Disruptions and silos

What about visibility? Supply chain performance and resilience.

Supply chains and visibility amidst security alerts, new laws, and tough competition. How do you lower risks and achieve award-winning performance?

Supply chain visibility remains top challenge for businesses

That’s one of the findings of the “Supply Chain Resilience Report 2016” by the Business Continuity Institute (BCI). The report also emphasizes the urgency and need for organizations to understand their supply chains in more depth, identify and integrate key suppliers, and improve reporting of disruptions. According to the report, this need is amplified by:

  1. Increased dependencies between suppliers and downstream organizations
  2. Knock-on effects of supplier disruptions on downstream organizations
  3. The growing proportion of incidents occurring at lower tier suppliers

This comprehensive, annual industry study by BCI focuses on the origins, causes, and consequences of supply chain disruption worldwide from a risk management perspective. It also benchmarks business continuity arrangements that raise the level of supply chain resilience. The BCI’s 2016 report features responses from 526 businesses across 64 countries and 15 industry sectors.

Hide and seek? Predominant origins of supply chain disruptions

The BCI survey also asked participating businesses to break down the origins of discrepancies in their external inbound supply chain in the past year. I was quite shocked about the result – please take a look:

Origins of discrepancies
Origins of discrepancies

Sure, I expected disruptions from tier one suppliers to dominate and those from lower level suppliers to be on the rise. But it seriously disturbed me that still 40 percent of businesses do not analyze the source of supply chain disruptions at all. OMG, that’s outrageous! In this day and age! With the options, we have! Why is this? Do you know? Are you one of them?

A glance at the leaders: latest award-winning supply chains

Distressed by these findings, I tried to console myself looking at supply chain champions. “Supply Chain to Admire 2017” is a research study by Supply Chain Insights (SCI) that analyzes supply chain performance and improvements of 494 publicly held companies across 31 countries for the period of 2010 to 2016. The study is based on over 7,000 responses collected from supply chain leaders across industry sectors and relevant market indexes.

The research focuses on the choices that companies made over the last decade aimed at adding corporate value through improvements in supply chain excellence. It’s so new, the full study insights are not even available yet: they will be presented at the SCI Global Summit in Greensboro, US in September 2017.

But, there’s always a sneak peek – in this case provided by Lora Cecere, founder and CEO of Supply Chain Insights, on LinkedIn on June 14. There are 23 winners across industry sectors, and tataaaaa, in alphabetical order, these are as follows and for more details, the full report is available here.

  1. Apple
  2. Autoliv
  3. BD
  4. Bridgestone
  5. Broadcom
  6. Cisco
  7. Cummins
  8. Dollar General
  9. Fuji Heavy Industries Ltd.
  10. Herman Miller
  11. Hershey
  12. Honeywell
  13. L’Oréal
  14. Leggett & Platt
  15. PCA
  16. Qualcomm
  17. Sundrug
  18. Tempur+Sealy
  19. The Boston Beer Company
  20. TJX
  21. TSMC
  22. UBIQUITI
  23. United Tractors

Difficult or lazy? Continuous improvements

SCI’s comprehensive analysis of supply chain performance over the period of five years emphasizes the significant differences across industry sectors and so called peer groups. As such, supply chain performance and improvements cannot truly be compared across but only within applicable groups of companies.

Sadly, the report finds that even among the top performers, sustaining supply chain performance year over year seems difficult. This year’s list of winners is different from the one in 2016, and so on. Only five companies made the list for two consecutive years so far: Apple, Cisco, Cummins, L’Oréal, and TSMC.

In terms of improvement, most companies – across industries – seem to be stuck, except the 23 winners. There are no companies outperforming their peer group in 16 of the 31 industries studied. Overall, the report also notes that driving improvement in high performing companies proceeds slowly: the greater the performance level, the harder it seems to drive improvement.

Does this mean success makes businesses lazy and no longer hungry to improve, I wonder? In my view, no business can afford such an approach in today’s highly dynamic markets – with new, disruptive business models looming and new technologies with major impact on competition advancing fast.

Supply chain leaders cannot afford to operate silos

But the report finding that really pricked up my ears is this: efficient silos do not create effective supply chains. I was further disappointed to find out that with traditional focus on strong vertical processes, businesses are still creating “efficient silos” within an organization, it seems.

I could just tear my hair out. For me as visibility ambassador, “efficient silo” is a contradiction in terms. And I guess, Supply Chain Insights agrees with this view, because they focused on alignment and strong horizontal processes in their supply chain performance evaluation.

On this topic, I can’t seem to repeat myself enough: Integration of partners and systems, and sharing of relevant data back and forth in the value chain, is crucial – CRUCIAL!! – for supply chain success today. Shape up, people – it’s high time!

Hands-on: Where to start? Stock on hand and in transit.

Goods in transit, for example, represent an area of high potential for improving supply chain performance and reducing risks through visibility. Delivery delays represent one of the most common risks in supply chains – with direct impact on customer satisfaction levels. Not being informed about delays in deliveries reduces the satisfaction level even more and further increases the risk of customer losses.

Take a look at the benefits of our Monitoring & Alerting software to increase performance and lower risks. It establishes the foundations for supply chain transparency and proactive management. It empowers companies to increase customer satisfaction even in the event of disruptions. And don't miss this infographic that displays transparent and integrated processes for stock in warehouses for specialized products such as perishables. 

What do you think? Where would you rank your business in supply chain performance, integration levels, and visibility? I look forward to your comments on LinkedIn.

Monitoring & Alerting software from AEB

Download Cold Chain Warehouse infographic