A key prerequisite of supply chain optimization is real-time supply chain visibility. In the ideal state of the demand-driven supply chain, material flows in a synchronized fashion from one tier to the next, while remaining responsive to variation. Visibility’s power is in its ability to drive the supply chain partners towards realizing this ideal by reducing risk, supply chain waste (cost), and speed to market.
Supply chain visibility aims to:
- Minimize supply chain and business risk.
- Reduce Leadtime and improve operational performance.
- Identify quality issues and inventory shortages throughout the supply chain.
Unfortunately, surveys of supply chain management professionals often reveal the top challenge these professionals face is visibility. In fact, in some cases, supply chain managers still struggle just to have visibility of supply chain data one tier above or below their organization’s position in the supply chain.
Why is supply chain visibility such a challenge?
First, we need to take a look at the state of our world’s actual current state in order to appreciate the problem at hand. While information is something that should be shared, in most companies, not to mention supply chains, information is trapped within silos.
Siloed information prevails because it perfectly serves the purposes of those operating within the paradigm of the respective silo. Because each department within a company is focused on executing its own existing processes to achieve its unique operational goals and objectives, its perceived informational needs only extend as far as its current processes, goals, and objectives appear to dictate. Thus, production is concerned with production schedules. The sales department is focused on sales projections. Purchasing is focused on lead times and supplier costs. Sometimes each of these departments even possesses its own unique informational systems.
Complicating things further, this same silo-effect extends beyond departments to companies across a given supply chain, each of which often maintains completely separate information systems that they don’t normally share with the other supply chain partners.
If that describes our current state, then what does our future state look like? For that, we turn back to an April 2013 Gartner research paper which defined the goal of supply chain visibility accordingly…
“The aim of end-to-end supply chain visibility (E2ESCV) is to provide controlled access and transparency to accurate, timely, and complete events and data — transactions, content, and relevant supply chain information — within and across organizations and services operating supply chains.”
How do we get from our current state to the target future state?
A concept that has gained considerable traction in recent years is the supply chain control tower. A control tower enables the sharing of data at the different tiers of the supply chain, empowering close coordination by partners along the entire supply chain of customer demand and supply.
An effective supply chain control tower must provide supply chain partners with usable information. Unfortunately, that is often easier said than done, but it’s not impossible and is worth the work to achieve. Specifically, there are three areas that must be developed in order for a control tower to effectively transform raw data into usable information for making better supply chain decisions.
- 1. Collaborative Process:
Processes, including risk management, must be more collaborative, activity involving the sharing of data and planning between departments and across organizations. Close alignment of projected sales and the supply chain can aid suppliers in preparing for upcoming demand. Thus, data standards and data sharing requirements must be developed so that data can be effortlessly accessed and utilized by supply chain partners in their own planning.
- 2. Relationship:
Visibility of information between processes is a must not just within the organization but also within its respective silos such as delivery, production, sourcing, and planning. Informational sharing across functions and companies allows visibility for all concerned and paints a clear picture of each end-to-end processes. Sharing of information is vital building the necessary trust and rapport required for true collaboration.
- 3. Technology:
A significant hurdle to sharing information is the use of unique and different information systems. While one party may utilize advanced enterprise technology, another may still be managing by spreadsheet. Fortunately, technology solutions such as APIs, third-party application connectors, and cloud computing, continue to evolve to help companies simplify and streamline data extraction, transformation, and loading (ETL) activities and informational sharing.
The sharing of information throughout the supply chain permits proper planning and analysis. Real-time end-to-end data provided by the supply chain control tower allows companies to manage demands accurately to reduce inventory levels, better meet customer demand, and better prepare for and respond to supply chain risks.