Better visibility into complex supply chains translates to fewer disruptions, increasedcustomer satisfaction and lower costs. A supply chain visibility (SCV) project empowersproduct teams to spot and fix weaknesses in the supply chain, such as inventory shortfallsor order fulfillment issues, before they become major problems.
Sounds great, right? But many companies have found gaining meaningful end-to-end insights abigger challenge than they banked on. Let’s look at why that is and how to overcomecommon roadblocks.
What Is Supply Chain Visibility (SCV)?
Supply chain visibility (SCV) is the ability to track individual components, sub-assembliesand final products as they travel from supplier to manufacturer to consumer. The scope— for example, are raw materials included, and will the item be tracked with forwardsand backwards tracing — depends on the product.
SCV is enabled by supply chain managementtechnology, which provides real-time data about logistics and other aspects of yoursupply chain. This data helps companies maneuver around inventory shortages, avoidbottlenecks, meet compliance directives and track products through to delivery.
SCV may refer to visibility both inside a company’s own operational borders and acrossa partner network. The former is clearly less of a challenge — though still nottrivial — because the company controls access to relevant data sources. To track themovement of a widget from a factory in China to a U.S. assembly plant to a wholesaledistributor and on to the customer or retailer is a multifaceted operation requiring theintegration of diverse partner systems.
The technologies, such as procurement and inventory and order management software, to achievethis visibility are typically part of a company’s broader enterprise resource planning (ERP) system.
Key Takeaways
- Supply chain visibility applies to not only internal business operations, but those ofexternal partners. It tracks raw materials through production and assembly, intofinished products, all the way through to the customer’s doorstep.
- Modern supply chains are more complex than ever before, as they rely on diverse suppliernetworks all over the world.
- Transparency throughout this oft-expansive network can improve customer and supplierrelationships, boost supply chain efficiency and increase profit margins.
- Improving your supply chain visibility involves automating supply chain processes formaximum efficiency, investing in supply chain management software and using insightsfrom the software to drive decision-making.
Supply Chain Visibility Explained
Throughout the years, as companies have outsourced more pieces of their supply chains, theyhave found it more and more difficult to maintain control over their operations. This iswhere greater transparency throughout the process, or supply chain visibility (SCV), comesinto play.
SCV relies on a business’s ability to adequately and consistently manage and keeprecords of all raw materials and components from suppliers and manufacturers as theyprogress through the supply chain. Companies need to track the movement of all productsinto, within and out of their facilities.
Oftentimes, companies will invest in supply chain management technology that automates manyerror-prone processes, reduces operational and overhead costs and makes information visibleacross the numerous departments responsible for managing the supply chain. In using thistechnology that improves SCV, companies can see the status of raw materials and the shippingand expected delivery dates of orders from both customers and suppliers.
Increased visibility into this network is also useful in enhancing internal businessprocesses as it can alert employees of inefficiencies and highlight adjustments they shouldmake. Without this data, businesses would be at major risk of losing out on sales anddisappointing their customers with inaccurate product availability and inconsistent ornonexistent order tracking information.
Goals of Supply Chain Visibility
The broad goal of SCV is to collect better information about supply chain operations, improveefficiency, reduce risk, boost customer satisfaction and increase profits. Companies achievethese results via the improved planning, insights and supply chainexecution delivered by supply chain management software.
Success depends on access to real-time, shared data across every node in a supply chainnetwork. Often, that means configuring a centralized control tower, or hub, where SCV software analyzessupply chain data, such as product demand, sales forecasts, material availability and more.This control tower becomes a comprehensive source for decision-makers to review and manageall of a company’s supply chain activities.
Types of Supply Chain Visibility
Supply chain visibility is a broad concept, and which areas of the supply chain requireincreased transparency will vary by industry and company. When deciding how and where togain greater insights into the supply chain, companies should consider cargo location,rates, auditing records and supply chain activities.
Cargo Location. Real-time visibility into the location and shipmentstatus of cargo is one of the most important and foundational forms of SCV. Havingaccess to the exact whereabouts of an order helps a business determine when toschedule the repurchase and delivery of products, stay on top of payments and keepinternal and external stakeholders informed on the status of materials and goods.All of these improvements can improve operational efficiency. Given that customersincreasingly expect to be able to track their purchases from the time it leaves thewarehouse to the time it reaches their doorstep, visibility into cargo location alsobuilds trust among customers.
Rates. Rates are defined as the costs related to the transportationof cargo. Therefore, visibility into them helps companies understand how much theyare spending moving, shipping and delivering freight. This process used to beconsiderably simpler, yet as businesses expand their order volume and more closelymonitor the number of shipments, available carriers and potential fulfillmentlocations, things start getting more complex. Full visibility into the various ratesis necessary for supply chain leaders to conduct cost-benefit analyses and trackcompany spending.
Auditing Records. Visibility into the supply chain yields accurateand detailed information on past transactions, documentation of freight activitiesand more. This information is invaluable within the auditing process as it allowsbusinesses to fully inspect, review and validate past completed orders. Greatertransparency within the auditing process also makes complying with regulations mucheasier, which is especially important for companies that operate across multiplecountries.
Supply Chain Activities. Transparency within supply chain activitiesmeans tracking quotes, order receipts, bills of lading, proof of delivery and more,then sharing and managing all of that documentation. This allows organizations totrace each and every supply chain activity in order to better detect, pinpoint thesource of and react to any problems that may arise.
4 Key Reasons Why Supply Chain Visibility Is Important
So, why is supply chain visibility important? Insights into the inner workings of a supplychain can inform operations, customer satisfaction, compliance and company growth. Otherbenefits boil down to four C’s:
Complexity: Modern supply chains are global. Extending insightsacross a diverse supplier network requires not just the right software and KPIs buta level of trust and transparency. It’s also the only way to head offlogistical snafus that can damage customer relationships and erode profit margins.
Customers: Having the right products available at the rightlocations at the right time is fundamental to customer satisfaction, retention andacquisition. Moreover, customers have been conditioned to expect fast delivery andto be able to track their orders from loading dock to doorstep.
Compliance: International supply chains face steep regulatoryrequirements, including changing trade agreements, procurement rules andgovernmental tariffs. Then there’s your brand reputation: Are you sure thatall the partners in your supply chain are behaving ethically? SCV helps companiesmonitor and manage variables including volatile monetary exchange rates, extremeweather and political or social unrest that could delay shipments.
Competitiveness: The supply chain encompasses a significant portionof many companies’ operating budgets, so inefficiency directly impacts thebottom line. SCV allows companies to spot and fix inefficiencies throughout thechain and thus reduce costs.
Award Winning
Cloud Inventory
Free ProductTour
What Does a Highly Visible Supply Chain Look Like?
Transparency within the supply chain has the potential to revolutionize a company’soperations by improving interactions and relationships with external suppliers andcustomers.
Regardless of whether a business needs to monitor supplies and products within the supplychain at a batch or individual item level, keeping track of safety, legal and materialcertifications, order and supplier information, the location and status of varioussuppliers, and the manufacturing date are integral to a highly visible supply chain.
A high-quality supply chain pulls data from across not only its internal operations, but fromsuppliers’ systems, allowing businesses to keep detailed tabs on each component ituses or sells. This transparency into upstream partners means companies are immediatelynotified of any issues, so that they have enough time to either address the problem or findan alternate solution.
A manufacturer with this level of visibility would first be able to track the movement of rawmaterials from the source to a sub-supplier or supplier. From there, the company couldfollow the movement of those materials or components as they eventually reached itsmanufacturing plant, where they are transformed into finished products. Not only would therebe documentation for the use of each raw material and component within the productionprocess — for future reference and to maintain accurate inventory records — butupon completion, the business could see the exact location of the finished goods. As goodsleft the plant, companies that purchased these goods would be able to track the movement ofgoods on ships, airplanes or trucks through customs or any other checkpoints. Once an endcustomer bought these products, they would be able to see the location and shipping statusof their purchase, right up until it’s delivered.
If a customer initiated a return, reverse supply chain visibility would enable a company totrack the returned item, receive it and document that when as it reached the fulfillmentcenter. Ultimately, in the best and most efficient supply chain, there is an abundance ofcommunication and information that is constantly being exchanged between all supply chainplayers to ensure that everybody has access to the most up-to-date data.
3 Steps to Increase Supply Chain Visibility
To increase SCV, you must gather and disseminate timely, relevant supply chain data acrossthe organization — and then make sure it’s analyzed and acted on. This is a three-stepprocess.
Select and implement SCV technology: Full-featured supply chainmanagement software automates production from raw materials to delivery of finishedgoods to the consumer. First, diagram your supply chains so you know which modulesyou need. If your manufacturing is fully on-shore, for example, you can get bywithout insight into exchange rates.
SCV software ranges from simple point products to suites with dozens of modules that natively integratesupply chain and logistics capabilities with core back-end systems like ERP and CRM.
Look for capabilities across four areas: customer demand, inventory control andwarehouse and fleet management. Popular modules include supplier relationshipmanagement and the ability to process client orders and closely trackshipping and delivery.
Focus on process improvements: If your processes need serious work,you may want to shift this step ahead of software selection.
Once you’ve selected SCV technology, work with your software provider orintegrator to make sure your team gets the full benefits. Eliminate manual orspreadsheet-driven processes — they are usually limited, inefficient and lackscalability. Make sure all decision-makers receive relevant reports related tosupply chain activities — and that they have the ability to act on thatinformation.
Drive efficiency: This is where you get returns on your software andprocess improvement investments. As your team gains deeper insights into the supplychain, from material sourcing to manufacturing to end customer, they’llinevitably identify areas ripe for improvement.
2 Examples of Supply Chain Visibility
LovelySkin
Dr. Joel Schlessinger founded LovelySkin, an ecommerce site for skincare products anddermatology information, in 1997 to make skincare solutions and assistance more accessible.As the ecommerce business blossomed and the organization partnered with more brands andexpanded its product offerings, it started to run into some logistical difficulties. Notonly was there more inventory, orders, and vendors to manage, but the information related toeach was spread across many different systems. This made keeping track of all supply chaindata a daunting task filled with confusion and the potential for errors.
After replacing QuickBooks, Excel and other homegrown systems with NetSuite’s supplymanagement systems, LovelySkin was able to better account for their inventory and plan forfuture business needs. Adopting a platform that updated information in real time and haddemand planning capabilities helped LovelySkin become more profitable. The health and beautybrand was able to track all components from assembly to delivery, immediately placereplenishment orders based on sales trends, avoid overstocks and hold less inventory.
With the help of NetSuite, LovelySkin was able to handle a 300% increase in orders at thestart of the pandemic as demand for certain products surged. It’s better prepared forany future demand fluctuations with a single system that can manage its entire operationalnetwork.
Enjoy Life
Enjoy Life is a Chicago-based company that provides a line of allergy-free and gluten-freesnacks and ingredients. After its founding in 2002 with 12 baked goods, the company quicklyexpanded and achieved its yearly growth milestones. By 2015, with business still booming,global snack company Mondelez International acquired Enjoy Life.
Yet, success was not without struggle. As Enjoy Life reached $40 million in revenue and hadalmost 100 SKUs, it realized that QuickBooks financials and Fishbowl inventory managementcould no longer keep up with the growing complexity and sheer volume of orders. Lackingaccess to real-time inventory data that would enable Enjoy Life to track product expirationdates and analyze product-related information was not conducive to optimizing businessoperations.
Turning to NetSuite’s supply chain management systems, Enjoy Life was able to exchangemore data and improve communication with its many distributors, launching a key partnershipwith grocery chain Whole Foods. The business also started selling through adirect-to-consumer ecommerce site. Without having to worry about whether their software cankeep up, Enjoy Life has tripled their sales and helped more customers enjoy tasty snacks.
7 Supply Chain Trends in 2023
Supply chains are increasingly digital,cloud-based and agile. Here are six trends to consider as you update your supply chainstrategy.
Digitization: If we learned anything from an almost overnight shiftto remote work it’s that manual processes and paper records are no way tomanage a modern supply chain. Spreadsheets aren’t much better. By digitizingthe supply chain, you’ll significantly improve the ability of business leadersto make timely decisions using demand forecasts and bettermanage inventory, suppliers, transportation and storage.
A move to the cloud: Along the same lines, the limitations of legacyon-premises systems and storage have become clear. Supply chain software deliveredin an as-a-service model is accessible to decision-makers wherever they may be andis often easier to integrate with partner systems.
Focus on resilience: Modern supply chains enable adjustments innear-real-time to cope with disruptive events. Key here are end-to-end visibilityand supplier relationship management capabilities paired with contingency planningand crisis managementprocesses and incident response plans.
Nearshoring and reshoring: Companies are also increasingly lookingto reshore parts of their supply chains to their home country or nearshore them,which is bringing the supply chain closer to, but not within, their home country.More than just a response to consumer demand, both processes can lower transit andshipping costs, allow for flexibility, decrease lead times and increase ability todetect risks and potential product defects.
Reverse and circular logistics: Today “end-to-end”doesn’t necessarily mean a linear progression from steel to sheet metal tocarmaker to dealership. The concept of a circular supply chain is gainingpopularity as companies look to make their manufacturing more sustainable by reusingand recycling stock. Similarly, reverse logistics is all aboutcapturing value from, or properly disposing of, excess goods. As we discuss, in2019, U.S. shoppers returned merchandise worth more than $300 billion, with asignificant chunk of those items ending up back in the hands of distributors.Managing the reverse logistics process is critical to profitability.
Automation and robotics: Advanced automation and robotics —both on manufacturing lines and in software via robotic process automation (RPA)— enhance operational efficiency and reduce errors from repetitive manualtasks and data entry.
AI and machine learning: Artificial Intelligence (AI) and machinelearning likewise increase supply chain efficiencies through trend-spotting andself-learning capabilities. These technologies will eventually be incorporated intotop supply chain and logistics software to improve decision-making, planning,forecasting, advanced calculations and more.
Trends are always evolving, so check out our 14 supply chain trends towatch in 2023.
Increase Supply Chain Visibility With Supply Chain Management Software
The degree of visibility that an organization has into its supply chain has the potential tospell success or failure for the business. Having insights into the location and status ofraw materials, finished products, delivered orders and returned items is crucial for theefficiency and lasting financial success of a business. NetSuite can make it easier tomanage this complex and critical network with its supply chain execution software. This technology keepstrack of the location and status of their current, in-transit and work-in-progress inventoryand automates manual processes such as managing purchase and work orders, receipts andvendors.
NetSuite also helps companies strike the right balance between supply and demand trends witha demand planning module that canreview historical data and other factors to make better procurement decisions. The tool canuse a number of different calculations to come up with forecasts. NetSuite provides acentralized database that makes communicating with key supply chain players and keeping aclose watch on all the moving parts of the supply chain feasible.
Although gaining full supply chain visibility is no easy feat, it’s a necessary one forany business that relies on a supply chain to generate revenue and wants to continue tosatisfy and retain customers. Taking steps to generate greater transparency, efficiency andaccountability throughout the supply chain can set companies on the path toward improvedcustomer and supplier relationships and increased financial success.
