By David Parker, Chief Evangelist
This is the first blog post in a four-part series on defining, assessing and improving supply chain visibility as companies drive their digital transformation.
To learn more about supply chain visibility, read the Supply Chain Visibility Index: The Definitive Guide.
Changes in the supply chain industry are occurring at breakneck speed, with networked sensors and intelligent devices being used throughout the industry. Welcome to the Industrial Internet of Things (IIoT) age, where companies leverage this data to make supply chains more efficient, sustainable, and profitable.
These changes are bringing about a dramatic shift in supply chain management, as companies are moving away from the traditional supply chain to demand-driven networks. The beginning of big data in retail supply chains started way back in 1974, with the advent of barcodes in grocery stores. Manufacturers who adopted bar code technology could track shipment information through the Electronic Data Interchange (EDI) system, so the shipper, manufacturer, and retailer all had the same information regarding the location of the merchandise.
Supply chains are embracing IIoT systems that are based on technology such as sensors, GPS, smart beacons, and a myriad of other networking and monitoring systems. Now, smart factories can build on these new, innovative IIoT solutions that enable them to be fully connected – from suppliers, to manufacturers, to distributors. This change in operational model signals a dramatic shift which is driving 100% end-to-end visibility, connecting every aspect of the supply chain, including delivery information, business planning, operations, and the entire supplier network. Bringing all this data together equips supply chain leaders with a single source of truth in the moment to make the right decisions.
As a result, companies can respond in real time to changes in market and customer variables, driving enormous value for every business in a connected supply chain. This increase in visibility also propels these companies into new levels of supply chain maturity. Gartner has identified these levels as five distinct stages of maturity, as illustrated in the chart below.
Figure 1: The five stages of supply chain maturity, as defined by Gartner at the top, also have specific visibility maturity impacts – notice how the company gains scope and intelligence at every stage.
These five stages also have direct impacts on the visibility maturity of a company, depending on what stage of supply chain maturity the company is in. Let’s take a look at these impacts:
- Stage 1 – React Companies in the react stage are focused on reacting to events faster to reduce waste.
- Stage 2 – Anticipate In this stage, application-based status and alerts can be analyzed to identify specific areas that can be improved.
- Stage 3 – Integrate In the integration stage, companies can continuously monitor products at the conveyance level (tote, pallet, crate, etc.) through each step of the product journey. Function-based product status and alerts allow for information to flow across all businesses in the supply chain.
- Stage 4 – Collaborate Companies at this stage benefit from a demand-driven value network, as alerts, status data, and events are visible across the end-to-end supply chain. At this stage, companies can realize a 50-60% increase in top and bottom-line growth, as well as increased savings and improved capabilities across the entire business.
- Stage 5 – Orchestrate In the orchestrate stage, companies benefit from complete visibility into customer operations, logistics, manufacturing plants, and supplier operations. Information on demand and supply are constantly visible, including product condition information. As a company’s visibility maturity increases in the orchestrate stage, they can leverage increased predictive and prescriptive analytics for faster decision-making.
Gaining visibility into the supply chain is a key component of any successful digital transformation; it can transform your company’s ability to respond to changes in both your company and in the marketplace in real time.
Fortunately, there are companies such as Cloudleaf that can address gaps in supply chain visibility by providing IoT-at-scale solutions that gives you real-time visibility into your supply chain operations. By shifting from a traditional, efficiency-focused supply chain to a demand-driving value network with continuous visibility and continuous intelligence, your organization will be able to interpret real-time data and know what action to take as a result. Eliminating data silos allows for harmonizing data to provide continuous visibility and intelligence throughout your supply chain.
All blog posts in this series:
- The 5 Stages of Supply Chain Visibility Maturity: Where is Your Company? (This post)
- Top 5 Reasons Your Supply Chain Has Visibility Gaps
- How to Gauge Visibility Gaps in Your Extended Supply Chain
- How to Close the Gaps in Your Supply Chain Visibility