7 Reasons Why Visibility is So Important in Supply Chain Management
Supply chain visibility, commonly abbreviated as SCV, provides businesses with the ability to track and trace both raw materials and finished products across the entire supply chain. A visible supply chain supplies crucial data including-
- Supplier order receipt
- Shipping details
- Current order status
- Regulatory data
- Supplier delivery date
- Customer information
In a recent study, 70% of firms used the phrases very complex or extremely complex to describe their supply chain. Additionally, 74% of these firms reported utilizing 4-5 separate transportation modes within their supply chain.
These staggering statistics illustrate both the complexity of supply chains and the resulting supply chain management difficulties. As such, SCV is a great solution to global supply chain management complexities and issues.
Although achieving a perfect visible supply chain may seem close to impossible, companies are increasingly recognizing how crucial visibility is within the supply chain. In fact, studies have shown the majority of companies believe that improving supply chain visibility is as important as on time deliveries and product availability.
7 significant reasons why visibility is so crucial for supply chain management include-
1. Disruption Damages
Companies that experience a prominent supply chain disruption suffer as high of a 7% share price reduction. However, businesses endure much more than financial losses during a disruption.
Decreased productivity, inefficient use of resources, and brand damage are all additional notable consequences that result from disruptions within the supply chain. In order to effectively avoid these losses, SCV provides transparency and suggests alternative solutions.
2. Increased Globalization
It is difficult to keep supply chain management visible when there are so many third party participants involved. Supply chain management visibility is even further compounded by globalization, as portions of the supply chain are increasingly outsourced to other continents.
Maintaining SCV that oversees product manufacturing and delivery is much more realistic with the assistance of supply chain management software.
3. Predictive Analytics
The increase in product tracking and traceability is a predictive analytics category with high growth potential. Using predictive analytics, businesses are better able to estimate and predict future demand, sales, and activities.
The benefits that SCV provides predictive analytics and vice versa improve supply chain management efficiency and effectiveness.
4. Customer Experiences
The competitiveness of the global market does not show any signs of slowing down. As a result, customers now demand faster service, higher quality products, and lower prices.
A visible supply chain assists businesses in retaining their customer base and staying competitive.
5. Environmental Sustainability
Sustainability is much more than a buzzword with both businesses and their customers reporting that they consider environmental concerns a top priority. Studies show that a supply chain can be responsible for more than 400% of the carbon emissions that a company produces through its direct operations.
A great first step for visible supply chain environmental management is to measure the supply chain's carbon footprint. Then, businesses can look for innovative solutions to decrease the carbon footprint and increase sustainability throughout the supply chain.
6. Regulatory Compliance
Businesses are well aware that supply chain rules and regulations are constantly changing. A visible supply chain is a good tool to make sure that all third party participants in the supply chain are staying transparent and compliant.
Both domestic and international tracking and tracing help businesses to hold one another accountable and to guarantee the safety and regulation of all supply chain participants.
7. Efficiency Issues
Each shipment wastes an average of 3 hours of company time that is spent requesting and processing data from partners. The combination of unnecessary labor costs and poor time management have massive consequences on a business's efficiency.
End to end supply chain visibility, traceability, and tracking capabilities decrease inefficiency. A centralized communication channel decreases the likelihood of miscommunications and misunderstandings which further increases supply chain efficiency.
Not only can businesses locate goods and view real time updates with visible supply chain management but there is also a decrease in product damage. As a result, businesses will not have to deal with as many customer service complaints or costs incurred through replacement or refund of damaged goods.
- Supply chain visibility allows traceability and trackability throughout the supply chain and supplies data ranging from supplier order receipt to shipping details.
- A supply chain disruption can cost companies an average of 7% of their stock price. Productivity decreases, resource usage inefficiencies, and brand damage are additional consequences that businesses suffer as a result of supply chain disruptions.
- Visible supply chain management decreases inefficiencies while providing massive benefits for third party businesses including optimized sustainability and predictive analytic capabilities.