7 Supply Chain Visibility Tips That Might Surprise You

The adoption of supply chain visibility has been accelerated rapidly. Here you will learn the basic concept and how you can improve supply chain visibility.

What is Supply Chain Visibility?
Nobody knows exactly how the visibility concept was developed. So we dig deeper and found that one of the earliest articles about this was "Electronic data interchange in the automotive industry: managing information flows for greater profitability" by Jerrold Donington (1995). At that time, there were the growing complexities of the business environment and the increasing level of inter-company dependency. Then companies needed to eliminate uncertainties, reduce unnecessary inventory and respond faster. Supply Chain Visibility was defined as below,
"Supply Chain Visibility is the flow of information, across the supply chain to coordinate supply chain processes"

The author suggested that EDI be used to achieve this goal. For your information, EDI system in 1995 was capable to handle various kinds of data transmission such as,

- Planning Schedule & Sequence
- Product Transfer and Product Activity Data
- Order / Delivery Status

Concepts Related to Supply Chain Visibility
Articles based on the practitioner's perspective to focus heavily on bar code, EDI, RFID, software system and the connectivity issues. From academic perspectives, visibility is about inter-firm collaboration, information sharing, quality / timeliness / freshness of shared data.

Even though the sophisticated visibility software is implemented, there are the ways that allow us to see the situations with better clarity. To learn more about this, more information has been gathered from the articles as below,

- Building the Resilient Supply Chain by Martin Christopher and Helen Peck

- Mitigate Supply Chain Risk Through Improved Confidence by Martin Christopher and Hau Lee

- The Bullwhip Effect in Supply Chains by Hau Lee, V. Padmanabhan and Seungjin Whang

Information is then grouped and converted in the infographic as below,

Supply Chain Visibility

1. Reduce stocking points
Visibility can be diminished by multiple stocking points in the distribution channel. Instead of seeing one figure for one SKU as in centralized distribution, companies with too many stocking points are suffering from multiple data of the same SKU. Then, reducing stocking points is the way to avoid the information overload.

2. Shorten pipeline
The prevalent use of outsourcing, global sourcing in particular, increase the members of the supply chain including related processes. Then, it takes more time for the information to flow from one end of the pipeline to the other end. As a result, people can't understand the whole thing about what happens and where.

Shorten the pipeline can be done through the use of intermediaries such as trading companies, international procurement office or even fourth party logistics providers. The key is that the focal company communicates with a "hub" of intermediaries.

Another way to shorten the pipeline is to reduce the number of suppliers or supply base reduction.

3. Find the bottlenecks
Do you really have to see anything and everything that happens in the supply chain? The answer is NO. Finding the bottleneck such as production facilities with quality issues or high downtime can save you time and resource to fix the big problems.

4. Smooth ordering
This principle is based on the bullwhip effect concept. Certain behaviors such as order batching or excessive promotions at the end of the quarter can create the "peak and valley" demand pattern that are difficult for downstream supply chain members to manage. The use of annual contract or blanket orders will help your supplier manage the demand much easier.

5. Avoid safety lead times
Classic symptoms of a material planning system is to use "safety lead times" to compensate lead-time variability. Basically, people add a bit of an extra lead-time to every step of order cycle. For example, adding 3 days for a possible delay in customs clearance or adding 2 days for an extra quality inspection. The result of this is that you can't actually believe the lead-time information in your own enterprise system.

6. Destroy functional silos
People tend to pay attention to certain aspects of data only. For example, procurement people always monitor incoming material closely. When there are problems, procurement people may hesitate to discuss with production department because they don't want to go outside the departmental wall. Functional silos are then a problem that delays the internal communication and lowers visibility from the inside.

7. Invest in agility
The ultimate goal of supply chain visibility is to make a proper decision quickly. To achieve this goal, companies need to develop multi-skill workforce, empower employees to make decisions and simplify the internal rules and business processes. Then, the agile organization is something that you should develop.

As you can see, the way to create a better supply chain visibility is centered around the design of your supply chain, internal behaviors and competency of the internal team.

Related Article: What is Supply Chain Integration?