Supply chain visibility: What it is and why it matters
August 10, 2023
September 28, 2023
Controlling supply chain risk goes hand-in-hand with achieving a high level of supply chain visibility.
Without adequate visibility, logistics and supply chain teams are often left with two less-than-desirable options: taking costly measures to compensate for uncertainties or simply leaving things to chance.
For organisations lacking the right supply chain visibility tools, bloated levels of safety stock, heavy reliance on expensive transportation modes, detention and demurrage charges and other punitive costs are common consequences.
In this article, we break down the concept of supply chain visibility and examine the transformative power it holds in driving operational excellence. As the saying goes, "what you can see, you can manage," and nowhere is this truer than in the realm of supply chain management.
What is supply chain visibility?
Supply chain visibility refers to an organisation’s capacity to understand the real-time movement of goods, share this information with those who need it and leverage the gathered data to gain insight into the overall performance of supply chain operations.
Sometimes referred to as transportation, freight or end-to-end visibility, the term supply chain visibility is often (and mistakenly) used to refer exclusively to freight tracking. But a robust visibility infrastructure should also support strategic planning by aggregating tracking data to quantify the cumulative performance of carriers, ports, shipping routes and more.
To put it simply, the function of supply chain visibility is to understand what’s happening in your supply chain now and learn from what’s happened in the past so you can avoid the same problems in the future.
Supply chain visibility benefits
Supply chain visibility is important because it offers both operational and strategic benefits including time savings, improved supply chain collaboration, cost reduction, reliability improvements and ultimately bottom line profitability.
Zero effort transportation tracking
By eliminating the tedious task of manually fetching tracking updates from a multitude of carrier portals to update the ERP or (dreaded) master tracking spreadsheet, visibility tools help supply chain and logistics teams operate more efficiently and with more reliable data. This means better intelligence about where your goods are for a fraction of the cost and effort, all while freeing up scarce resources to focus on higher-value supply chain activities.
Real-time updates and alerts for all stakeholders
By unifying data across multiple carriers and transportation modes in a single platform, visibility tools function as your supply chain command centre. They can trigger notifications when shipments are at risk so you can take corrective action and some will even let you seamlessly share updates with stakeholders (customers, merchandisers, warehouses, hauliers etc.) so nobody is being left in the dark – no long email chains required!
Reduce detention, demurrage and other unplanned costs
Poor freight visibility cuts into profits by contributing to unbudgeted costs resulting from detention and demurrage, haulier cancellation, warehouse penalties and the need to book hauliers on short notice. By being able to access and share real-time updates, you can keep haulier and warehouse partners up to speed so they can keep goods moving along as quickly as possible, all while avoiding these punitive costs.
Gain insights that improve supply chain reliability (and customer satisfaction)
A reliable supply chain goes hand-in-hand with happy customers (and revenue growth), but reliability starts with being able to identify the persistent sources of disruption. A good supply chain visibility infrastructure will help you improve reliability by aggregating historical tracking data to generate insight on key questions such as:
Which of my carriers have the most ETA slippage?
Which ports are most likely to be congested?
Which shipping routes are most likely to encounter delays?
How do my route times compare to the rest of the market?
Free up cash flow by reducing safety stock
A common consequence of poor supply chain visibility is being forced to tie up precious cash flow in high levels of ‘just in case’ inventory. As we’ve seen, visibility drives reliability and as reliability improves you’ll have the confidence to move from ‘just in case’ to ‘just in time’ and reduce the amount of cash flow being tied up in inventory that’s just sitting on the racks at the warehouse.
How to improve supply chain visibility
Supply chain visibility can be measured along a maturity spectrum. Most organisations fall somewhere to the centre-left where they are exerting a lot of manual effort to generate tracking updates of varying reliability.
Improving supply chain visibility and moving towards the right of the spectrum starts with building a data infrastructure you trust and understanding what your stakeholders want to know.
Data integrity and governance
Without good data, you can’t have good visibility. If your teams don’t trust the data that’s flowing through your systems or are still living and breathing in spreadsheets, that’s the place to start. Decide on a system of record (“single source of truth”), set standards for data governance and enforce them.
Visibility isn’t just useful for your supply chain and logistics team. As an operational function, supply chain serves a wide range of stakeholders. Understanding who these people are, what they want to know and why they want to know it will set the requirements for your supply chain visibility improvement project.
Invest in a supply chain visibility platform
The good news is you don’t have to start from scratch when it comes to building your visibility infrastructure. Whereas ERP systems are useful for generating a “moment in time” snapshot of what’s happening, purpose built supply chain visibility platforms like Beacon are designed to easily plug into ERP systems and capture data over time to help you understand the dynamic flow of goods through your supply chain at a deeper level.
Supply chains are inherently unpredictable - disruptions are bound to occur. However, by arming yourself with the right tools you can maintain a firm grip on your supply chain, mitigate risks and make data-backed decisions that boost reliability, reduce costs and accelerate growth.
Get in touch to learn how Beacon can help you transform your approach to visibility.