Imagine organizing a big party and enlisting your friends’ help. Each handles a different task: one picks up the cake, another arranges decorations, another brings equipment. You want everything to go smoothly, but you can’t be everywhere at once.
Supply chain visibility is like having an app that shows you where each friend is, what they’re doing, and if they’re on schedule. It even sends real-time notifications: “Sarah picked up the cake and is on her way.” “Mohamad is halfway through decorating.” “Anna encountered traffic but will still make it on time.”
With supply chain visibility, your business can achieve end-to-end transparency, improve efficiency, and mitigate risks. Here’s what you need to know.
What is supply chain visibility?
Supply chain visibility (SCV) is the ability of all stakeholders within a supply chain to access and share real-time data on the movement, status, and condition of products and materials as they travel from one location to the next.
SCV is a linchpin of modern supply chain management because it enables end-to-end visibility of products, materials, and information throughout the entire supply chain network, from raw material suppliers to manufacturers to end consumers. This helps improve efficiency, mitigate risks, and reduce costs.
Business leaders can use supply chain visibility solutions to make data-driven decisions about their company’s operations. They can then modify various systems within their supply chain operations to promote better results on future, higher-value projects.
How supply chain visibility works
- Data collection and integration
- Data transmission and communication
- Data analysis
- Visualization and reporting
Supply chain visibility involves gathering data on your company’s various supply chain processes. You then transmit and analyze the data for stakeholders and decision-makers—often using supply chain visibility software. Here’s how the process works:
1. Data collection and integration
Sensors, scanners, and radio-frequency identification (RFID) devices collect real-time data on the location, temperature, humidity, and other conditions of goods in transit. This hardware integrates with enterprise resource planning (ERP) systems, combining data from various departments within your organization.
Meanwhile, warehouse management systems (WMS) and transportation management systems (TMS) track inventory levels, shipment details, and transportation schedules.
2. Data transmission and communication
Cloud-based platforms facilitate the storage and sharing of data across different stakeholders—including suppliers, shipping managers, manufacturing teams, and logistics providers—providing full visibility into supply chain operations and fostering collaboration.
Cloud-based platforms transmit information about supply chain activities and supply chain disruptions in a timely manner, thanks to APIs (application programming interfaces) that enable different software systems and platforms to communicate with each other—even from one industry to another.
3. Data analysis
Supply chain leaders use advanced analytics to process large volumes of data, identify patterns, and generate insights. These can be manual processes, but modern supply chains increasingly rely on artificial intelligence (AI) and machine learning (ML) to power a visibility platform. These new technologies can predict trends, detect anomalies, reduce risk, and optimize supply chain processes based on historical and real-time data.
4. Visualization and reporting
Supply chain data gets reported across the company, offering complete visibility to relevant team members. Interactive dashboards provide a visual representation of supply chain data, helping companies monitor and manage their supply chain effectively.
For example, automated alerts can inform businesses of potential issues, such as delays or disruptions, allowing for prompt action.
Why is supply chain visibility important?
- Improved efficiency
- Risk mitigation
- Cost reduction
- Improved customer satisfaction
- Informed decision-making
You have many incentives to increase supply chain visibility. Today’s global supply chains can be intimidatingly complex, with raw materials arriving from different continents, shipping costs changing, and customer demands shifting seasonally.
Leveraging supply chain technology for full visibility can help you tackle these challenges. Here’s how:
Improved efficiency
Increased visibility can streamline your supply chain operations by reducing delays and bottlenecks. It can also enhance coordination among suppliers, manufacturers, and distributors.
Risk mitigation
Supply chain visibility systems enable you to identify potential disruptions and implement contingency plans. They also assist in managing recalls and ensure regulatory compliance, reducing your risk exposure.
Cost reduction
Many businesses improve visibility as a means to cut costs. This happens by reducing excess inventory and associated holding costs (such as detention costs levied by shipping companies). Real-time visibility also helps you lower transit costs through optimized routing and scheduling.
Improved customer satisfaction
Supply chain visibility can enhance client relations by providing expected delivery dates and tracking information to customers. They can also help you guarantee product availability and reduce stockouts.
Informed decision-making
Visibility gives you insight into how your supply chain works, including your manufacturing capacity, shipping speeds, and analytics capabilities. Leverage visibility technology to find effective solutions to issues that may impact your business. For instance, studying your warehouse operations may help you keep more inventory on hand to meet customer demand.
Challenges of supply chain visibility
While supply chain visibility has many benefits, there are also drawbacks to the digital transformation of supply chain monitoring:
Data silos
You may struggle to integrate data from disparate systems and organizations. This can result in data silos—isolated data storage inaccessible to other systems—that hinder the flow of information across the supply chain, making it difficult to achieve a unified view of your operations.
Data accuracy and quality
Ensuring the accuracy, timeliness, and completeness of your organizational data can be challenging. Inaccurate or outdated data—such as incorrect inventory levels or product locations—can affect decision-making and reduce effectiveness of the visibility initiatives.
Privacy and security
Protecting sensitive information from unauthorized access and cyber threats is essential, as breaches can have severe consequences for the business and its stakeholders. This issue might arise if contractors gain access to digital supply chain data, for example, or an employee doing remote work accidentally downloads supply chain data to a shared computer.
Tips for improving supply chain visibility
- Implement advanced technologies
- Integrate your supply chain management systems
- Embrace data analytics and AI
- Enhance collaboration and communication
Improving supply chain visibility can significantly boost operational efficiency and responsiveness. Full visibility lets you track products throughout the global supply chain and respond to issues in a timely manner. Here are five ways to improve supply chain visibility:
Implement advanced technologies
Advanced technologies can provide real-time data on the location and condition of goods. For instance, Internet of Things (IoT) sensors can monitor temperature, humidity, and other environmental factors, ensuring sensitive products meet the required conditions. RFID and GPS tracking enable precise monitoring of inventory and shipments, reducing the chances of loss or delays.
Integrate your supply chain management systems
Integrated supply chain management systems such as ERP, warehouse management systems, and transportation management systems can centralize data from different parts of your supply chain. These systems facilitate communication and data sharing among suppliers, manufacturers, distributors, and retailers. Integration with cloud-based digital platforms can further enhance data accessibility and collaboration.
Embrace data analytics and AI
Big data analytics and AI can help you process vast supply chain data to identify patterns, predict trends, and optimize operations. Machine learning algorithms can forecast demand, detect anomalies, and suggest improvements in supply chain processes. These technologies enable you to make more informed decisions and proactively address potential issues.
Enhance collaboration and communication
To get the most out of your digital supply chain visibility tools, foster communication and collaboration among all of your organization’s various stakeholders. Establish clear channels for information exchange to keep teams aligned and aware of potential issues. Collaborative platforms and tools, like shared dashboards and real-time messaging systems, can facilitate coordination and quicker response times.
Supply chain visibility trends
- Sustainability and ethical sourcing
- Increased embrace of AI and machine learning
- Digital twins for optimal supply chain modeling
- Real-time data integration
Here are a few ways supply chain visibility is affecting industries:
Sustainability and ethical sourcing
With a growing focus on sustainability and ethical sourcing within supply chains, consumers and regulators increasingly demand insight into products’ environmental and social impact. Supply chain visibility tools can track material sourcing, monitor compliance with labor standards, and measure the carbon footprint of transportation and production processes. Enhanced visibility in these areas helps companies adhere to ethical practices and meet sustainability goals, which can also serve as a competitive advantage.
Increased embrace of AI and machine learning
AI and machine learning are becoming integral to enhancing supply chain visibility. These technologies enable predictive analytics, which can forecast demand, optimize inventory levels, and predict potential disruptions.
Digital twins for optimal supply chain modeling
A digital twin is a virtual replica of your physical supply chain, letting you simulate, analyze, and optimize your supply chain operations in a virtual environment. Digital twins can help manage supply chain components, identify bottlenecks, and test the impact of potential changes before implementing them in the real world.
Real-time data integration
IoT devices allow for precise monitoring and management of shipments, reducing delays and losses. For instance, they can monitor parameters like temperature, humidity, and shock—crucial for transporting perishable or sensitive items.
Supply chain visibility FAQ
How do you build supply chain visibility?
To build supply chain visibility, integrate advanced technologies, real-time data analytics, and collaborative communication systems to ensure end-to-end transparency and efficient information sharing among all stakeholders.
What is an example of supply chain visibility?
An example of supply chain visibility is using IoT sensors, GPS tracking, and specialized software to monitor the real-time location and condition of goods throughout the transit process.
What is supply chain visibility software?
Supply chain visibility software is a digital tool that provides real-time tracking and comprehensive data analysis of inventory, shipments, and supply chain activities to enhance transparency and decision-making across the supply chain.
