Supply chain visibility, or supply chain transparency, is the ability to track all component parts, pieces, and portions of a product from the place it’s manufactured to their final destination. It can offer insight into which parts of a business are working well—and which aren’t.
Creating better, more efficient supply chain management processes is one of the number one ways businesses can cut costs and realize higher revenues. But managing a supply chain that is murky and indistinct can be an exercise in futility.
For the next part of our ongoing content series on supply chain efficiency, we’re going to focus on supply chain visibility—and what that can mean for a company’s bottom line. Read on to discover how strong supply chain visibility gives firms the leading edge.
Why supply chain visibility matters
Having a crystal-clear, end-to-end view of the supply chain has always been important. But as shipping routes have grown increasingly complex and customers have come to expect more from providers, the need for robust supply chain visibility has steadily escalated.
In this environment, there’s a growing need for suppliers to be able to communicate swift management decisions to various leaders along the supply chain.
Let’s look at a typical example. A shipment of crucial components will no longer arrive in time for production to start on schedule. The ability for a supplier to re-source those parts from somewhere else, redistribute the burden of the error, or find an alternate solution, rests heavily on the visibility within their value chain. A manager with hazy visibility might not even see this issue arise until it’s too late. This is one reason why supply chain visibility is so important.
Supply chain visibility also matters in the ever-changing world of compliance regulations. This is particularly true for global suppliers, whose supply chain operations might involve international shipping laws and tariffs. Investing in the proper management system can aid in untangling dense legalities and can also help firms anticipate the adjustments they will need to make to satisfy the latest regulatory requirements.
Assessing current visibilities
A firm might already have some level of supply chain visibility, but relying solely on what is visible now might lead to problems later. How can a firm tell if they are gathering the right supply chain data—and confirm they’re not overlooking anything?
Non-quantitative ways that a firm can test their supply chain visibility might include methods such as simply thinking of a few key performance indicators (KPIs) that would aid in overall supply chain management and then attempting to find out what they are. What is the inventory turnover rate? The cash to cash cycle time? What about the gross margin return on investment? If it is a difficult task to uncover these data points, consider that the supply chain is unhealthy from a visibility perspective.
However, this highly subjective method for assessing blind spots within the supply chain has its downsides. If a firm doesn’t even know which KPIs to be looking at, they might overlook basic blockages and bottlenecks. This can leave the organization vulnerable to missing more granular-level inefficiencies impacting their supply chain efficiency.
A more objective method would be to conduct an in-depth analysis of past forecast errors. Repeated forecasting errors might signal low levels of visibility somewhere along the supply chain. To diagnose the issue, ask diagnostic questions regarding the inaccurate forecasts. Are they being over- or under-delivered? Both? Can the forecast errors be traced back to a distinct event, or is there no clear reason for them to occur?
Once questions like these are answered, management can determine underlying reasons for forecast errors, which can provide insight into where along the supply chain silos might exist.
How to improve supply chain visibility
Firms facing visibility blockages in their supply chain can take heart. Plenty of solutions exist that can provide the kind of heightened clarity essential to rooting out costly inefficiency.
Transportation management systems (TMS) are a class of digital applications that can aid in providing the end-to-end visibility modern suppliers need. TMSs provide comprehensive dashboards that allow managers to easily monitor inbound deliveries, track outbound shipments, and seamlessly communicate with leadership along the supply chain. This leads to better forecasting, fewer missed deliveries, and happier customers.
CTSI-Global’s TMS software allows suppliers to do all this and more. Contact us today to discover the next evolution of the supply chain.