Businesses are spreading across the globe. And so are their supply chains. In retail, supply chains are growing more complex and lead times are becoming a matter of serious concern. In an earlier post, I had mentioned the need to improve accuracy and speed of supply chains to address bloated inventory pipelines, respond to changing markets and consumer preferences and reduce supply chain management costs. Reaching these decisions is not rocket science, it is common sense. A recent research by the Aberdeen Group reinforces this, exposing the extent to which supply chain visibility has become a concern. The study indicated that supply chain complexity was the top business pressure (44%) and visibility was a key issue.
This brings me to ask a simple question: What is meant by supply chain visibility? If you are making decisions around supply chain visibility, you perhaps have a view that places greater emphasis on one of the following: process, technology, strategy or business outcomes. We’ll try and focus on more general and universal characteristics of supply chain visibility. For retailers, supply chain visibility should ideally mean the discipline and practice of capturing information and data related to materials (items or SKUs for sale or components for assembly/ production from vendors and suppliers), capital (accounts receivable, payable, cost of capital etc.) and organizational information (demand forecasts, actual sales, margins, BOM, production capacity, distribution capability etc.) and turning that into intelligence for business decision making.
The components of supply chain visibility are rather simple. It is making supply chain visibility effective that retailers need to focus on. Here is a quick 30,000 feet view of creating effective supply chain visibility:
- Capturing data: In retail, the key is to capture the data as it is created in the supply chain, in real time or near real time, and distribute/ share it across stakeholders. To minimize bottlenecks and poor decision-making, retailers need strong data governance that ensures a single source of truth.
- Inter-relating data: Retailers must create strong capabilities to inter-relate data in different formats from different sources. Making available the right data at the right time to the right stakeholders is the key.
- Supporting decision-making: Providing stakeholders (organization, suppliers and trading partners) the ability to review the data and take instant action.
A concept that is taking root in supply chain practice is the idea of setting up a control tower to improve supply chain visibility. The concept is derived from aviation where a control tower has complete visibility of the airport as well as the inbound and outbound aircraft traffic. Many global companies are using Supply Chain Control Towers to gain end-to-end views of their supply and distribution flows. The control tower is able to get a bird’s eye view of the business - the idea of a 30,000 feet view becomes even more relevant - and is able to ensure that everyone works towards a single goal, regardless of the functional area, the tools they work with and the management practices they adopt. Not only does the control tower monitor the flow of materials and products but it also provides insights to various stakeholders in the supply chain that can prevent possible bottle necks, help the supply chain respond rapidly to change, measure performance and create reports.
Think of the Supply Chain Control Tower as a hub built around people and technology. Can your business enhance short and long term visibility in its supply chain, thereby improving its control of the organization and its partners?