Whether you are the CEO of a witty corporation or project manager in a successful enterprise, if you want the business to thrive in the long run you’d better watch out for the supply chain visibility.
In short, supply chain visibility is the process of tracking product orders from the source of production to their destination, while being transparent about it. This transparency translates into information, lots of it: location facilities, product information, certificates, sustainability, operators’ compliance with safety regulations and more.
While 62% of companies have limited visibility of their supply chain, 15% of companies have visibility on production. Meanwhile, only 6% report full visibility, according to the GEODIS Supply Chain Worldwide Survey.
That shouts opportunity! Opportunity to gain a competitive advantage.
Next, we’ll go a bit deeper into the topic, understanding why visibility shouldn’t be the boogeyman in the supply chain stories and how you can use technology to improve it.
So, let’s roll.
The Need for an End-to-End Supply Chain Visibility Framework
In order for all the supply chain processes to work smoothly, managing properly the flow of information that is being shared among suppliers, partners, and customers is essential.
The advantages that come along are huge and we’ll dissect them right below.
Through smart supply chain intelligence, you will be able to be transparent across the whole chain and be able to identify potential “blind spots” that might carry risks.
The moment you’re in control of the process, you will:
- reduce operational risks
- prevent errors from occurring
- identify weak points
- be proactive in generating solutions
- do better forecasts
One example here: you can identify some seasonal difficulties with some producers/ suppliers/ customers so that you can prepare in advance for the situation (getting some extra suppliers, changing some delivery dates, etc).
The moment you’ll figure out how the whole supply chain processes look like you’ll manage to pinpoint areas that can be optimized.
This will allow you to analyze, predict, and respond to unexpected events, and come up with solutions.
This will translate into a cost reduction for labor and materials.
While cutting costs, this means you’ve optimized your cash-flows as well and managed to boost your efficiency.
From stock management to shipment and delivery, real-time robust data will help you highlight areas to focus on from the optimization perspective.
An efficiency boost comes along with improved responsiveness to customers.
Happy customers, happy business, right?
Not only can you prevent problems easier, but you can expose them fast. Through supply chain visibility you’ll be able to monitor “blind spots” and be pro-active in problem-solving.
In the long run, this will raise customer retention rates.
Supply chains are facing lots of pressure from their stakeholders to implement sustainability practices that relate to economic, social, environmental aspects.
By increasing visibility across the supply chain businesses will be able to:
- Reduce waste
- Reduce gas emissions
- Meet other environmental requirements
- Identify “bad actors” (companies that employ children, practice slavery, don’t care about human rights, etc)
In the end, it’s not only about “doing what’s right” but also about keeping your reputation safe.
Technologies in Supply Chain Traceability
The visibility concept encompasses three more ideas: traceability, mapping, and transparency.
Supply chain traceability allows you to track products from their source to the final consumer. It connects all the dots along the supply chain and gives you control over the processes, and brand as well.
Now, let’s talk about what’s hot in traceability: the technology.
I’ve done a shortlist of the most important technologies used to track products.
So follow me.
Blockchain works like a distributed ledger that digitally records transaction history between parties. And there’s plenty of parties in the supply chain: manufacturers, customers, suppliers, transporters. So this sounds like a match made in heaven, right?
The technology allows for transactions and assets to be recorded and tracked with an end goal of creating a transparent and efficient system for managing all documents involved in the supply chain.
And we’re not just walking the talk here, the technology is here and it’s being used.
Some examples come from the food industry.
Billions of people in the world are at risk of getting unsafe food. This is putting lots of pressure on both societies and food supply chains. The global population is expected to reach at least 9 billion by the year 2050, requiring up to 70% more food from more sustainable sources.
The blockchain technology is here to help.
Gartner, Inc. predicts that, by 2025, 20% of the top 10 global grocers by revenue will be using blockchain to increase visibility across the supply chain: from production, quality to freshness.
Walmart is now requiring suppliers of leafy greens to implement a farm-to-store tracking system based on blockchain, while Unilever and Nestlé, are also using blockchain to trace food contamination.
Some other examples come from China.
Local government officials from Yunnan Province partnered with VeChain to track the Pu’er Tea (traditional Chinese specialty, which can fetch as much $3,500 per kilogram). The platform is expected to incorporate other products such as Chinese herbal medicines, Yangcheng-Lake crab and Wuchang rice.
Internet of Things
IoT is an intertwined system of a mix of technologies that capture data and communicate it through IP networks to software applications. We’ve got smart objects that are being monitored and are sending data that gets stored in a centralized database.
IoT can be of use to:
- Get info on shipment status
- Providing the real-time location of inventory within a facility
- Tracking the source of goods, and other attributes
- Minimize operational risks (human errors that come up when doing manual tracking)
The UN Food and Agriculture Organization stated that almost 30% of all food gets lost or wasted across the supply chain and never ends up on our tables.
This raises lots of concerns. The Agenda for Sustainable Development calls for cutting this number in half by 2030.
IoT can come to the rescue. One example here: IoT systems can track and automatically adjust the temperature, atmospheric pressure, moisture, and other properties that could endanger food while being transported.
Product Identification and Marking (ID)
This includes bar codes, QR codes, and other imprinting tools. This technology relies on tracking numbers in order to connect info from production history until the finished good.
Bar codes are being used across most of the aspects of the supply chain. But they can come with some downsides: they are unreadable if damaged, the scanners can only read one label at a time, and environmental data can’t be collected.
Radio Frequency Identification (RFID)
The RFID technology is beginning to be used more and more for product traceability due to decreasing costs.
Some retailers and governmental agencies use RFID Smart Labeling in order to track product movement across the supply chain. How does this work? By placing a smart label/tag (a very flat configured transponder positioned under a conventional print-coded label) on a product. The label relies on radio frequency communications between the smart label and a portable memory device and host computer to exchange data.
RFID tags can encode lots of data that can then be collected via an RFID reader. There’s no need for any human intervention. This makes it really useful for tracking product movements inside closed systems, such as warehouses.
Wireless Sensor Networks (WSN)
One of the key abilities required in responsive supply chains is real-time and continuous monitoring of shipments and WSNs can have a big impact here. WSNs consist of small computing devices equipped with tiny sensors and wireless communication, battery-operated, can sense the world around them and can communicate with other devices wirelessly.
This technology has a lot of applications in supply chain management, healthcare monitoring, water management, air pollution monitoring, and other environmental data-gathering efforts.
One important application that relates to the supply chain is geofencing. In short, geofencing is used to locate devices via cellular, wifi or GPS tech. Aaaand, I think you already know where I wanna get, don’t you? Tracking, traceability, visibility, that’s right.
In shipping, for example, through geofencing, you can identify when a truck is approaching so that you can notify staff. This means you can free up docks before the truck’s arrival and optimize all the connected activities.
The companies which embrace traceability technologies in supply chain management will have a better edge to those who don’t do it. The competitive edge is connected to the accuracy, operational efficiency, and better control over the whole supply chain.
You will be able to better understand, and take action when the most important risks and opportunities materialize.
Also, let’s not ditch the whole reputational thing. People are more aware now about the need to know the source of a product, if safety and security regulations are respected, if the environment is protected across the whole chain movements.
So, it’s time to get transparent.