How visible is your supply chain?

Big data. We’ve been told how big data will transform our businesses by driving efficiencies in the business process and transforming our business. But, has big data lived up to its promises to provide business intelligence that will drive supply chain efficiencies and provide the transparency that supply chain managers can benefit from?

We recently conducted a poll with supply chain managers in the transportation industry on the transparency of their supply chains.

It was found that among those polled, 44% of respondents rated their current supply chains’ transparency situation as “merely average” while the same number of respondents ranked their current supply situation as “high” (27%) and “very high” (17%).

It is clear that when it comes to transparency, the logistics community is divided.

 Key reasons for less-than-optimal supply chain performance

Our poll unveiled that the lack of transparency in supply chains are due to the following reasons:

● Sluggish internal processes: 44% of respondents noted that this factor was as one of the key reasons
● Inadequate internal integration: Only 29% respondents reported a “very high level” or “high level” of integration between business intelligence and data analyses

But, is the integration between business intelligence and analysis tools the panacea to improving your company’s supply chain visibility and performance?
It is found that data integration is just part of the solution. Not having access to data is a key problem and this is what businesses need to address first.
However, even before one can think about data access, one needs to identify the kind of data the needs to be generated. Might it be at the package level or at the consignment level and so forth? If the data were to come from a single source, this is a simple problem to solve. But, if the data are aggregated from multiple systems internally and from your service providers, this complicates the entire issue.

Next, is the quality of the data. How accurate and complete is your data from your service provider?
If a delivery is made by your service provider, and you would like to track their delivery performance, are you able to gather all the data from the time the package leaves your company to when it is delivered to the intended receiver?

When delivery of the package is only recorded in the system only after the delivery person returns to the depot and the office staff inputs the information, often without recording the exact time, this impacts the integrity of the data.
This is where collaboration is equally important to this issue of supply chain visibility.

 Collaboration key to supply chain visibility success

A term like “collaboration”’ in the context of supply chain evokes ambivalence.

When we conducted our Global Trade Management study on “Supply chain collaboration the key challenges in managing international supply chains”, we decided to use a working definition of collaboration and asked participants if they identified with the definition. More than three-quarters of our survey participants identified with this definition, “Collaboration is a targeted, solution-oriented cooperation between companies. The aim is a coordinated, cross-enterprise optimization of processes and workflows in which each partner retains entrepreneurial freedom.”

Regardless of how exactly the respondents define the word, “collaboration”, the study reveals a consistent positive attitude towards the strategic need for collaboration.

The general consensus is that collaboration is much more than cooperation and therefore, leads to much greater complexity.

Collaboration is also closely associated with IT. This is the key consensus among those who are currently engaged in collaboration, as well as those who do not.

 The role of IT in collaboration

As more and more companies engage in collaboration, the role of suitable tools will also grow in importance.

While transportation is a common area of collaboration in the supply chain, many companies do not realise that there are many less explored areas in which partnerships are formed.

Our study found that employees at larger enterprises (companies with more than 2,000 employees) are better supported for collaboration through the use of IT collaboration tools such as agreement on industry standards, vendor-managed inventory (VMI) and kanban, while smaller companies still rely on more traditional means of communication e.g. meetings.

When two market players wish to collaborate using different systems, the study found that the weaker partner will use the system of the stronger partner, which is still a rare occurrence. Most, would use a symmetrical strategy based on industry standards or a metaplatform that puts partners on an equal footing and create an atmosphere of trust.

 Collaborative Data Management

Most companies regard their data as a valuable asset and that transparency only makes sense only if the reward is worthwhile and there is a clear benefit.

While most respondents said that they believed that sharing of master data was important, 70% of respondents said that the master data was an important asset that should not be given away. This is not surprising given that most companies won’t give their data away easily as it is the most valuable asset that they have.

Our study unveiled that transport is the most important field of collaboration, with 45 % of respondents already working closely with partners and 26 % planning to do so. Some 30 % to 40 % of respondents also work with other companies in the areas of inventory, forecasting, and order and capacity management.

Many larger enterprises said that they plan to share the master data. What’s important is that there needs to be a win-win principle, and this is an important aspect that should be included in the definition and understanding of what collaboration means.

 Measuring Collaboration Success

Our study also unveiled that while IT tools are important as a collaboration tool, the underlying success for collaboration depends on whether there is a shared goal between two companies. This, can only be achieved using open and regular communications. Therefore, the human factor is the most important aspect of any successful collaboration.

Cost-to-benefit ratio is used to measure the success of an activity. In measuring how successful the impact of collaboration is, about 44% of respondents said that they are able to do so in achieving the shared goals.

In general, the study showed that collaboration was most successful in lowering transport costs and minimizing lead times. Larger enterprises were able to achieve lower levels of production re-planning. On the other hand, it was primarily smaller companies with up to 200 employees that were able to reduce penalties through partnerships.

 The End Goal

Based on the poll and the study we conducted, the ability to collect the right type of data and the willingness to share the data is key to supply chain visibility. While there are IT platforms and tools in place to help reduce the complexities, it is through through shared understanding of what collaboration means to each partner in the equation and having a same vision of what shared goals means define the success.

Ultimately, collaboration creates competitive advantages and businesses that collaborate closely with other businesses in the supply chain and work with them to optimize workflows gain critical competitive advantages.


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