Supply Chain Visibility: The Gold Standard For Every Company

It's 10 p.m. Do you know where your goods are?

If you do, it means you're on top of your supply chain. And also on top of your company's financials. "The supply chain represents about 80% of a company's cost," as Steven Bowen, CEO of consulting firm Maine Pointe, told CFO Dive in a June 4 article. The very thought of not knowing where your goods, and 80% of your money, is going should keep you up at night.

Being able to accurately trace and locate your inventory is known as supply chain visibility (SCV). Any frustrations, added costs, and confusion that happen in your supply chain directly correlate to a lack of SCV. It's not only bad for your business, but it can create confusion and higher prices for consumers, which should be a major concern for everyone.

Supply chain visibility: Every company needs it, yet not many know how to achieve it. But here are three simple tools to help, which many fast-moving, leading brands are implementing now.

What Is Supply Chain Visibility?

Supply chain visibility happens when you can pinpoint where your product is at in any given time in its journey from creation to final destination. A manufacturing brand will know where their product is from raw materials being brought into a factory, to the factory making the product, to the product leaving the factory, and lastly to it being delivered to its end location. A retailer will know where the goods it sells are, from factory to wholesaler to distributor/supplier to its own deliveries dock or back door.

It's a little like when you order something on Amazon and they are not only able to tell you when your package will be delivered, but they provide you with the ability to track it along the way. Only, there are more moving pieces and the stakes are way higher.

SCV eliminates the guesswork out of your operations, making the process of ordering, manufacturing, shipping, and inventory management visible and accessible to everyone involved. Effective supply chain visibility brings efficiencies across the board, and the end result is a stronger and more agile supply chain.

How to Achieve Supply Chain Visibility

So now, having been sold on SCV, how do you attain it? There are three basic steps.

1. Know every tier of your supply chain

While this seems fairly simple, it makes you think twice. Do you actually know who provides you your product? Would you be able to contact them directly if there was a delay or quality issue?

Case in point: The sudden demand for, and subsequent lack of, certain sanitary/cleansing products when the COVID-19 crisis hit last spring. With hand sanitizers, for example, there was a shortage of a key component -- ethanol alcohol. This raw material needed to be produced at a greater rate, and suppliers needed to look for new sources to buy it. While this was happening behind the scenes, consumers often found that they couldn't buy any their local store. And all too often, store personnel couldn't tell them why.

While at Apple, I was in charge of the conflict minerals program. Our goal was to prevent legal issues and production delays. If we knew who produced our product, how they produced it, and verified there were no human rights violations, the supply chain would continue to run smoothly and efficiently. With this initiative, it was clear who produced what, when, and where.

The added visibility helped with costs, lead time reduction, and quality improvements across the supply chain. Going to this level allows you to know what levers to pull if you ever need to.

2. Adapt technology to your supply chain

It is impossible to have SCV when you are living via individual (non-shareable) spreadsheets and email. This negates visibility not only internally, across the company, but also externally where you truly need your partners to be aligned. Today, more than ever, automated and collaborative supply chain tools are critical for companies to be successful. Just think how hard it would be for your sales team to be successful without a customer relationship management (CRM) system.

A tremendous amount of gains can be had within your supply chain group with just a little technology.

This technology can automate manual and repetitive tasks that typically take hours, if not days. More than ever, time is critical and this is an area where a company can get that back. A simple example would be knowing how long it would take to make a product and ship to your location with great accuracy, using data from both internal and external sources. This is something where SCV is helpful and eliminates the guesswork.

3. Connect your all your supply chain systems

While working with hundreds of factories and brands, I'm always surprised to see that their supply chain technology is fragmented between business units and even smaller groups. It is not uncommon to see multiple enterprise resource planning tools like SAP and Oracle that are not connected. Without this connection, you lose sight of orders and shipments that can create catastrophic impacts across your supply chain. On top of that, it requires you to hire more people to manage multiple systems instead of truly connecting your entire supply chain.

One central hub will make your current team more productive when they do not have visibility barriers. Everyone can operate from a single source of truth, thus reducing the amount of confusion and friction within the supply chain.

If your current enterprise system does not give you full confidence in your supply chain, you're leaving money on the table and at the end of the day needing to overcharge for your goods. It's imperative that brands take action now to start breaking down silos, reducing information barriers, and enabling more transparency -- not just for their own good, but for the consumers who buy their products.

Rodney Manzo is the founder of Anvyl, an end-to-end management and production tool and platform; he was named an AlleyWatch NYC E-Commerce Influencer in 2019.