Supply Chain Visibility: The Search Continues
May 14, 2012
Dan Gilmore, editor-in-chief of Supply Chain Digest, asserts, “Almost like the search for the Holy Grail, the quest for greater visibility has similarly been driving supply chains across the globe for the past decade.” [“The Visible Supply Chain,” 5 April 2012] In fact, Gilmore goes further and claims that the quest for supply chain visibility “started in the late 1990s, when Art Mesher, then an analyst at Gartner and now CEO of Descartes Systems, wrote a series of research notes on ‘The Three V’s of Supply Chain,’ which were velocity, variability, — and visibility.” He continues:
“From that point on, visibility has been at the forefront of supply chain issues, and improving the level of visibility has moved in the last 7-10 years to the top of the corporate supply chain priority list for the majority of companies. Ah but what is it, really? Can a company ever really achieve a satisfactory level of visibility? What are the keys to success?”
If you are a small- to medium-size company and don’t believe that visibility is a challenge for you, the editorial staff at SupplyChainBrain writes, “The idea that visibility only impacts the most complex supply chains is untrue – even the most ‘simple’ chains often source globally and are instantly impacted by any logistical hiccup.” [“Eliminating Supply Chain Silos Is Crucial to Improved Visibility and Success,” 22 March 2012] The article goes on to describe some of the benefits of increased supply chain visibility:
“Some of the benefits of supply chain visibility can be realized in the following ways:
• Improved inventory policies. Without visibility, inventory managers are left to base their policies around heuristics, which often lead to inventory bloat and inappropriate levels of safety stock. Visibility allows inventory managers the ability to analyze how subtle changes (e.g., changing days’ worth of supply for specific products) will affect inventory levels and profits.
• Improved procurement and sourcing analysis. Visibility impacts downstream facets of the supply chain as well. Spend analysis is more accurate with improved supply chain visibility, and purchasing managers can successfully analyze areas that require improved supplier performance. Additionally, impact spend analysis findings can be shared with other departments, such as risk assessment to help mitigate supplier risk.
• Improved communication between manufacturing and transportation. Information from manufacturing, distribution and logistics operations can be further integrated to increase the entire supply chain’s reaction time. The entire process becomes much smoother and able to quickly adapt to disaster or rapidly developing change.
“The benefits of end-to-end supply chain visibility impact the entire supply chain, from planning and forecasting to sourcing and procurement to logistics. By investing in visibility improvement, business leaders can move beyond thinking about the supply chain as a cost-reductive business initiative. Rather, proper visibility can lead to operational excellence and the supply chain becoming a powerful, strategic arm of the business.”
Gilmore continues his discussion about supply chain visibility by noting that it “is very much like the proverbial onion: it has many layers that must be peeled back over time to reveal more and more data and insight to a company’s managers and executives.” That is a point I have made in past posts, visibility is increased over time as companies come to understand what information is most important and work with vendors to develop strategies to obtain and analyze it. The challenge with this incremental approach is avoiding the temptation to implement systems that end up siloing rather than integrating data. Gilmore continues:
“When progress is made, it at first appears that this new level of visibility has solved many existing problems. But over time, that level of visibility seems not nearly sufficient, and the company must look to peel away another layer of the onion to address another set of challenges or opportunities.”
As Lora Cecere frequently points out, real visibility isn’t achieved unless it reaches your supplier’s supplier and your customer’s customer. Gilmore continues:
“There are no longer any real technical barriers to achieving near perfect visibility, and it is coming soon to a supply chain near you. Auto ID/RFID, GPS, video, mobile, wireless, sensors, the Cloud, etc. – these are largely very mature technologies. The costs for most keep going down. To really get where we can go with this, we’ll need to see RFID adoption pick up some more, as in some applications bar coding provides challenges, but really RFID technology is moving along nicely, regardless of the initial Walmart RFID mandate debacle.”
I’m not sure that most analysts would call all of the technologies associated with supply chain visibility “largely very mature.” In fact, many analysts believe that we may just be in the infancy with regards to some technologies; but, those technologies are maturing fast. As I noted above, many companies fall into the trap of implementing niche visibility solutions for specific departments. The result is sequestered (or siloed) data that adds little value to entire supply chain visibility challenge. The SupplyChainBrain article reports:
“Software Advice finds that many supply chain leaders have difficulty moving past ‘silo-based’ approaches – or relying on spreadsheet programs or non-communicative software solutions to manage various supply chain functions. By adopting software solutions that can provide accurate and up-to-date inventory data, supply chain managers gain a more realistic portrayal of their entire value chain. One way this can be done is through the deployment of integrated supply chain solutions in a supply chain hub. This hub uses a centralized access point and automated inventory collection methods to improve inventory accuracy. In doing so, human error is reduced and inventory data is visible to anyone within the organization with access.”
Even though Gilmore insists that “the technology is there,” Michael J. Stolarczyk, president of Kontane Logistics, in his book, Logical Logistics: A Common Sense Primer for Your Supply Chain, writes:
“The globalization of commerce has made sophisticated logistics technology a necessity for companies large and small. The need for advanced solutions may seem obvious, but a surprising number of companies still have a long way to go when it comes to global supply chain technology sophistication. Many Fortune 500 companies report their global supply chain technology is inadequate to provide timely information required for budget and cash flow planning. Indeed, the global supply chain has been relatively ignored because it was traditionally a small part of a organization’s business mindset.”
Gilmore insists that regardless of what technology you put in place “it just takes companies time to mature and evolve.” He continues:
“That said, some [companies] are clearly evolving lot faster than others. … Visibility is a complex thing, touching nearly every aspect of the supply chain. The initial thinking was primarily a logistics-oriented one – ‘where’s my stuff?’ That is still a very important question, especially with both Lean and global supply chains trying to exist simultaneously), but visibility thinking and action has gone way beyond that today, embracing demand and supply visibility, risk visibility, and more.”
To demonstrate the complexity described by Gilmore, the staff at Supply Chain Digest “developed a new Supply Chain Visibility framework that encompasses eight ‘vectors’ of visibility information and insight.” Gilmore explains that this framework (depicted below) “incorporates concepts related to performance management and analytics that are also components of visibility.”
Gilmore writes, “We may never get there, but the ultimate end game would be the creation of a central portal that would contain integrated visibility information across all the eight sectors.” It’s certainly a goal worth pursuing. I was pleased that the SCD framework prominently highlights predictive analytics, event management, and dashboards — all areas in which my company, Enterra Solutions, is involved. Decision makers don’t really want to see everything all the time. What they want to see are anomalies that could bite them or emerging opportunities that could enhance their company’s market share. That is why user-friendly dashboards are so important. Gilmore concludes that we are still some distance from creating the ideal Supply Chain Visibility Hub, “though so-called ‘Control Towers’ in the logistics arena provide a type of model for it.” To read more about Control Towers, see my post entitled Have You Heard about Supply Chain Control Towers? Gilmore concludes:
“Are vendors working on somewhat analogous concepts for even wider supply chain data beyond logistics? Absolutely. What I think many don’t appreciate are the changes that this level of ‘turbo visibility’ is going to bring eventually. It will drive rethinking about our existing supply chain organizations, especially as operational planning and execution start to blur into one thing. … One of my all-time favorite quotes relative to visibility comes from Nick LaHowchic and the late Dr. Don Bowersox from their excellent book ‘Start Pulling Your Chain’ from a few years ago. They wrote: ‘If information was shared fluidly between participating firms in a channel, then a great deal of “anticipation” would be replaced with facts. In a collaborative environment, it would not be necessary to forecast what others are planning to do or what they are planning to buy. You would see it.’ Not only is this simply a concise but powerful vision of where we are headed, but again shows how visibility has moved well beyond just ‘where’s my stuff?'”
The staff at SupplyChainBrain concludes, “Visibility was a top priority for executives in 2011. Look for this initiative to increase in 2012 as more executives are concerned about supply chain risk in light of recent natural and supplier disasters. Additionally, look for more executives to focus on improving inventory accuracy and accessibility to obtain greater insight into the entire value chain.” I suspect that we are going to continue to read more and more about the importance of supply chain visibility. Fortunately, such discussions are going to be taking place just as new technologies are being introduced that will help companies achieve (or come very to achieving) the kind of visibility that Gilmore envisions.