Supply chain visibility (SCV) has become a common term within the supply chain management (SCM) industry and is a high priority for many firms and companies.
SCV is a ubiquitous term and finding a complete definition not influenced by a vendor is somewhat challenging. In essence, SCV is the identity, location and status of entities transiting through the supply chain, captured in timely messages about events, along with the planned and actual dates or times for these events.
While SCV provides many benefits, a strong conceptual understanding of SCV is key to realising these benefits. An effective way to exhibit how SCV functions as a concept is extracting an example from a FMCG manufacturing company.
Supply chain visibility in action
A leading FMCG manufacturer company is ordering industrial boilers to increase productivity and replace old equipment within its Gauteng based factories so its product will be accessible to its customers faster. To facilitate the factory boiler upgrade, specialised boilers need to be ordered from a British manufacturer.
The manufacturer receives the order, and the parts are manufactured as per the order. Here, the boiler is the entity, which is any object that moves within a supply chain. Since the manufacturer is based in the United Kingdom, the parts will need to be transported to South Africa, where it will be received at the FMCG manufacturer’s warehouse in Johannesburg.
The boilers are transported from the factory near Glasgow to the Port of Southampton, where they are loaded into a shipping container and placed on a container ship. The container ship will dock at the Port of Durban, and the container will be road hauled to the FMCG manufacturer warehouse. Thereafter, the boilers will be offloaded and receipted. Throughout this journey, from Scotland to the warehouse, the boilers’ location has been tracked. Location within SCV identifies the entity’s position as it moves through the supply chain.
Whilst the boilers move across the supply chain, the status of the boilers change. The status describes the state of the entity, which is dependent on the processes affecting it e.g. the boilers have been shipped or been receipted. Examples of a status are if the boilers are still being manufactured, shipped or offloaded at a certain port.
The journey the boilers took from Durban to the warehouse in Johannesburg is an event. The boilers being received at the warehouse, the boilers being shipped from Scotland, and the boilers being offloaded in Durban are also events. An event is the specific time when a defined process has been completed and the next process begins. Whilst the boilers are being received, and shipping from one country to another has different time spans, each is an event that has a beginning and end.
Throughout the boilers’ journey, messages will be communicated to the FMCG manufacturer, the boiler manufacturer and logistics providers. These messages describe the different events in the supply chain concerning information about the entity – the boilers – combined with the planned or actual dates of the events occurring, such as its journey from Durban to Johannesburg.
Below is an example of the process described above:
Why is supply chain visibility important?
Imagine driving along a desolate road on a pitch-black night without headlights. At this time, you have no idea what lies ahead, nor do you have any way to prepare for any action that you might need to take. You’re at the full mercy of what lays before you – none of which, you can even view – with little to no time to respond accordingly.
In the case of supply chains, SCV act as your headlights in this scenario. In our example, SCV allows all stakeholders within a supply chain to know exactly what is happening at what time and where.
Supply chains are becoming more complex and visibility of key information is imperative to allow for risk mitigation, forward and contingency planning, and optimisation. Leveraging the information or data created by SCV leads to more informed decision making, but the challenge is whether such data is being utilised to its full potential.
The benefits of supply chain visibility
The primary benefit and ultimate objective of SCV is to improve the overall performance of a company on a continuous basis. There are additional secondary and tertiary benefits to SCV, as illustrated below in a non-exhaustive fashion.
How to create supply chain visibility
Now that we understand what SCV is, and the benefits it provides, let’s take a look at how to best implement it.
1. Define Your Supply Chain
To create visibility in an organisation, there is a necessity to define the end-to-end supply chain and the importance of visibility throughout the entire process and in its composite sub-processes. Depending on the organisation, certain processes may be relevant to provide visibility, while others are not. Defining the supply chain visibility points should be done while keeping key metrics, SLAs and KPIs in mind.
In the case of our FMCG manufacturer, the supply chain begins at the factory near Glasgow and ends at the point of delivery, with the different loading, shipping, offloading and transport events being key points of visibility.
2. Define Your Software Systems
Determine which of your current software systems are generating data and which additional systems might be needed to collect data for the relevant visibility points. Also, define how frequently these points will generate data. In the case of a boiler, especially specialised ones only available on order, this process can take weeks to months, meaning messages will not be distributed as frequently compared to a vehicle already available for purchase.
3. Standardise Your Data
Create a clear data strategy. Cleanse and define consistent data structures to translate the data into meaningful information.
4. Select Your Data Warehouse Platform
Choose a suitable technological platform to store generated data. This platform needs to be consistently managed and maintained.
5. Extract, Transform, Load (ETL)
Once the data warehouse has been selected, an ETL procedure needs to be conducted, being the transferring of data from one or more sources to a destination platform.
6. Data Analysis
Analyse the data in line with your strategic objectives and translate it into meaningful information. This requires skilled professionals such as Data Analysts, Data Scientists or Business Intelligence Analysts.
7. Data Visualisation
The translated data needs to be loaded into a visual tool – such as a dashboard – to provide the platform visibility. The visuals displayed should be aligned specifically to strategic objectives.
An example (which can also be found here) of what a dashboard should look like is below:
8. Continuous Improvement
Once the dashboard has been created, the data represented can be used to drive efficient decision-making. Opportunities for improvement can be realised and solutions executed. This process can be repeated to drive continuous improvement, with the represented data providing your iteration backbone.
Letsema’s deep understanding of SCV ensures that your organisation will realise its full benefits within the context of your strategic objectives. We apply over 23 years of management consulting and supply chain expertise to help you identify SCV’s potential in your organisation, down from creation to execution.
If you are interested in contacting Letsema’s Supply Chain team to help you with your supply chain processes, email firstname.lastname@example.org, connect with our staff on LinkedIn or call 011 233 0000.