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The Rise of Supply Chain Visibility
As globalization and technological advancements have accelerated over the past decade, our definition of “supply chain” has undergone a massive transformation. For many businesses, their supply chain has become far more complex than just moving a product from point A to point B—it now encompasses a vast network of partners, suppliers, and customers scattered around the world. Increasingly, the ability to connect and efficiently communicate across these complex networks determines a company’s ability to compete and differentiate.
In this environment, digitally-enabled supply chain visibility has emerged as the “table stakes” for meeting the increasingly demanding requirements of customers. Aside from helping companies compete amidst increasingly high-velocity global trade, digitally-enabled supply chain visibility accelerates revenue growth, increases operational efficiencies, reduces supply chain costs, and tightens relationships with customers.
While many of the world’s largest companies have been continuously investing in supply chain integration and visibility initiatives, not everyone is taking advantage of the competitive edge these digital systems can offer. Why? Historically, the cost of enabling these systems has been prohibitive, system integration hurdles block progress, or perhaps a business simply doesn’t have enough expert resources on hand to successfully implement these technologies.
Now, emerging solutions are removing these barriers for companies that have yet to unlock these benefits and level the playing field with much larger competitors. With these solutions now available, why should your business be actively pursuing supply chain visibility initiatives?
Benefits of Supply Chain Visibility
Who Benefits from Supply Chain Visibility?
The ability to track a shipment’s journey from the manufacturer to its final destination is becoming increasingly important for both businesses and their customers. Although under-utilized by many businesses, these sophisticated digital systems can lead to an increase in operational efficiency. Businesses are able to plan and forecast throughout the supply chain journey, be proactive, and react smartly to any issues that might arise.
Supply chain visibility also greatly impacts the customer experience. Through increased visibility, businesses foster a sense of trust with their customers by being reliable with their inventory and delivery dates. Knowing that a business can consistently meet their needs creates a better customer experience and builds a stronger relationship between customers and a company.
Increased Speed Drives Revenue Growth
When companies enable digital supply chain visibility, everyone across their supply chain network is working from a common set of data and documentation, a “single version of the truth” that allows every party to make more timely and accurate decisions. From the origination of an order, through order fulfillment across multiple shipments, through the import and customs process, and ultimately, to domestic delivery at the customer, this common view of shipment status dramatically compresses this overall lifecycle.
The single biggest reason companies invest in digital supply chain tools is that when the the PO-to-delivery lifecycle gets faster, their top line revenues grow. They get paid faster. They recognize revenue faster. They are able to reinvest more dollars in the continuing growth of their business. This digital transformation delivers a continuously improving process that fuels overall business success.
Optimizing The Supply Chain Process
Through increased visibility, the supply chain can be analyzed to optimize operational efficiency. From deciding on carriers and shipment methods to figuring out staffing needs, the information gained from visibility can be used to leverage a more efficient supply chain.
There are numerous decisions to be made and some of the first questions that will arise are related to shipping methods: Should items be shipped by land, air, or sea? What size containers should be used for shipments? Should we wait to have a full container/truck or should we ship LCL/LTL? By using digital supply chain visibility tools, businesses are able to look at the different options, proactively plan tradeoff decisions, and forecast which methods are best for their business.
A company familiar with the benefits of digitally-enabled supply chain visibility is Twin City Fan, a Minneapolis-based seller of industrial fans. During the manufacturing process, Twin City Fan is regularly required to ship product parts between their five facilities in South Dakota. However, they struggled with inefficiency in their outbound domestic shipping process as each plant would send their own trucks for delivery instead of coordinating and working cohesively with other plants. Jack Prentice, logistics manager at Twin City Fan says, “Each plant was arranging and coordinating their own trucks in a siloed environment. We’d have one plant send half a truckload to one plant. And another plant would send half a truckload to another.” Through digital visibility tools, Twin City Fan was able to evaluate past performance and volumes and determine that a dedicated “daily truck” that constantly moved between facilities would be the most efficient way to transport their shipments and cut down on half-empty trucks.
Improved visibility also can provide logistical insight into staffing choices for businesses. By having a better understanding of the exact timing of when shipments will be arriving, companies can more accurately predict staffing needs at facilities and know who needs to be in what warehouse and when. Warehouse workers no longer need to wait around wondering when an item will arrive and transportation workers can better estimate when an item will need to be picked up. This allows for all staff to optimize their time and always work productively.
Through useful analytics such as dwell time, on-time percentage, and late percentage, businesses now have more exact answers to questions that could only be roughly estimated before. Do we have the proper staffing to meet goods when they arrive? Will the shipment arrive to the warehouse on time? Will shipments make it to the customer on time? Do we have enough inventory now and for the future? All of these questions can now be answered before an item is even in transit, allowing businesses to proactively come up with solutions instead of scrambling at the last minute to fix any glitches.
Digital supply chain visibility tools also allow businesses to analyze their partnerships and engage more deeply with partners who are peak performers. Companies are able to analyze all of their partners and vendors to see how they are performing. This evaluation of past performance allows businesses to decide if any changes need to be made within their supply chain network.
Within the supply chain journey, there are a variety of events that can’t be predicted or controlled. Unexpected complications like bad weather and labor strikes used to bring the supply chain to a halt but today, with increased visibility, these once huge problems are now minor inconveniences that can be handled with agility.
As a specialty women’s retailer, shipments for Christopher & Banks Corporation are extremely time-sensitive and have a short turnaround from the distribution center to the sales floor. During the summer of 2014, the fashion retailer faced a potential crisis as labor disputes took place at ports throughout the West Coast causing significant backups and delays on inbound shipments. For Christopher & Banks this meant the possibility of missed sales and markdowns if time-sensitive merchandise arrived after peak season or after a planned marketing campaign. However, with digitally-enabled supply chain visibility, the company was able to identify the containers carrying the most time-sensitive merchandise and work with shippers to prioritize getting those loaded and delivered first.
By providing a better understanding into shipping and transportation needs, digital visibility tools can help companies reduce logistics costs, limit unnecessary labor costs, better manage inventory, and avoid fines.
Northern Tool + Equipment exemplifies how improved visibility can lead to huge savings for companies. The large tool and equipment retailer has increasingly become more international as it’s grown in size throughout the years. When the company needed a way to reduce costs and better coordinate with the different resources within their network, they turned to digital supply chain visibility tools as their solution. Within the first year of implementing the technology, Northern Tool saw more than 5% in savings on their international logistics spending. A large portion of their savings was due to a change in their shipping methods. As they were able to analyze their usual methods through their new software, they saw it would be more cost-effective to transport items in 40-foot shipping containers instead of their usual 20-foot containers. Today, almost all of Northern Tool’s shipments are done in full containers which eliminates the excess fees per containers as well as ensures more direct shipping and the reduction of excess handling that can lead to damaged items.
When companies are able to more accurately forecast when an item will come to a warehouse, it can help to reduce labor costs while also ensuring supply continuity. Businesses can optimize their receiving plans at warehouses and better staff their facilities. Workers no longer need to wait extra hours wondering when an item will show up, and companies can plan to have the optimal number of staff members awaiting a shipment’s arrival. This allows loading docks to be used efficiently and avoid unnecessary back up.
Through the analytics provided in digital visibility tools, companies are able to better manage their inventory. Increased visibility helps companies accurately estimate the status of their products and materials. This leads to an ensured continuity of supply and allows companies to reduce on-hand inventory as well as capital in transit. Enhanced inventory management allows businesses to cut costs by better controlling the items currently in the pipeline and leads to an increased accuracy in financial forecasting.
Digital supply chain visibility also helps companies stay compliant and decrease the risk of being fined. With enhanced visibility, companies are able to manage their shipments and avoid detention fees and penalties for missing shipping deadlines. Additionally, with notifications and alerts from software, businesses can avoid penalties for missing important deadlines such as filing customs and border entry forms. Northern Tool takes advantage of their digital visibility solution by using it to store customs documents. Their documents are stored in one searchable place making it simple to produce them if they’re requested in later audits, helping them to avoid any financial penalties.
One of the most important ways that visibility impacts a business is through its relationships with customers. The improved in-stock and on-time delivery rates made possible by increased visibility leads to happier customers and larger order volumes.
In today’s world of online shopping, the customer expects two main things: their product to be in stock and their purchase to arrive on time. With digitally-enabled shipment visibility, everyone understands the status of a shipment, and can take proactive action throughout the journey to the customer’s receiving dock. This increases on-time delivery rates, and dramatically reduces the likelihood that the customer will encounter ‘back orders’ or out-of-stock inventory issues that can undermine their own customer relationships.
When a customer learns that a company is reliable and transparent about their shipments, they will be more likely to do business with them in the future. Customers know they can trust their items will arrive to them safely and in a timely manner, leading a stronger relationship between the customer and the business.
For More Information:
To learn how Navegate and cloud-based software with logistics support can help benefit your company, please contact us via email at [email protected] or by telephone (U.S) at 1(800)944-2471.