Why Does it Matter?
There’s a reason that 90% of logistics and transport companies say improving operational visibility is either “critical and necessary” or “very important” -- namely, the impact SCV has on inventory management. The birth of the omni-channel consumer, coupled with a growing tendency to outsource operations, has given rise to an incredibly complex supply chain landscape. No longer are customers satisfied with basic at-home deliveries: consumers now expect unprecedented flexibility, from how they place an order to where and when they pick up (or return) their purchase. On top of it all, they are less tolerant of late deliveries and order mix-ups, and are quick to publicly voice their grievances online and take their business elsewhere.
As a result, companies are scrambling to keep up, depending on a massive and diverse range of modes of transportation to meet these ever-stringent demands. Doing so makes the already difficult job of optimizing service levels even more arduous, and this is precisely why having a comprehensive, real-time view of your inventory -- both at rest and in motion -- is so valuable; it’s also what makes supply chain visibility non-negotiable.
Those without such visibility (78.6% of organizations, according to a Business Constituency Institute survey) are at a much greater risk of experiencing significant disruptions. In fact, 76% of the respondents in that same BCI study had experienced at least one supply chain disruption in the last twelve months, with roughly one quarter reporting losses of more than $1 million due to disruptions in the same time period. 13.2% had lost more than $1 million as the result of a single event.
Matching Demand to Supply
Although interruptions in the supply chain are inevitable, a lightning-fast response is crucial to mitigate damage and reduce the associated costs. But an appropriately quick response isn’t possible if you don’t know exactly where the disruption took place, what caused it, and why. Improved visibility lets you isolate these sources of disruption as they arise, while facilitating coordination between you and your partners to effectively address the problem.
Subsequently, developing effective mitigation plans becomes easier -- especially when big data is incorporated into your process. If need be, you can quickly find an alternative source of supply, whether by re-routing products on the move, or by dipping into your safety stock. Not only does this limit the impact of a given disruption -- it also improves the customer experience by keeping them informed of the reasons for any delay in their shipment.
In the same way, SCV helps companies match demand to supply because they can immediately determine the status of incoming goods and customer orders. Companies with visibility into both transportation and distribution channels can anticipate the impact of demand on their supply chains, writes Lisa Terry of Inbound Logistics. They could, for example, interpret how a 10% increase in business in a given region would affect their supply network.
Such insights help organizations more accurately determine how best to allocate their resources, and with real-time updates, those decisions have an immediate effect. This agility simultaneously cuts out unnecessary middlemen and redundancies in the process, reducing inefficiency while simultaneously increasing revenues by enabling companies to quickly react to (and meet) surges in demand. Indeed, companies with tools facilitating end-to-end visibility can expect to see up to a 110% increase in operating margins, with 25% faster response times.
Matching demand to supply simply isn’t possible without active collaboration between all partners, however, and advancing visibility tools take the mystery out of these supply chain partnerships. For instance, many companies lack a granular view of their payments records, which means they often don’t have an accurate understanding of what their suppliers actually provide, explains Spend Matters’ Kaitlyn Mcavoy. Cloud-based data management systems optimize record-keeping, which reduces onerous duplications or incomplete SKU documentation, while streamlining communication between the supply chain stakeholders.
This clarity between partners is becoming increasingly important as supply chains become more globalized and regulatory demands tighten. Whether it’s managing trade regulations or complying with transportation rules, greater visibility helps you and your network navigate this evolving landscape.
Subsequently, all this added information and improved collaboration bolsters a company’s ability to forecast future performance. The combination of current and historical data gives business partners and suppliers access to an in-depth analysis of their supply chain environment, improving both immediate performance and the ability to plan for the future.