Supply chain challenges are expected to continue through this year, and businesses must continue to adapt. However, gaining end-to-end visibility continues to be a challenge with suppliers dispersed geographically and operating on systems that may not be digitally compatible—or digital at all.
In this article, we’ll discuss the visibility hurdles in the current landscape as well as short-term and organizational solutions to help improve supply-chain visibility.
Complexity Contributes to Fragmentation
Over the past decade, we’ve seen a lot of investments—in things like data platforms, supply chain control towers, risk assessment tools, transportation visibility providers—that have improved visibility in some areas, but not enough to overcome the supply chain’s growing complexity and fast-changing nature.
Even within individual large organizations, it’s common to see multiple ERP and planning systems in use by different divisions, which can complicate the task of understanding where everything is within their own systems at any time.
When you also factor in the geometrically expanding web of primary, secondary and tertiary suppliers, each with their own systems, the ideal state of end-to-end visibility seems very hard to reach. For example, the global semiconductor chip shortage that began in 2020 persists today, in part because of the supply chain complexity involved: from raw material to end customer, chip components could “travel well over 50,000 kilometers and cross more than 70 international borders,” according to the Global Semiconductor Alliance. Shortages, slowdowns and transportation issues upstream affected 169 different industries, from electronics and auto manufacturing to soapmaking and industrial furnishings
Consider one popular toy brand that includes fashion dolls and their accoutrements. The dolls are manufactured in Asia given stable demand and lower costs and are easy to transport due to size, but the popular accoutrements (clothes, beds and toys) which have a very seasonal and unstable demand are produced in Mexico, closer to their biggest market, allowing the company to respond quicker to local demand changes based on consumer buying patterns.
This kind of geographic dispersal illustrates the complexities that became clear, even to people who had never heard of the supply chain, during the worst of the pandemic’s workplace closures. These shifts in strategy will continue to be more common as companies balance lowest-cost manufacturing options versus a “just in case” philosophy to ensure consumers can visit their local store and see the desired products on the shelf. It is likely that existing data platforms and system will not always be able to adapt to these shifts in strategies.
Visibility Improvement Requires a New Approach
Until there’s a technological way to resolve this data complexity, organizations can work on unifying their internal data within and across systems as a first step to visibility improvements and applying analytics for more accurate forecasting and planning.
Often the data will need to be standardized before it can be ingested and analyzed. However, there’s also a critical change-management component to consider. This involves determining who owns and accesses the data internally, which partners it’s shared with and how that access is managed.
Many companies are hesitant to share their data, whether that be internally, with specific vendors or with customers. This is often because they want to protect their market – and sharing vital data around inventory levels, for example, could put that at risk. This means addressing visibility concerns is more complicated than standardizing the data and building out the platforms themselves – it requires assessing the company culture and processes that influence data sharing decisions.
Another strategy may help to move more data among parties in the supply chain ecosystem: deliberate communication improvements and agreements between suppliers and customers. This will require a shift in mindset and practice for many organizations.
Often, for reasons of efficiency and security, players in the supply chain share only the data that’s necessary to do business with their customers and suppliers. Requesting – or volunteering – more information around shortages, schedule delays and other issues can increase visibility without requiring major investments.
In other words, a short-term solution is for participants across the supply chain to behave as members of a larger team working to optimize their sourcing and costs, plan for more efficient product and maintenance and gain competitive advantage.
In general, it’s best to start small and expand visibility efforts in a way that flows logically from that starting point: the classic crawl, walk, run approach. For example, a manufacturer might start out by building a clearer view of their shipments, then move on to a more complex step such as collaborating on demand management by sharing additional data with their suppliers.
Over time, these practices can create new opportunities to improve visibility in other areas, to make supply chain players and their partners more agile, resilient and efficient even as external factors keep changing.
Kris Kraft is senior manager of Supply Chain Transformation, Capgemini Invent.
