SCM success factors

The key ingredients for supply chain success: Visibility and BI

Visibility throughout your supply chain is essential. But knowing about what's going on is just the first step. Then you need to act. Find out how.

If you ask ten people about supply chain visibility, they will all agree that it’s tremendously important. But most likely, only half of them will have a certain level of visibility established. And if you then ask what supply chain visibility actually means, you’ll probably get 5 different answers – at least ;).

For some, it only means track and trace – knowing the status of their deliveries. For others, it includes inventory visibility – of goods in stock as well as in transit. Other views include supply chain partner integration – extending visibility beyond the borders of the own organization, and order status tracking – including payment status for shipment release.

So, which one is it then? Well, all of them, of course. And it is up to the individual company to define its own key performance indicators (KPI) and identify the information that is most relevant to their business, their processes, and importantly, their customers. Remember, the customer runs your business these days – and this trend is only going to increase in the future.

What a visibility tool needs to be capable of

From the technology perspective, a visibility tool must be able to capture and integrate any data along the supply chain. Today, your business might need a certain set – but in today’s dynamic marketplaces, things change swiftly, and tomorrow’s requirements may be different. So, the system must be flexible and capable to handle data from different sources and in various formats and structures – and integrate it accordingly.

In addition to collecting information and sending alerts, a visibility system also needs to connect the different views on any given object: some will look for a shipment number, some for an order, others for an invoice or payment reference. All these different references must come together to provide one consolidated set of information on any object and its status – one full “truth” for all partners.

Why business intelligence (BI) is a must

A good visibility tool also needs to deliver powerful reports. Just collecting the data and sending some alerts is not enough. In logistics, speed is key – both for physical processes and also for information logistics.

Nevertheless, at the moment, many urgent operational decisions are often still based on historical data. Current information is usually readily available in operational systems – but without a visibility solution, this information is neither consolidated nor prepared to enable decisions.

But it’s not just about daily operational decisions, the importance of BI also applies to strategic ones. Good BI tools as part of visibility solutions deliver important reports in a standardized format for all involved teams and relevant business units. They prepare and display data in intelligent visualization, which makes it easy to understand.

This creates transparency at a glance – for the following questions, for example:

  • How well am I utilizing the capacity at my loading docks?
  • Do I need to re-plan my distribution of warehouse staff?
  • How many critical shipments that require an intervention are currently waiting to be processed?
  • How is my transport volume distributed among the various shipping points and consignees?
  • How high is the transport volume of each business area or branch office?
  • How long are internal lead times before a shipment to the customer is ready for dispatch?
  • How well do my carriers perform regarding transport times, erroneous deliveries, and delays?

BI reports provided by visibility solutions will answer all these – and many more – questions. And then you need to take action – align warehouse staff levels to daily delivery volumes, negotiate new rates with service providers when delivery promises were not fulfilled, shift goods from distribution centers to enable shorter last-mile deliveries – to name just a few. Just knowing is not enough – it’s the action that counts.

Monitoring performance – not just externally!

Based on common perception, it always seems to be “the others” that need to be monitored to ensure performance. Like transport providers, for example. And yes, sure, it’s very important to monitor carriers’ delivery performance – to ensure that customers receive their deliveries as promised but also to have a full performance record as basis for renegotiating service contracts, for example.

But what about your own, internal processes? The different steps in the production or assembly process of your goods? Or the processing times of your shipping, customs, or warehouse teams?

We’ve done a small survey among our newsletter readers last year. We’ve asked businesses across industry sectors to assess the transparency in their supply chain, and comment on BI reports as well as key performance indicators (KPIs).

Interestingly, 44% of respondents cited “slow internal processes” as main reason for suboptimal delivery performance. Performance discrepancies based on customers changing orders or bad performance by service providers ranked much lower, cited by only 23%.

Wow! This makes it clear that visibility and performance monitoring should not only start once your goods are handed over to your carriers. To get the full picture, it should start at procurement, include your key production steps, and all your relevant workflows afterwards, including in-house documentation, pick and pack, and customs formalities.

Key ingredient of competitive supply chains

In the digital age with continuously increasing customer expectations, the pressure on supply chain management is high. According to Capgemini Consulting, “supply chain management needs to stay innovative, flexible, proactive, and transparent to be able to keep up with the technological progress.”

In their Q4 2017 trend analysis “The future of supply chain management”, they reported that the “willingness to adopt new trends, as well as the technological capabilities and know-how needed to implement relevant trends, is a basic requirement for a competitive supply chain”.

This also includes increased visibility as an integral part. See the visualization below for some more information. What do you think? Where does your company stand – what’s your current level of visibility and how do you actually work with the data and performance reports you receive? Which actions do you take? I look forward to your comments – here, or on LinkedIn.

Learn more about visibility as part of supply chain collaboration with AEB

Source: https://www.capgemini.com/consulting/2017/10/the-future-of-supply-chain-management-a-trend-analysis/#
Source: https://www.capgemini.com/consulting/2017/10/the-future-of-supply-chain-management-a-trend-analysis/#