Blog › Supply Chain Visibility: Why Is It Crucial for Business and How Does It Optimize Results?

Supply Chain Visibility: Why Is It Crucial for Business and How Does It Optimize Results?

8/20/2020

forkliftBy Lisa Magnuson

One aspect of supply chain visibility is all about knowing where your inventory is at a particular point in time, and how accurately you can track your products or parts as they move from the manufacturer to their final destination. Supply chain visibility can enable you to proactively manage a shipment at any point in the process to mitigate risk.

Without near-complete visibility into your supply chain, your organization may be at risk due to:

  1. Disruption: COVID-19 is clearly disrupting the world. It is dramatically altering how people live, interact with each other, and do business. However, there are many other disruptions, such as natural disasters (earthquakes, fires, floods, typhoons), labor disputes, changes in regulatory demands, and political turmoil. Resiliency and agility have emerged as mission-critical abilities when overcoming supply chain disruption.
  2. Inability to forecast demand: Lack of visibility into your supply chain can cause companies to lose track of where their inventory is at any given point in time. If you don’t have the technology that keeps you up to date on where your products are, you could be left with not enough or too much inventory at different points in your supply chain.
  3. Lack of insights:  Without near-complete visibility into all of your data across the supply chain, you won’t be able to receive alerts that lead to actionable insights that mitigate risks and increase efficiencies. Without these insights, you won’t be able to keep track of their goods throughout the supply chain and optimize the process from manufacturing all the way to the customer. If something goes wrong, a high visibility supply chain will flag that there’s a problem.
  4. Inability to meet customer needs: Supply chain flexibility is critical when it comes to meeting customer needs. With near-complete visibility into your supply chain, you can better accommodate customers’ differing needs.

Using Supply Chain Visibility to Optimize Results and Meet Sustainability Goals

Supply chain visibility is a key factor in the successful implementation of strategic sustainability. In the report “Market Guide for Supply Chain Visibility Software,” Gartner advises that “Supply chain leaders can improve performance and lessen risk by using multi-enterprise, collaborative software for real-time insights across the value network.” Additionally, many multinational companies have committed to working only with suppliers that adhere to social and environmental standards. Today, more than 90 percent of CEOs state that sustainability is important to their company’s success.

These companies have taken several major steps to promote suppliers’ responsibility, such as:

  • The development of long-term sustainability goals.
  • They work with their first-tier suppliers closely to make sure that they set their own sustainability goals.
  • 2nd, 3rd, and 4th-tier suppliers are also included in the company’s sustainability strategies.

By leveraging a digital visibility platform, companies can enhance transparency and accountability across the supply chain. According to MIT, successful sustainability practices must include environmentally friendly conditions for workers, and end-to-end visibility at every step, from raw materials to the final destination.

Increased Supply Chain Visibility Strengthens Consumer Trust

Sustainability should be on every supply chain leader’s radar, according to Maria Nieradka, Cloudleaf Board of Advisor member. Investing in supply chain visibility is an important and powerful way for way for companies to gain consumer trust; it can even lead to increased salestransparency enhances trust in both an organization’s product and in the company itself. When consumers trust an organization, they are more likely to return to that business for repeat purchases. A survey from ROI found that 78% of consumers trust transparent brands more than those that don’t offer visibility into their supply chains.

According to Y. Karen Zheng, Professor at MIT Sloan, ““At a time when customers are becoming savvier —and more skeptical— about social responsibility, our findings show that the investment can be worthwhile as it always engenders consumer trust.”

To stay competitive, supply chain managers need to understand the importance of leveraging supply chain visibility to increase customer trust, improve sustainable supply chain functions, and achieve higher profitability. Cloudleaf CEO Mahesh Veerina agrees, saying “When it comes to supply chains, sustainability and profitability go hand in hand. It is very satisfying to see a customer lower operating costs by 30% and save $20M in energy — a cost they won’t need to keep on their books and a better environmental footprint.”

By gaining an in-depth understanding of the benefits and risks beyond just your first tier of suppliers, you’ll be in a better position to proactively manage future disruptions. By adopting a supply chain digital visibility platform, you’ll be able to more consistently deliver on your goals in both sales, sustainability and customer satisfaction.