The pandemic disrupted global supply chains, causing extreme uncertainty in terms of delivery times for just about everything you can imagine.
Today it’s never been more important for companies to gain visibility into their supply chain, especially with more online purchases and demands for just-in-time (JIT) delivery.
Better supply chain visibility enables companies to mitigate potential disruptions, meet customer demands, and boost their bottom line.
In this article, we’ll explain what supply chain visibility is and why it’s important. We’ll also look at how you can gain full transparency across your supply chain with the CalAmp application that offers real-time visibility.
What is supply chain visibility?
Supply chain visibility is the ability to track goods and other components as they move through the supply chain from a manufacturer to a retailer or distributor and finally to the consumer. Its scope will depend on what you’re tracking and where it’s coming from.
For example, a restaurant might partner with local farms and have a simple system in place to track produce from its point of origin. In contrast, companies like Apple or Amazon will have more complex and sophisticated supply chains that span the globe.
However, a more complex supply chain increases the risk of “blind spots” — instances where you don’t have real-time visibility of your goods. This often happens while your shipments are in transit.
These blind spots can affect decision-making and create inefficient processes. 60% of organizations say that a lack of transparency in their supply chain poses a significant risk to their operations.
So, what exactly does “visibility” look like? When we talk about supply chains, we’re referring to two levels — low and high visibility environments.
Let’s say you operate a grocery store. Of course, your company depends on regular shipments from suppliers to keep your shelves stocked and your customers happy.
In a low visibility environment, you might have a rough idea of when to expect shipments. But you might not know where exactly they are. You might also be unaware if a shipment gets delayed or lost due to cargo theft.
This lack of visibility doesn’t just create problems in terms of delivery schedules; it can also lead to spoilage and revenue loss. If temperatures exceed specified limits, you need to be aware, so you can divert to a local retailer to minimize spoilage.
In a high visibility environment, you can track goods in real-time until they’re delivered. This is made possible by using telematics devices and sensors placed on high-value goods or in pallets of cargo. They alert you of potential issues so you can take steps to mitigate them. If a shipment won’t get to you in time, you can source from a different supplier or take other action to mitigate the disruption.
Creating a more visible supply chain is more important than ever. Let’s look at why in the next section.
Why is supply chain visibility important?
A more transparent supply chain can completely transform your operations. Here’s how improving visibility across your supply chain can benefit your company.
Mitigate disruptions
Disruptions are a fact of life in global supply chains — trade restrictions, factory closures, labor shortages, and import tariffs are just some of the driving forces.
Unforeseen circumstances can also affect supply chains. 75% of companies have reported supply chain disruption due to the pandemic. These events can bring your operations to a halt and result in lost revenue.
High supply chain visibility helps you become aware of any disruptions almost as soon as they occur, allowing you to act quickly to minimize their impact. Examples include working with a backup supplier, auditing your inventory, and communicating with your customers.
Improve efficiency
Understanding how your products move through your supply chain can help you pinpoint inefficiencies and identify areas for improvement.
For example, when making deliveries, you may discover that your drivers are taking inefficient routes. By addressing this issue, you can make customer deliveries even faster.
Meet customer expectations
Customer expectations are higher than ever. High supply chain visibility enables you to track orders and provide accurate delivery estimates.
91% of customers are more likely to make a repeat purchase after a positive experience.
However, when deliveries fail to arrive on time or are constantly pushed back, it can cause customers to feel frustrated. Worse, it may push them to seek out your competitors.
If goods won’t meet their expected delivery times, you can get in front of the issue by being transparent with your customers.
Reduce costs
Theft is a serious issue that affects supply chains. In 2021, a total of $57.9 million in cargo was stolen across the United States and Canada. 55% of theft incidents reported involved at least one commercial vehicle.
With trucking telematics, companies can monitor when trailer doors open and close when precious cargo is being transported. These sensors can alert drivers of break-in attempts and prevent instances of theft.
Cold chain logistics is another area where high supply chain visibility can prove invaluable. By minimizing disruptions, you can monitor temperature-sensitive goods and ensure they reach their destination spoilage free.
Improve decision-making
Finally, more visibility enables decision-making in real-time, which can improve supply chain efficiency and reduce loss. When you have a clear view of your supply chain, you can make more informed decisions that benefit your business operations.
Understanding what happens in your supply chain is vital. It’s why 77% of companies plan to invest more in increasing their supply chain visibility.
Let’s look at the common challenges they’ll face along the way.
Supply chain visibility challenges
As more companies outsource parts of their supply chain to meet increasing demands, they’re also finding it difficult to manage their operations.
Here are common challenges that prevent companies from achieving high supply chain visibility.
Data silos
When a company grows quickly but fails to scale its infrastructure, data silos start to form. This is when data is stored on different systems because departments lack a shared network.
Data silos make supply chain visibility difficult to achieve. When data is in disparate sources, stakeholders in the supply chain ecosystem are unable to get a full picture of the supply chain. As a result, they may make poor decisions due to incomplete or even inaccurate data.
Having clear processes in place and facilitating communication between departments across the supply chain is key to preventing data silos from forming.
Poor supplier communication
As disruptions in the supply chain become more commonplace, effective communication is vital to mitigate and stay ahead of risks. It’s not surprising then that 56% of companies intend to increase communication with their suppliers to improve supply chain visibility.
It’s easier said than done, of course.
There are numerous parties involved across the supply chain — you have teams involved in manufacturing, operations, shipping, and more. A communication breakdown in just one part can create a ripple effect and lead to problems like late deliveries and quality control issues.
Lack of technology
Another challenge that prevents companies from achieving high supply chain visibility is a lack of technology. They simply don’t have the tools or systems in place to see a unified view of all shipments in real time. Any disruptions along the way may not become apparent until later.
Of course, companies aren’t always to blame. Suppliers may still rely on outdated technology or separate applications and platforms to manage their processes. This makes it almost impossible to unify all the data insights and feed it into other enterprise resource planning (ERP) systems.
To address these challenges, more companies are investing in their supply chain logistics. It allows them to track goods in transit and get off-loading crews ready for deliveries.
How to achieve supply chain visibility
An efficient supply chain can improve your operations. However, a lack of visibility can affect decision-making and lead to problems like delayed deliveries.
Follow these steps to improve visibility across your supply chain.
1. Analyze your supply chain
Performing a supply chain analysis is the first step to improving visibility. It involves evaluating each stage of your supply chain, from acquiring raw materials or supplies to delivering the finished products to your customers.
Start by creating a flowchart. It should outline each step of your supply chain and include the manufacturers and suppliers you work with. It should also include how those goods reach your company. Work with department heads to help fill in any gaps.
Then look at your flowchart and identify which “links” are vulnerable. For example, if your company gets a crucial part from a single supplier, you might want to diversify your supply base by partnering with backup vendors. This will help you minimize disruptions and prepare for unforeseen events.
2. Improve collaboration with your suppliers
Companies with strong supplier-collaboration ties demonstrated higher growth, lower operating costs, and greater profitability than their peers.
By improving collaboration with your suppliers, you can reduce lead times, streamline your procurement processes, and create more accurate supply forecasts.
Establish clear expectations from the start — communicate your business goals, performance expectations, and evaluation methods. Your suppliers should also understand what your expected turnaround times are and what they should do if they can’t meet them.
Don’t wait for disruptions to hit. Make sure to establish communication channels for each supplier and define roles and responsibilities in advance. It’s also a good idea to schedule regular meetings, so your team can take proactive steps should any issues arise.
3. Centralize and unify your data
Data silos occur when teams store internal data in disparate systems. When supply chain managers don’t have access to the same data, it can lead to mistakes like double ordering.
That’s why it’s important to centralize your data. By collecting and storing data in a single location, you create a “single source of truth” and ensure that teams are always working with the latest data. Most importantly, it can help you eliminate data silos in your supply chain.
Consider investing in a supply chain management platform. These systems enable you to collect and unify your data. Some even allow you to integrate with the systems your suppliers use, which give you real-time data on your orders. This increased visibility can help you react proactively if an unexpected disruption occurs.
4. Choose a supply chain logistics platform
One technology that companies are using to increase supply chain visibility is telematics devices and sensors that gather and exchange data over the internet.
These devices integrated with a cloud platform and displayed in an easy to use application let you track the location and status of goods in real time. They can even monitor temperature, humidity, shock, and movement right down to the package level.
If sensitive shipments exceed certain temperature thresholds, you can take steps to ensure the integrity of your cargo and prevent spoilage.
Using CalAmp for supply chain visibility lets your company access real-time tracking data from a web-based portal. By monitoring shipments across different modes of transportation, you’ll be able to coordinate shipments from the point-of-pack to the final destination, enabling you to provide real-time updates on the status.
5. Monitor supply chain KPIs and improve
An inefficient supply chain can increase your operational costs and affect your ability to deliver value to your customers. Monitoring supply chain key performance indicators (KPI) is important because it helps you evaluate your supply chain performance over time.
Here are a handful of supply chain KPIs that you should monitor:
- On-time delivery: The percentage of deliveries that were made on time.
- Demand satisfaction rate: The percentage of orders you fulfilled.
- Customer order cycle time: How long it takes for customers to receive their orders.
- Spoilage rate: The percentage of goods that were lost due to spoilage.
- Freight bill accuracy: The percentage of inaccuracies on a freight bill.
Tracking these metrics can reveal potential issues in your supply chain, like an uptick in late shipments or higher spoilage rates. Try to identify the cause of those issues and take steps to address them. That could mean switching to a different vendor, implementing new tracking systems, or providing better training for your team.
Conclusion
High supply chain visibility enables you to make better business decisions, exceed customer expectations, and gain a competitive advantage. Of course, you’ll need the right tools to get a unified view of everything happening in your supply chain.
Request a demo to see how CalAmp can help you gain end-to-end visibility across your entire supply chain.