Don’t fear Supply Chain visibility
Supply chain visibility remains a hot-button topic for supply chain executives. When executed correctly, it can open the door to new efficiencies, contributes to higher profitability, and reduces risk.
Meanwhile, the premature launch of systems and processes can dramatically add to costs. As Halloween approaches, poor implementation of visibility-gaining systems will reveal a monster.
This monster cannot die; it’s not susceptible to daylight or even the most intense of prayers. Instead, the supply chain visibility monster looks to show exactly every facet of an operation, including those you wish stayed hidden.
In fact, let’s take a stroll down Nightmare on Visibility Street and see what’s lurking.
Where do Supply Chain executives stand with visibility?
Everyone wants visibility. That’s simple. Unfortunately, implementing standards to manage and ensure visibility represents a direct cost to the company.
Supply Chain Dive reports that as few as 6% of supply chains have retrieved true end-to-end visibility. In the retail supply chain, corporations must ensure adequate on-hand inventory, and if they cannot deliver, suppliers and consumers will go elsewhere. Of course, part of the problem of supply chain visibility lies within the vast diversity of products and solutions.
Shippers cannot simply analyze all available technologies and resources to implement a cost-effective visibility solution. To trim the fat, supply chain leaders look for the most affordable solutions. Yet, the most affordable solution is not always the most effective solution.
Assume the company spends $6 million in managing overhead expenses, but the company only sees a profit of $18 million. With a 33% expense, justifying a $4 or $5 million investment in supply chain visibility technologies is difficult.
How long will it take to see the return on investment?
What happens if the system fails? There is ample opportunity for risk and error. That said, the benefits of increased supply chain visibility can not be ignored.
What about cloud computing capabilities and visibility?
The rise of cloud-based systems does offer an advantage for companies of smaller scale that wish to implement sustainable visibility measures. Software vendors that operate within the cloud typically enjoy a lower expense margin so that they can offer their software as a service.
Software-as-a service models have become another keyword in the battle for supply chain visibility, but like all other systems, supply chain leaders need to evaluate available solutions before investing thoroughly.
Can Supply Chain leaders maintain the status quo without investing in Supply Chain visibility?
The short answer is no. As explained by Supply Chain Brain, manufacturers, and global retailers, especially in the US, are looking toward their suppliers and vendors for improved supply chain visibility.
Since an overwhelming majority of modern e-commerce rests within third-party sellers as per BigCommerce, shortcomings within smaller retailers that do not conform to the strategy will lead to reduced supply chain visibility. Meanwhile, products in the food and drug space, are under increasing scrutiny for tracking product history.
In fact, Walmart recently announced the requirement for all produce vendors to implement tracking measures that leverage blockchain-based platforms to guarantee farm-to-table inventory visibility. While this information remains out of touch for consumers, the retailer has taken notice. Failure to meet the standards will result in the alienation of products among the company, putting your brand at risk.
Another factor must be taken into consideration. Technological evolution has given rise to a host of sensors and data-generating devices that can digitize your systems and processes.
These technologies also run independently of existing systems, allowing companies to keep their expensive, tested, and well-established legacy platforms and processes in place. It also reduces the cost of investing in supply chain visibility, and by the same token, retrofitting supply chains to gain visibility is becoming the new standardization of the industry.
What do Supply Chain leaders need right now?
That’s a loaded question. All supply chains need improved inventory visibility, but the question remains. At what cost will supply chain leaders justify investments? The answer lies in the question, putting the power of SaaS platforms to work, enabling real traceability throughout the supply chain. As more organizations look to improve visibility, its costs and risks will decrease.
As a result, challenges associated with implementing new technologies will decline as well. With Halloween around the corner and the economy on shakier ground, supply chain leaders need something to count on, and visibility is that something.
Slay the beast of supply chain visibility by making small improvements in your organization that reduce inefficiencies and provide more transparency into all activities.
Furthermore, recognize that direct investments will require an upfront cost, but for those that take the time to carefully consider their options and work with established partners, such as ShipChain, the rewards will be great.