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How Can Lack Of Supply Chain Visibility Put Your Business At Risk?

If your supply chain lacks transparency, it can devastate your company

15Jan

For a supply chain to operate effectively in today’s global world, visibility is a prerequisite. Supply chain visibility (SCV) is knowing where inventory is at any given time, and how well parts, components or products in transit can be tracked as they move from the manufacturer to their final destination. The goal of SCV is to improve and strengthen the supply chain by making this information readily available to all stakeholders, so as to enable a quick response to any shocks to the chain. It means that demand can be reshaped and supply redirected whenever, and however, it is necessary to do so.

Without precise knowledge of actual consumer demand, inventory, and shipments, agility and responsiveness basically go out the window. Having a visible supply chain may cut risks, improve speed to market, and help identify shortage and quality problems along the supply chain, yet many companies are failing in their duty to enforce it. According to the Supply Chain Resilience Report 2015 by insurance company Zurich and the Business Continuity Institute, 31% of businesses said they did not analyze the full supply chain to identify the original source of any disruption they experienced. This failure means that many are sleepwalking into their potential destruction.

The key to providing end-to-end SCV is providing controlled access and transparency to accurate events and data in a timely fashion. This data includes transactions, content and relevant supply chain information — not only between the different organizations involved, but also different departments within a company. The cloud is having a massive impact in providing access to all of this, as is data collection and analysis software and it is useful to have a single interface which is accessible by everyone who needs access. Supply chains have long suffered from data silos, and these need to be freed up as a matter of course to help manage demand signals more accurately and reduce inventory levels, answer customers’ requests faster and more accurately, and improve demand variation.

Another vital part of ensuring good SCV is communication. All parties must be aware of what definition of SVC you are working from, as different firms have different ideas on what it is. They must be aware of the expectation that information is to be shared immediately, and what the KPIs are. For this communication to work efficiently though, trust is paramount, as is developing a good relationship with your suppliers. This comes from solid background work and diligently selecting the right supplier.

While SCV is important, it isn’t enough to simply build it and think that’s the end of it. Once a problem is identified you need to react to it quickly, and the processes to exploit SCV must be in place or it is fundamentally meaningless.

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