The Supply Chain’s Vision Problem

Stephen DeAngelis

February 11, 2020

Supply chain visibility remains elusive despite decades pursuing it. Arnaud Morvan states a simple truth, “It’s difficult to see, measure and improve what’s happening across the supply chain.”[1] And that’s a problem. Morvan notes, “The management guru Peter Drucker suggested, you can’t improve what you can’t measure. To go back a step further, you can’t measure what you can’t see. That sums up supply chain operations at a lot of companies today: It’s difficult to see, measure and improve what’s happening across the supply chain.” Despite the difficulty, Morvan asserts, “The need is clear. In our hyper-competitive global environment, companies have to respond rapidly to any supply chain event that impacts customer satisfaction, profitability and working capital. End-to-end visibility and timely KPIs are the foundation for quickly making the right decisions to mitigate risk and ensure profitability.”

Alex Saric, a procurement expert at Ivalua, observes that poor supply chain visibility exposes companies to unwanted risks. He states, “In order to build solid contingency plans, organizations need to have a complete view of their supply chains, allowing them to assess risk effectively from a single viewpoint. Here, a smart approach to procurement will allow companies to improve supplier visibility, put effective measures in place and identify supply chain risks as they appear. In this way, they can unlock the full potential value of their supply chains and deliver a competitive advantage to the business.”[2] But as Morvan notes, achieving better visibility is easier said than done.

The improved visibility imperative

Vishnu Rajamanickam (@vishnucr92) writes, “Rising consumer expectations on delivery standards have compelled supply chains to react faster and push for digitalization, to ensure transparency across stakeholders and visibility into operations. Though it makes obvious sense to say visibility increases efficiency, the push towards greater operational visibility has remained a difficult task.”[3] Rajamanickam touches on the most important element of supply chain visibility — digitalization. Digitalization helps companies obtain the right data from the right sources and ensures that data gets to the right decision-makers. He notes one big challenge is integrating data. He explains, “One of the primary problems that face supply chains is the siloed approach within logistics verticals, which has traditionally reduced fluidity between operations and hampered efficiency. This leads to fragmented visibility.”

In the Digital Age, one would think obtaining the right data wouldn’t be a problem. After all, the world is drowning in data. The challenge is knowing who has the data. Many of today’s supply chains are tiers deep and trying to discover tier 3 and, maybe even, lower suppliers can be extremely difficult; especially if those suppliers are half a world away. Rajamanickam notes, “Globalization has brought consumers closer to products from across the world. However, that globalization lengthens and complicates supply chains, as they have to work with added unpredictability, making them susceptible to changing regulations and policies across economic blocs.” Richard Cushing, a principal at Cushing & Associates, believes the situation is growing worse. “As late as the late 80s, at least for the majority of North American companies,” he notes, “supply chains were predominantly local and, perhaps, nationwide at most. Most companies weren’t buying from China or Taiwan or Malaysia like they are today.”[4] Because supply chains have become so complicated, Cushing insists, “The only kind of supply chain visibility that is worth spending time, energy, or money on is visibility that promotes and protects the flow of relevant material.”

Cognitive technology and supply chain visibility

Angel Mendez, Chief Operating Officer at HERE Technologies, writes, “Supply chain activities are more instrumented and measured than ever before. Point of sale data tracks exactly how many black shirts in size medium were sold yesterday, then meshes with inventory management technology to generate demand predictions that then prompt production of more (or less). Quality yields of machines on a factory floor are constantly measured. IoT devices mean equipment and assets can give reports of their well-being like never before. [Nevertheless,] we still fall short of the ideal, however, where all the multitudinous moving parts of a supply chain are visible, in detail, all the time, immediately.”[5] Cushing insists the challenge is not primarily the data. He explains, “Many organizations that I work with all too frequently have got plenty of visibility into data. They’re swimming in data. But what they lack are insights. By lack of insights, I mean having easy access to relevant data about relevant materials in the supply chain. I also mean that these data are being presented in a way that allows supply chain managers and executives to make both effective and unambiguous decisions about priorities and actions.” When the terms “data” and “insights” are linked, you can be assured what is being discussed is advanced analytics — probably associated with a cognitive computing platform.

As noted above, the ideal is obtaining continuous data flows and Mendez believes that remains a problem. He explains, “The current situation is that we have fantastically accurate information available quickly about all sorts of things in the supply chain, but these nodes of data-gathering are like narrowly-focused spotlights on an otherwise dark stage. The bright spots include factories, distribution centers and stores, but it’s much harder to come by good information about goods on the move. When a shipment of those black shirts in medium gets put on a truck or, even more, a ship, things go dark. There are all kinds of discontinuity in the data that’s essential to better managing the supply chain.” He believes, however, we are on the verge of doing better. Andrew Dawson, commercial director at MACMobile, agrees we are getting closer to obtaining end-to-end supply chain visibility. He notes, “The ultimate goal for maximum efficiency and visibility is an integrated value chain where all systems communicate seamlessly.”[6]

Dawson adds, “Armed with [appropriate] data, manufacturers, distributors and retailers will be able to make use of intelligent dashboards to interpret data against key performance indicators and deliver real-time actionable insight. Structured reports can be pulled at any time, and automatic alerts can be configured if any exceptions occur. This enables real-time business management. Digital transformation of the supply chain will also enable data to be utilized for predictive analytics, enabling more agile and effective decision-making across the board.” Given the right data, solutions like the Enterra Supply Chain Intelligence System™, powered by the Enterra Cognitive Core™, can help generate the kind of actionable insights decision-makers need.

Concluding thoughts

Cushing concludes, “Proper and effective supply chain visibility should help executives and managers effectively manage their data so that relevant information is included in the relevant timeframes. The shop floor managers must be able to see only data they need; otherwise, they’re going to be distracted at best and misled at worst. The same thing applies to the managers who are looking at the longer term; they need to be looking only at the data they need — the relevant data for their planning timeframe. The crucial data that supply chain managers and executives need most is, ‘Where is my supply chain at the greatest risk of imminent failure? Where are the greatest risks, and what are the most logical actions to take to abrogate those risks?’ This means having the right data at the right time. To do this, organizations need to start by assessing what data is needed where and eliminating unnecessary data that gets reported.” Then they need to leverage cognitive technologies to sharpen their visibility and insights.

Footnotes
[1] Arnaud Morvan, “The Never Ending Quest for End-to-End Supply Chain Visibility,” Supply & Demand Chain Executive, 13 September 2019.
[2] Nancy Clinton, “It’s a Risky Business not having full supply chain visibility,” Spend Matters UK, 24 October 2019.
[3] Vishnu Rajamanickam, “Visibility into operations is the biggest issue plaguing supply chains,” Freight Waves, 4 November 2019.
[4] Richard Cushing, “What Kind of Visibility Into Your Supply Chain Do You Really Need, and How Do You Get It?Oracle Supply Chain Management Blog, 24 October 2019.
[5] Angel Mendez, “We’re Close to a Crucial Breakthrough for Supply Chain Visibility,” SupplyChainBrain, 5 September 2019.
[6] Andrew Dawson, “Technology Makes End-to-End Supply Chain Visibility and Predictive Analytics a Reality,” Industrial Distribution, 20 May 2019.