Supply Chain Visibility: The Key to a Resilient and Agile Supply Chain
The modern world of commerce relies on the performance and operational efficiency of multiple, complex supply chains. Companies in the retail, consumer packaged goods (CPG), and fast-moving consumer goods (FMCG) sectors are particularly affected by issues or problems with their supply chains. Achieving maximum supply chain visibility is an essential component in developing a resilient and agile supply chain.
I. What is Supply Chain Visibility?
Supply chain visibility (SCV) is the ability to accurately track parts, components, or products from their original producer or manufacturer to their final destination. The objective of SCV is to strengthen and improve the supply chain by making information available to all stakeholders including retail establishments and customers.
Supply chain visibility is important for several reasons.
Accuracy is essential in today’s omnichannel marketplace and provides multiple benefits including:
Reducing nil-picks and substitutions which waste resources and impact customer loyalty;
Driving enhanced customer satisfaction;
Promoting longer shelf life and better quality perishable goods.
Reducing food waste of perishable goods
Improving carbon footprint tracking for emission reduction strategies and in reducing environmental impact
The safety of perishable food products is enhanced through supply chain visibility. It is mandated in certain situations such as the United States FDA’s Food Safety Modernization Act Rule 204 which requires “accurate” tracking of food products from farm to retailer. Effective SCV enables the real-time supply chain inventory necessary to ensure the freshness of perishable foods offered for sale to customers and to manage recalls in the inevitable event of outbreaks of foodborne illness.
Reduced carbon footprint
A reduced carbon footprint is possible by eliminating the waste associated with the unnecessary transportation required to address product shortages. More effective scheduling results in more efficient use of a transportation fleet and a reduction of carbon emissions.
Companies that achieve effective supply chain visibility are in a better position to compete with market rivals. The knowledge of where their inventory is at any time allows them to avoid empty shelves and ensure higher levels of customer satisfaction.
Companies face multiple challenges in achieving effective SCV that include:
Poor data sharing between entities in the SCV;
Data silos that hinder information sharing;
Lack of real-time data on the elements of the supply chain;
Manual error prone process and use of outdated technologies for Auto-Identification (Auto-ID) of inventory
II. The Components of Supply Chain Visibility
The following major components are all required to attain effective supply chain visibility.
Data collection and integration
Reliable and accurate information is the key to SCV. Effective SCV requires access to real-time inventory tracking data from across all elements of the supply chain. This data needs to be accurate and of high quality. Data collected from the diverse elements of the supply chain needs to be integrated to provide usable information regarding supply chain management.
Information sharing and collaboration
Information sharing and collaboration between all entities in the supply chain are imperative for effective SCV. It is impossible to provide the necessary real-time visibility into the supply chain without data being shared between all involved parties. Data sharing needs to be facilitated between companies and internally within an organization to provide viable SCV. Sharing information allows all entities to get advanced notice or demand signals that can inform their rate of production and allocation of inventory.
Agreeing on the standards and protocols used for data exchange is critical for promoting collaboration and information sharing. Companies have traditionally used the Electronic Data Interchange (EDI) method of sharing information in a standardized format. While EDI raised the bar when compared with previous processes it has limitations in terms of the sharing of demand signals and more detailed inventory data now gathered as a result of on shelf visibility and cold chain sensing. It has generally been adopted by large scale players in supply chains, which can result in limited visibility. GS1 Electronic Product Code Information Services (EPCIS) version 2 offers an improved protocol that supports existing and emerging industry use cases for supply chain visibility, including visibility of temperature events that are relevant to coldchain systems as well as the sharing of more detailed status information about the state and location of inventory.
Support forAmbient Internet of Things (IoT) devices is being added to wireless standards such as Bluetooth, 5G/6G and IEEE 802.11 making them an excellent solution for use in real-time supply chains. These devices, such as Wiliot IoT Pixels, are smaller and less expensive than previous generations of IoT devices. An additional benefit besides their size and cost-effectiveness is that the devices are powered by harvesting ambient wireless energy.
Analytics and decision-making
The ability to perform advanced analytics is essential to effective SCV. Ideally, the software platform used to enact supply chain visibility provides all three forms of analytics.
Descriptive analytics tells a company what has already happened regarding the supply chain.
Predictive analytics provides information about what could happen in the future.
Prescriptive analytics provide details on what should happen in the future so the company can take the appropriate actions to improve supply chain efficiency. When prescriptive analytics are performed in real-time this can empower operational decisions to reduce operational errors (such as loading inventory into the wrong shipping container).
End-to-end visibility refers to the ability of organizations to track elements through every stage of the supply chain. For example, a grocer needs to know when and how the produce was picked, packaged, and transported to ensure they are supplying fresh items to their customers. End-to-end visibility enables a company to understand where all elements of the supply chain are at any point in time.
Multiple challenges can make it difficult to implement end-to-end visibility. It requires a concerted effort to deliver real-time inventory tracking from all parties involved in the supply chain. Integrating the data collected from diverse sources complicates efforts to provide true end-to-end supply chain visibility.
III. Technologies Enabling Supply Chain Visibility
Advances in technology are responsible for enabling effective supply chain visibility. The following major technologies are employed in providing SCV.
Internet of Things (IoT) - IoT solutions such as RFID tags, ambient IoT, and telematics in vehicles and containers enable new and efficient methods of data collection regarding elements of the supply chain.
Blockchain technology offers a more secure method of record keeping.
Artificial intelligence (AI) and machine learning (ML) are intrinsic components of the supply chain software for tracking and powering advanced analytics.
Cloud computing facilitates data collection and sharing by making information available from any location.
Advanced analytics are employed to obtain a better understanding of current supply chain issues and predict future outcomes.
Integration platforms are essential to consolidate the collected information and make it available to stakeholders throughout the supply chain.
IV. Key Performance Indicators (KPIs) for Supply Chain Visibility
Determining the efficiency of supply chain visibility depends on the results of multiple KPIs that include:
On-time delivery performance - This KPI tracks the on-time delivery performance which is critical for meeting retailer and consumer demands.
Inventory accuracy - A company’s inventory must be current and accurate to enable effective supply chain visibility and management.
Order fulfillment lead time - Reducing the lead time necessary to fulfill orders is possible through SCV.
Order tracking accuracy - Orders need to be accurately tracked and incorporated into inventory revisions to maintain inventory accuracy.
Supplier performance - Tracking supplier performance is essential to identify potential issues that can affect the supply chain.
V. Barriers to Supply Chain Visibility
Several challenges and barriers can negatively impact the ability of an organization to achieve supply chain visibility. Addressing these issues is essential for achieving the level of SCV companies require.
Data silos need to be eliminated so information can flow between organizations and departments within a company.
A lack of standardization in data collection and processing methodology impacts the ability to consolidate the information from multiple sources which is essential to SCV.
Limited data sharing can be a function of the previously mentioned data silos and lack of standardization. It can also come from a reluctance of some organizations to share data with other companies for business reasons that place a greater value on amassing proprietary data as opposed to a more open culture of sharing.
Resistance to change can be a major barrier to implementing the necessary procedures that enable effective SCV. Many companies need to make extensive modifications in the way they do business to implement SCV.
Cybersecurity concerns can be a roadblock in developing the digital infrastructure required to process data efficiently for SCV.
VI. Best Practices for Achieving Supply Chain Visibility
Organizations interested in improving supply chain visibility should consider implementing the following best practices.
Establish clear business goals and objectives that are driving the desire for more effective SCV. This may be to improve customer satisfaction or conserve resources by reducing the number of trucks and trips used in the supply chain.
Collaboration with supply chain partners is essential for information sharing and improving specific areas of the chain that may be underperforming.
Invest in the appropriate technology and infrastructure required to promote enhanced SCV.
Prioritize the quality and accuracy of all collected data. Inaccurate or poor-quality information impedes the ability to achieve SCV.
Implement data analytics and reporting to make better use of collected data resources.
Address the cybersecurity and privacy concerns that are involved with tracking and data collection. It’s important to maintain secure data repositories and limit information collection to the data that is necessary to provide SVC.
VII. The Future of Supply Chain Visibility
Supply chain visibility will become more important in the future as businesses try to become more competitive and take advantage of the benefits of SCV. Let’s look at some of the factors that are poised to impact supply chain visibility in the future.
Emerging trends and technological innovations will have a tremendous impact on supply chain visibility. The continued expansion of IoT technology, Artificial Intelligence (AI), and Machine Learning (ML) will provide organizations with enhanced tools for real-time inventory tracking and advanced analytics. Robotics and automation will offer the potential to streamline operations and improve sustainability. Industry trends like a concentration on last-mile delivery improve fleet management and offer opportunities for more insightful predictive analytics.
Supply chain visibility can play a significant role in promoting sustainability. Companies are looking to demonstrate improved sustainability measures to streamline operations, save money by reducing waste, and appeal to environmentally conscious consumers.
The impact of regulations and standards will have a major influence on the future of SCV. As can be seen in the U.S. FSMA Rule 204, companies will be forced to improve their supply chain management and achieve better SCV or be restricted from continuing to conduct business operations.
The evolving role of supply chain professionals will offer companies a simplified method of attaining effective SCV. The emergence of Supply Chain as a Service (SCaaS) enables a company to outsource supply chain operations to an experienced third party so they can concentrate on core business competencies.
On Shelf Availability, real-time sales and out of stock “demand signals” can be relayed from the retailers shelves and be shared automatically with suppliers earlier in the supply chain.
As ambient IoT extends into the home and into smart packaging for products it will be possible for out of stock replenishment or demand signals to come from the primary packaging for consumables and to be shared with the suppliers further back in the supply chain.
Supply chain visibility continues to become increasingly important in the modern business world. SCV provides a method of achieving a competitive advantage, enhancing customer satisfaction, improving sustainability, and streamlining business operations. Companies that cannot achieve effective SCV will not be able to compete with more successful rivals.
Companies need to be prepared to continuously improve their supply chain visibility to remain competitive and compliant with new regulatory standards. They need to be willing to take advantage of new technologies to replace entrenched and obsolete inventory tracking methods. Developing and maintaining effective supply chain visibility will become an even more essential component of successful businesses in the future.
For related insights, check out Wiliot's podcast episode with Bob Trebilcock of Modern Materials Handling and Supply Chain Management Review