source of truth. Decisions based on incomplete, outdated information are a signature to a disaster. Applying rules of thumb unsupported by facts and figures could typically run your supply chain to the ground. It’s very difficult to glean insights from outdated information. It is therefore important to ensure that recent data is converted into actionable insights that are user friendly to all members of the supply chain network. It will give supply chain leaders the opportunity to utilize actionable insights, largely in context, enabling them to make fact-based decisions. Collaboration will enable the formation of a single repository of valuable and sharable information which enables effective real-time business communication between and amongst supply chain partners.

Mutual data exchange creates an opportunity for better and more reliable collaboration among business partners. Data can only be a strategic asset where you put it to work. It can be used to identify trends, proactively flag risk while at the same time triggering preventative actions. Supply chain professionals are fully aware that agility is difficult to achieve with static data, more so in situations where the data is derived from fragmented and disparate data silos. With fragmented data, there is an off-chance possibility of obscuring unified and actionable improvements into supply chain operations. Supply chain professionals can only gain contextual insight into how the supply chain contributes for the collective good where data is not siloed.

Supply chain visibility is the hallmark of collaboration, but it can only be achieved where supply chain partners are ready to foster a culture of togetherness by ensuring that information is readily available for use on a common platform accessible to all users in the chain. While every single member of the supply chain has perfect information about itself, uncertainties can arise where there is no perfect information about other members. Supply chain collaboration has therefore since replaced individual genius as the principal source of creativity in modern commerce. Supply chain visibility in essence enables supply chain partners to connect and have access to the same information at the same time which promotes the achievement of shared goals. It will allow partners along the supply chain network to see what is working and or what is not working, allowing them to remain on the same page when making supply chain decisions. Supply chain visibility therefore facilitates one-to-one, one-to-many, and many-to-many active engagements between and amongst supply chain partners. After all, the success of your supply chain means more business for your supply chain partners as well.

Collaboration often breaks down where supply chain partners fail to fully grasp and have a clear understanding of the various ongoings one level below or one level up the long supply chain ecosystem. The timeous information flow between and amongst supply chain partners is as important as the product movement in the chain. Such information provides deeper user insights which promotes faster response times whenever so required. The idea is to avoid systems that produces siloed repositories of data. Where supply chain partners are walled off against other trading partners, there is bound to be challenges in sharing common goals of a robust and resilient supply chain network primed to serve the market. As the number of partners increase in the chain so too does the complexity in terms of interactions across supply chain partners. It therefore becomes a strategic imperative to have a seamless integrated visibility that facilitates responsiveness across companies. The big-picture collective knowledge will facilitate supply chain professionals to walk in step towards superior supply chain performance.

It’s not unusual that organizations are often caught completely off guard resulting in serious business continuity challenges across the value chain. If one cog in the wheel becomes dysfunctional, the domino effect will have costly consequences to the chain. There are certainly numerous unplanned supply chain disruptions as a result of abnormal weather conditions, natural disasters such as floods, hurricanes and earthquakes. Such kind of disruptions may result in an increase in costs by a factor of three or four. Supply chain professionals should make use of past trends to activate a dependable safety alarm in the event of encountering choke points along the supply chain network.

If supply chain disruptions have taught us something, it is the need to remain prepared for the unexpected. Black swan events can come in many shapes and sizes. It will probably result in a ripple effect echoing throughout the entire supply chain. Supply chain practitioners must be able to trace their source of disruption past their immediate supplier. It is called a supply chain for a reason. Each supply chain node is connected and must be linked to the next node. It therefore follows that if one node happens to be rattled for whatever reason, the entire ecosystem is disturbed. Eliminating potential redundancies becomes key. Recovering faster from supply chain disruptions becomes key, ensuring the creation of a robust and resilient supply chain network which can stand up to a world characterized by a near-constant state of flux.

The speed and scale of disruption can be minimized where real-time information is relied upon to provide event based early warnings, taking the necessary pre-emptive steps to pivot quickly and flex to solve potential disruptions in good time. Should something go wrong, as it inevitably will, supply chain professionals will be in a position to flag the problem with ease. It will assist the disaster recovery plans to move in step with the challenges. It will allow the swift initiation of a business continuity plan to stay on track and in line. In an already fractured global supply chain, it gives supply chain professionals a vantage point to take corrective actions.

The tightening noose of government regulations can subject the entire systemic supply chain balance on toss. The supply chain is characterized by varying tariffs, trade agreements and varied government regulations across international markets. Supply chain visibility will therefore give organizations an opportunity to monitor in real time issues to do with environmental, social and governance costs from their supply chains. The organization’s greenhouse gas emissions are resident in supply chains. Potential human rights abuses are resident in supply chains. As ethical business standards heighten in significance, suppliers are critical for safeguarding the image and reputation of the business. It would appear issues of transparency around product origin and sustainability are now key. Supply chains will find it easy to keep in step with the ever-changing regulatory business environment where there is supply chain visibility. Reputational risk can easily keep all organizations on the edge, especially where they try to manage the risks manually. Supply chain visibility will significantly limit risky business practices to slip through the cracks of the supply chain network.

FINAL THOUGHTS

The more moving parts there are in a supply chain, the more supply chain visibility is required. It is a long-ignored reality that supply chain visibility is table stakes in today’s business environment. But as we all know, there are no shortages of headline stories on black swan events. The pressure for supply chain visibility has never been this high – and will only continue to intensify in large measure. Supply chain professionals are working under increasing strain. Business as usual will never be usual. The supply chain is a big crowd. Supply chain professionals can only stand out from the crowd by continuously juggling balls in the air. Without end-to-end supply chain visibility, one or more of those balls may be dropped.

Supply chain visibility will therefore enable the supply chain ecosystem to connect the dots. And the dots must remain connected. But that requires visibility throughout the supply chain ecosystem. Supply chain professionals have a huge responsibility to bring their supply chains closer to a connected and smart future. It’s no wonder the rest of the world has also taken notice and continues to support supply chain visibility through various initiatives. In the grand scheme of things, such initiatives will constitute subtle ways of maintaining a firm grip on the supply chain landscape taking a proactive approach with predictive visibility. With supply chain visibility, increased value is within reach due to the creation of a dynamic single source of truth for use by all supply chain partners. This will assist in the creation of a clear line of sight. Thought leaders in procurement cannot fix what they do not see. Visibility will take cost and time out of the supply chain with relative ease. Supply chains compete not so much through what they do but through how they do it. How the supply chains deliver is just as important as what they deliver. Supply chain professionals must remember that excellence in anything increases their potential in everything.

Charles Lovemore Nyika is a Supply Chain Practitioner based in Harare, Zimbabwe. For views and comments, he can be contacted at [email protected]