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How Limited Supply Chain Visibility Can Impact Your Business

10/13/2020

Warehouse worker unloading pallet shipment goods into a truck container

By David Parker

Five years ago, simply knowing the location and quantities of assets within your four walls was considered adequate “supply chain visibility.” These days, it’s clear that organizations need to have complete, real-time views and insights across the ecosystem—from suppliers through production and distribution to customers.

The economic turmoil caused by the COVID-19 pandemic has exposed many vulnerabilities in supply chains. To improve resilience and reduce the risks from future disruptions, you’ll need to know the exact location and condition of your products from the sourcing phase (sourcing logistics, inventory visibility, asset visibility), to manufacturing (inventory, asset, and workflow visibility), to final delivery (inventory and asset visibility as well as B2B CC logistics). Otherwise, you may face millions of dollars in lost revenue from future disruptions.

Limited supply chain visibility can be rectified by deploying Cloudleaf’s Digital Visibility Platform, which enables you to have real-time, end-to-end visibility and decision support across your supply chain. With device-agnostic IoT sensors combined with internal and external data sources to track the real-time location and condition of your supply chain, you’ll be able to answer the following questions:

  • Where’s my stuff?
  • What is its condition?
  • Is it delayed?
  • How many products do I have?
  • Are my products in compliance with regulations?
  • Am I able to use predictive ETA to provide my customers with accurate arrival information?

Properly managed supply chains and full visibility into supply chain processes are crucial. Supply chain visibility is about knowing the location and condition of inventory at any particular time, tracking inventory movement and delivery, and understanding thoroughly who you are doing business with. A lack of supply chain visibility can leave your company at risk for several types of supply chain disruptions.

Types of Supply Chain Disruptions

An agile supply chain can create a competitive advantage while helping organizations recover from disruptions and adapt to rapid changes in the market. Let’s take a look at several different types of supply chain disruptions, which vary greatly in terms of probability and severity.

Pandemics. Obviously, COVID-19 has had a tremendous negative impact on global supply chains. Supply chain disruptions such as COVID-19 can quickly expose vulnerabilities in a supply chain that companies may not otherwise be aware of when everything is operating smoothly. These disruptions could be of a small, localized nature, or they could have global ramifications, as with those organizations that have a high dependence on China for their raw materials or products.

China’s dominant role in global supply chains means that any major disruption can put a company’s supply chain at risk. In fact, in Wuhan, China, more than 40% of the Fortune Global 500 firms have a presence, and almost all of these companies have been negatively impacted. Without visibility in their Tier 2 and Tier 3 suppliers, these organizations will be unable to quickly respond to disruptions by shifting suppliers to other locations.

Natural disasters. The earthquake that struck off the Pacific coast of Japan in 2011 caused a tsunami that led to the nuclear disaster at the Fukushima Daiichi Nuclear Power Plant. This disaster forced many businesses to temporarily close, including those that manufactured 60% of certain auto parts, and 22% of the worldwide supply of silicon wafers, which are used in semiconductors. Other natural disasters such as fires, floods, or hurricanes can reveal supply chain dependencies in areas that feel the brunt of the disaster.

Transportation delays and price changes. An increase in both trade and globalization has put increased strain on both domestic and international transportation systems, leading to congestion and delays. Supply chain disruptions can increase transportation issues, including delays that impact a product’s viability, which can be seen today in the COVID-19 pandemic, as many countries that are in lockdown are making it difficult for freight carriers to deliver vital products. Importers face uncertainty across all modes of transport in terms of freight pricing, capacity, and demand volume. For example, ocean freight transportation costs are climbing; China-US West Coast rates are already 197% higher than last year, sparking calls for intervention.

Price fluctuations. Product demand is extremely volatile right now, which creates a variety of pricing challenges. For example, global energy market demand for things such oil, natural gas, and coal is declining as the impacts of COVID-19 have spread around the globe, leading to a collapse in oil prices. A change in a supplier’s price can also create disruption in your supply chain, as you may have to decide if you need to switch suppliers, raise the price of your product, or experience a reduction in profits.

Supply chain cyber-attacks. Supply chains are vulnerable to security risks, as we have seen in the many data breaches via third parties. According to a survey conducted a few years ago by the Ponemon Institute, 56 percent of companies have had a breach that was caused by one of their vendors.

The Solution: End-to-End Supply Chain Visibility

By attaining greater visibility in your supply chain, you’ll be able to achieve greater accuracy in planning and monitoring your systems. You’ll also be able to leverage predictive analytics to anticipate and proactively manage risks and decision-making to sustain your organization’s success. Cloudleaf’s digital supply chain solution leverages real-time data from both passive and active data streams, business rules and data science expertise to help you accelerate and improve decision making and to create a digital twin for analysis and scenario planning.

There are two dimensions to supply chain visibility:

  • Hard attributes are location, condition (vibration/shock, ambient temperature, humidity, pressure), timestamp and count that can be captured using sensors.
  • Soft attributes are classified mostly as context and process flow giving more granularity into visibility and helping you become more agile in your decision making.

Gaining visibility into both hard and soft attributes removes the blind spots so that you can see the true values over time. In addition, here are four critical steps to closing your supply chain gaps:

  1. Develop a deeper understanding of supply chain volatility and its impact on your business. Think of volatility as not a problem, but an opportunity to create a competitive advantage.
  2. Identify the critical problems in your supply chain (lost revenue, waste, costs, lost opportunities) and distinguish between risks that are acceptable and risks that require immediate attention.
  3. Identify all the “high-impact” black holes across the network and make them visible.
  4. Leverage analytics and planning platforms so that you can use this newly discovered visibility to drive value.

Near-optimal, intelligent visibility is the foundation for the Next Generation Supply Chain. Continuous visibility gives you the ability to leverage real-time vs. aged, static data and interpret the data to make sense of it. Armed with this level of visibility, you’ll know what action to take as a result and have systems in place to automatically alert or trigger that response.

Learn more about supply chain visibility by exploring these resources:

Supply Chain Visibility Index: The Definitive Guide

A Holistic Approach to Supply Chain Visibility