Improving your lean supply chain visibility on the demand-side as well as the supply-side can help improve forecasting, planning choices, innovation strategy decisions and growth strategies. You just have to know where to look.
However, most firms are dealing with an increasingly global supply chain management issue around the fact that they are dealing with multiple international outsourcers/partners whose data they cannot access. Your company is no doubt the same!
In this article I’ll detail what some of these challenges are, along with some of solutions currently on the table.
What is supply chain visibility?
Having better visibility of the supply chain relates to gaining data you can analyze about supply-side partnerships (tier 1/2/3) as well as demand-side data (point of sales, returns, trends). The more data you have to analyze, the better you can plan out your own production, business intelligence strategy, forecasting, etc.
The current difficulty however is that modern supply chain solutions where only ever intended for tracking inventory and stock within your company’s control. Most modern firms are dealing with dozens if not hundreds of outsourcing partners for components on the supply-side (materials, production tools supply, etc.), as well as selling partners on the demand-side.
The traditional SCM/ERP supply chain solutions really were never designed to incorporate interfacing with remote data systems/stores (especially those belonging to global supply chain partners).
Current visibility problems for most supply chains
The problems this causes to your supply chain visibility are twofold:
- Supply-side: The lack of visibility of what supplies you will be receiving impacts your production planning decisions as well as stock control. This can result in problems for waste management, defining your product roadmap and any productivity improvement techniques (e.g. just-in-time solutions) you may be using.
- Demand-side: The lack of visibility of point-of-sale information and trends can severely impact what sort of forecasting choices you make as a company and hinder growth strategies/innovation strategy choices (the firm may not be as dynamic as previously thought and unable to change features/products quickly). Even industries such as the vending machine business can capture point of sales information which feedback to producers.
Supply-side issues become less of a problem when buying a franchise as the parent company normally provides the infrastructure for both supplies.
The light at the end of the tunnel for this problem is the fact that new supply chain management solutions are entering the market which provide the capability to interface with outsourced partner data. But there has to be some concerns about these solutions:
- The first concern I would have at this point is the fact that these programs are still in their infancy and the interface points between different systems are not as clearly tied down as you would hope. You can mitigate against this risk by having a quality assurance plan in place from day one to double check the solutions results.
- The second concern for any CIO should be the fact that they now have to factor in the huge volume of data they are going to receive as a result of increased supply chain visibility. This will require a concerted effort by the company as regards manpower and project resources to analyze this incoming data for trends and forecasting purposes.
And while these global supply chain solutions may potentially provide the silver bullet necessary for effective supply chain management, the major difficulty for any CIO/executive will be justifying the cost of purchasing these products to replace existing systems.
The key to justifying such a purchase really comes back to identifying what benefits you will experience from improved supply chain visibility:
- Supply-side: The benefits could include improved productivity, better quality levels, just-in-time production, etc.
- Demand-side: The benefits could include improved upstream planning, better forecasting decisions, reduced inventory wastage, etc.