What Does Supply-Chain Visibility Actually Mean? | 2020-02-12
Analyst insight: Supply-chain visibility is top of mind for many companies, but they may not be asking the right questions.
When companies are beginning the journey to improve their supply-chain visibility, there are three immediate considerations they need to grasp before making a significant commitment.
Scope of visibility: What do we mean by supply-chain visibility? In many discussions, visibility refers to in-transit transparency — tracking the movement of product once it’s shipped as well as nodes it’s passing on the way to final delivery. Other levels of visibility might be from supplier to manufacturer to buyer, which are often deemed “end-to-end.”
A third interpretation is that full supply-chain visibility extends beyond Tier 1 suppliers — from raw material to product end of life.
Defining scope has implications for the level of data needed, the sophistication of supporting technology, and the amount of collaboration necessary to execute the vision.
Components of solution: Business leaders need to understand that supply-chain visibility comes from a mix of different solutions that work in concert, and significant effort is required to get these solutions to provide the insights that companies need. The overarching solutions comprise technologies that capture and translate information into digital formats; tools to transmit and upload that information across supply-chain partners; and systems that access and make that information actionable to a supply-chain manager.
The right questions: What components does your company need, and which KPIs should it track? Visibility conversations often begin with a manager simply “wanting to know more” about product flows, but open-ended requests can be too vague and difficult to scale. Questions should center around key supply-chain issues like supplier risk, inventory variability, delivery issues or environmental impact.
Supply-chain visibility will remain a trend for companies across industries, but with more refined language around scope. The pressure to achieve visibility in different contexts will likely grow in response to customer demands for more responsible corporate practices — and the need to improve performance in margin-constrained markets.
Alexis Bateman is director of MIT Sustainable Supply Chains at the MIT Center for Transportation and Logistics.