The supply chain of today faces a multitude of new and complex dynamics, along with the traditional challenges relating to planning, sourcing, distribution, and customer service that persist. Due to the number of challenges relating to demand forecasting, supplier relationship management, production efficiency, inventory management, technology integration, there is a need for seamless collaboration among supply chain entities. These are hurdles that supply chain professionals deal with day-to-day.
In the past four years, we have seen an unprecedented change being driven in the industry. Global events like the pandemic shifted people’s shopping habits to online, causing excess demand for suppliers, coupled with geopolitical issues and conflicts that have meant that supply chains are no longer built for efficiency, but for resilience.
The Role of Visibility in Supply Chains
Visibility plays a crucial role in achieving resilience within the supply chain. It refers to the ability to track and monitor the movement of goods, information and resources, across various stages in real time. It is about gaining a comprehensive view that extends from suppliers to end customers. However, only 6% of logistics companies can claim full visibility over their operations.
Achieving full visibility means that organizations need to track and monitor all the stages of the supply chain in real-time. It is crucial for building resilient supply chains, providing insights, enabling proactive decision making and fostering collaboration among supply chain partners. Achieving this provides a holistic view of the supply chain, allowing businesses to identify bottlenecks, optimize processes and enhance overall efficiency. In logistics and warehousing, the ability to track inventory in real time, monitor shipments and manage warehouse operations with precision is testament to the transformational power of visibility.
Understanding the Visibility Gap in the Supply Chain
With modern supply chains being so intricate and involving numerous stakeholders from suppliers to transportation providers, ensuring and maintaining full visibility is becoming increasingly challenging. However, many businesses operate with fragmented and legacy systems where data lives in different silos and across different platforms. This lack of integration hinders the seamless flow of data, making it difficult to track and monitor the entire supply chain in real-time.
The root cause of the visibility gap is related to data. There are several factors that cause the fragmentation of data, but three main reasons are:
- Fragmented systems. Many organizations operate with disjointed systems, creating data silos that hinder the seamless flow of information across the supply chain.
- Inefficient communication and human error. When critical information is not shared promptly or accurately, it creates gaps in visibility and exacerbates operational challenges. Similarly, human error can cause issues through something simple such as a misplacing a box in the wrong pallet location or entering it wrong in the WMS.
- Legacy technologies. Outdated or incompatible technologies can impact the real-time exchange of data. Legacy systems often lack the capabilities needed to keep up with the dynamic nature of modern supply chains.
Implications of the Visibility Gap on the Business
Now that we understand where the visibility gap comes in, we need to understand the implications of what it means to the business. As outlined before, visibility is the fundamental pillar for achieving and maintaining operational effectiveness. The lack of visibility can lead to many risks and inefficiencies.
These inefficiencies have real-world business implications that include, but are not limited to:
- Increased operating costs. Without a clear view of the supply chain, businesses may face increased operational costs due to inefficiencies, excess inventory, and disruptions. This, in turn, affects the overall profitability of the organization.
- Customer dissatisfaction. In today's consumer-driven market, customers expect timely and accurate deliveries. The visibility gap can result in delayed shipments or stockouts, leading to dissatisfied customers and potential damage to a company's reputation.
- Risk exposure. Lack of visibility makes it challenging to identify and mitigate risks effectively. Whether it's geopolitical issues, natural disasters, or disruptions in the supply chain, organizations with limited visibility are more susceptible to unforeseen challenges.
Closing the Visibility Gap
In warehouse management, an astonishing 6,500 hours are dedicated annually to seemingly straightforward tasks such as cycle counts and stock checking. Even though the number of hours is staggering, it is not enough. Data is only gathered in partial fragments at any one time and due to the dynamic nature in warehouses or the supply chain, the fragmented data snapshots become out-dated quickly. This usually leads to many businesses thinking that their accuracy is better than it is in real life on the shop floor.
But how do companies close the visibility gap? Below are some recommendations for closing this gap in the supply chain.
- Real-time data. Gathering real-time data allows businesses to get a holistic view of all their operations and make sure that the data is matching the warehouse management system (WMS) systems to quickly point out any discrepancies in the system. Organizations must invest in integrated systems that provide instant updates on inventory levels, order status, and shipment tracking.
- Advanced analytics and predictive monitoring. Leverage advanced analytics and predictive modelling to anticipate demand fluctuations, optimize inventory levels and identify potential bottlenecks in the warehouse. By utilizing AI powered solutions for analytics, businesses can generate more insights and visibility with more data. This is particularly important as it allows businesses to make the decisions on operations as they are, not how they thought they were.
- Invest in technology infrastructure. Allocate resources to upgrade and integrate technology infrastructure within the warehouse. This includes implementing warehouse management systems (WMS), Internet of Things (IoT) devices, and cloud-based solutions to streamline operations, and enhance real-time visibility.
- Prioritize collaboration. Foster collaboration with suppliers, manufacturers and distributors. Implement shared platforms and standardized data exchange protocols to ensure seamless communication and information flow throughout the supply chain.
- Employee training and change management. Recognise the importance of employee training to optimize the use of new technologies. Implement change management strategies to ensure a smooth transition and acceptance of new processes, minimizing resistance and maximizing efficiency gains.
- Continuous improvement. Establish a culture of continuous improvement within the warehouse. Regularly assess and refine processes based on data analytics and feedback loops, ensuring adaptability to evolving market conditions.
The visibility gap poses challenges to businesses in an ever-complex environment. Supply chain professionals need to embrace new innovations that allow them to close this visibility gap through a continuous stream of real-time data. To overcome the challenges of data collection, addressing warehouse complexities businesses need to consider deploying advanced technologies that allow them to enhance operational efficiency. Similarly, there is a need to also emphasize end-to-end visibility and data accuracy that will ensure continuity and resilience, whilst also serving as a strategic tool for proactive decision making.
