Supply chain visibility – 5 things you need to have in your sight
August 5, 2016
It’s a strategic necessity to have supply chain visibility in order to control your costs. According to statistics published by Gatepoint Research in January this year, approximately 80% of organisations reported that they had sufficient visibility of orders and inventory – but only 54% could see capacity, and less than a quarter had visibility over their upstream supply chain processes.
Effective global supply chain management requires an organisation to be able to view its whole supply chain; including upstream and downstream activities. And, the more detailed the data, the better the strategic decisions as the guesswork is taken away. Understanding the story behind the data leads to improved operations for the business and all it’s trading partners and end customers.
So what are the 5 key things a business should have sight of throughout its supply chain?
1. Raw material sourcing and suppliers
Whether a business manufactures goods in-house, or relies on suppliers to deliver ready-made components, a predictable and reliable supply of raw materials is vital. If a business has sight of its sourcing processes, resources and lead-times it enables better production planning – including the set-up of new supplier partners to cover any potential shortfalls from existing suppliers so that sales opportunities aren’t missed. This is especially important for products that are highly seasonal.
Moreover, there is growing emphasis on the need for organisations to monitor and report on CSR (Corporate Social Responsibility) and to do so they need to have visibility of where and how their raw materials are being sourced. Today, consumers are more informed about the consequences of unethical trading. Negative press and catastrophes spread like wildfire across the global news stage and campaigns such as ‘Who Made My Clothes’ are growing in popularity. The knock-on effect being that businesses are starting to turn away suppliers with a bad reputation such as a poor environmental record or rumours of child labour.
Manufacturers may not be involved in unethical behaviour directly, but their sub-contracted suppliers might and this could taint the rest of the supply chain, damaging sales and profit. Only with total visibility of raw material sourcing can businesses confidently claim an ethical and sustainable end product.
2. Supplier relationships and risk status
Every stakeholder involved in supply chain process plays a vital part in production. Yet despite this, many manufacturers still lack visibility of operations beyond their own factories.
The same Gatepoint Research mentioned earlier reported that only 39% of organisations are able to view operations between themselves and their Tier 1 partners. This fell to a mere 7% when looking at operations and recording the relationship between their Tier 3 and 4 suppliers. Furthermore, if you don’t have visibility of who all your suppliers and factories are, then you can’t comprehensively audit them and manage your risk.
The greatest efficiency gains are created when trading partners collaborate, sharing knowledge, resources and data to improve output and throughput. It makes good business sense to implement systems that facilitate this data sharing, allowing supply chain partners to view key metrics up and downstream, across multiple tiers.
3. Supplier capacity
Boeing’s 787 Dreamliner project is often thought of as a disaster – but there are important lessons for any manufacturer when it comes to supply chain visibility across multiple industries. Among the problems that dogged the programme were issues with supplier capacity – at one point Boeing claimed a shortage of bolts was the cause of delayed aircraft assembly operations.
Having already realised the importance of supply chain visibility, Boeing has implemented a portal used to link all of their Dreamliner component suppliers. This platform should have helped them avoid bottlenecks and shortages, so it is unclear why it took so long for new aircraft to begin rolling off the production line.
The principle behind Boeing’s supplier portal is sound, but the ideal platform pulls data from each party’s systems routinely. Having automatic data importing and sharing avoids problems with suppliers failing to update key metrics manually, and prevents capacity and production shortfalls.
With total capacity visibility, manufacturers can see lead times and accurately plan what is required to meet fluctuations in customer demand.
4. 360º view of inventory
Efficient inventory management is critical to control costs and react to fluctuating customer demands. Organisations now need real-time visibility of their assets to avoid shortages and delivery failures caused by old information.
Refining inventory management is also an important step towards improving cost control. Minimising the amount of excess stock held will help to reduce warehousing and demurrage costs to boost margins. The further down the supply chain a business can see, the easier it becomes to plan how much stock it needs held in warehouses at any point in time.
5. Order and shipment progress
Efficiently managing and monitoring the stock as it travels along the supply chain is of upmost importance. A sophisticated global supply chain management platform will track and report in real-time from carriers and destination agents once a milestone is achieved.
Having complete visibility of the order and shipment process results in a more effective supply chain. If all parties are working on a single platform it can quickly alert users to incomplete or late activities so that remedial actions can be taken. It’s also easier to access performance data against KPIs in place for suppliers, individual hauliers, freight forwarders, warehouses and DC’s. With the information being held centrally the low performing parties causing bottlenecks, or failing to reach the standards required are more easily highlighted. It is also much simpler to pinpoint whether delays are being caused by suppliers or the transport links in-between supplier tiers.
Supply chain visibility needs continuous improvement
In a global world of increasingly complex supply chains, organisations need to work toward continuously improving their processes. Future improvements in supply chain visibility will require intelligent insights being extracted from collaborative data sharing between trading partners. Combining and reporting on data gained from every point of the supply chain allows for detailed analysis and will help reveal the story behind your supply chain processes.
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Customer Success Stories
We have found them to be an excellent business partner. Through the implementation of both their supply chain and sourcing software they have more than proven themselves in giving us a product that functions the way we need it to. LIMA has been a fantastic supply chain visibility tool, calculating real accurate landed cost position throughout the order lifecycle. The LIBERTY software matches our product sourcing business needs perfectly. PLM systems I’ve previously used, often bring lots of issues through implementation, but these guys managed this and I’ve got highly satisfied users.John Amm - GM Global Sourcing, Myer
The solution has realised more benefits than we initially thought possible. Claims notifications are being handled in a fraction of the time. Suppliers are making fewer calls into the office and quality scores have increased dramatically. All of this can only have had a positive impact on the customer experienceMartin Ashfield, head of commercial property claims, AXA
The system alerts us to exceptions against our plan, allowing us to focus our attentions on solving the real issues in the supply chain. Having a comprehensive audit trail of events for everyone to see has resulted in significantly improved service levels from our suppliers and agents.Darren Walker, head of generics buying and UK trading, Alliance Healthcare
Now our buyers can exchange photographs with suppliers and have a real-time dialogue as they develop styles, while buyers out in the Far East can send detailed and accurate information back to their teams in the UK. It has certainly cut lead times and reduced errors.Maxine Walter, supply chain co-ordination manager, New Look
The time it takes to compile reports has been significantly reduced; a report which used to take five whole days to complete is now accomplished within a single day!Sam Brown, Responsible Sourcing Co-ordinator - John Lewis.