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The advent of the Internet has fundamentally changed the logistics business everywhere. In some countries, it has been known that an order can be delivered to the customer within hours after the order was submitted. The sharp growth of smaller parcels with highly individualized “last mile” requirements and the corresponding number of returns means that it is increasingly crucial for companies to maintain or even improve their service levels in supply chains. Additionally, shorter product cycles, more complex products, global procurement, and volatile markets are challenges in supply chain management.
Comprehensive supply chain visibility enabled by IT has been touted as the pathway to addressing the complexity issues of supply chains since the early days of the internet.
In the area of procurement, availability and reliability planning are critical factors of supply chains. Transparency and information sharing between businesses and their suppliers are crucial. To ensure that goods arrive on time, the transmitting documentation ahead of the goods is important. This includes preparing special information to be submitted to authorities and customs.
Visibility is needed to foresee potential disruptions to allow businesses to troubleshoot and take immediate actions to rectify the issue. This leads to better compliance with deadlines and quality standards in place. It also produces better service levels and development of trust and long-term partnerships.
Shorter cycles of innovation, seasonal products, marketing campaigns, and promotions lead to high fluctuation and capacity spikes. These dynamics drive the need to anticipate early on the impact on supply chains. This means that up-to-date information on the availability of materials and products and on-going status information must transcend the borders of one’s own warehouse. The aim is to create a global virtual inventory management system where goods in transit can be tracked and planning data can facilitate strategic decision-making and dynamic (re-)planning.
Real-time transparency that includes both operational and cost visibility across the entire supply chain is a critical factor in achieving savings. Transport costs that represent one of the biggest cost blocks within the supply chain have long been the focus of logistics managers. The information gathered -- on past transport volumes and costs -- can be used to take targeted actions in transportation management or to negotiate more favorable service levels for less critical products. This information forms the foundation for organizing effective, optimized freight contracts, service levels, and allotments.
Market research firm Gartner found that on average 7% of freight invoices contained errors. In the transportation sector with its complex freight agreements and fee schedules, businesses that use automated verification processes are able to eliminate freight costs errors. Automated verification processes can also help businesses achieve significant savings by monitoring on-going costs and erroneous service charges.
A 2016 study by Business Continuity Institute (BCI) on Supply Chain Resilience unveiled that 75% of companies reported that they have experienced at least one significant supply chain disruption in the past year. On average, damages resulting from these disruptions amounted to about 15% of the transaction value and did not include direct costs, damage to the company’s reputation and so forth.
Other notable risks include interruptions to procurement, production, and distribution networks within a company’s supply chain, while external risks include economic changes, critical scarcity of resources, geopolitical and security-related events, and natural disasters. Bringing end-to-end transparency to the various risk factors within the supply chain, this process enables a basic understanding of the risks that exist and how businesses can respond to the particular incident. It also allows businesses to respond appropriately to the different types of risks.
Most important for supply chain visibility is the exchange and sharing
of data that takes place internally within an enterprise and throughout
its distribution networks. However, getting all parties to share data is
the key challenge as it requires every single person within the supply
and distribution chain to be involved in the data gathering and
In practice, many businesses still rely largely on manual processes such as the use of MS Office to gather and share data. This is an inefficient method that quickly becomes inadequate as supply chains grow more complex. The recipe for success is to eliminate the need to enter data manually since the core technology required for end-to-end data collection is now available. But, what’s more challenging when using IT systems is data usage.
While a company might have the best IT tools in place to enable supply chain visibility, sharing data within the organization and externally -- with suppliers and customers -- is key to success for solving this issue. It requires the participation of everyone involved in the supply chain. This means that the quality of one’s partners and employees is a critical factor to enable end-to-end transparency; they must also be empowered to make the right decisions in the first place. This is when a business can move towards greater transparency in creating more visibility in their supply chains.
Is supply chain visibility an unfulfilled promise? How to increase end-to-end transparancy?
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