By Bill Marrin
Global organizations, especially those in the retail and CPG industries, have dramatically changed their mindset over the last decade—from being mere mass producers of goods to more forward-thing organizations that are customer-driven. This change in mindset has completely redefined how supply chains need to be organized, how they operate, and how they compete in the global marketplace.
Today, partial visibility into your supply chain simply doesn’t cut it; for a supply chain to operate effectively in today’s world, near-complete visibility is a prerequisite. Here are some insights into how you can improve your organization’s supply chain visibility.
Supply chain visibility is the missing link in most supply chains today; most organizations have many dark spots in their supply chain. It can be difficult to understand where the dark spots are and how to get real-time tracking data about them. For example, a supplier such as a transportation company may tell you their truck is at a certain location on the way to your destination, but it in fact may not be.
What makes Cloudleaf so exciting is that it facilitates visibility all the way down to the product level—not just to the transportation truck, but to the product itself. Cloudleaf makes use of sensor technologies that provide you with the precise location and condition information of your materials, so that you can react to delays and solve problems right away. Near-optimal visibility means that you can identify shortage and quality problems along the supply chain. For example, if your product isn’t where it’s supposed to be, you have the time to correct the problem so that you don’t disappoint a particular customer or manufacturing facility.
Controlling your supply chain depends on your ability to have visibility at some level at all points in the chain. Partial visibility is not nearly as acceptable today as it was even three or four years ago; there’s a higher level of expectation from both customers and executives. Lack of visibility into your supply chain can lead to a reputation of unreliability, which can put you out of business, whether it’s a manufacturing facility that’s depending on you to deliver a part, or a customer that shows up to a retail store to pick up a product that was supposed to be in stock.
A few years ago, organizations tried to skirt around this problem by building in buffers so that they had margin to support additional inventory if needed. But in today’s world, it’s dangerous to only have partial visibility into your supply chain, as rising consumer expectations demand both higher product availability and corporate transparency.
It’s important to develop the mindset that the status quo is no longer good enough; the systems and capabilities that you have had in place are undoubtedly riddled with flaws and holes. Most likely, you’ve accepted the fact that you have flaws in your supply chain and have developed workarounds, without any expectation that these systems could be changed or adapted. These days, you need to take a fresh look at the expectations you have for operating your supply chain. If you run into blind spots in your supply chain that can’t give you answers, it’s vital that you figure out how to leverage new technology that can fix those blind spots. If you embrace change and challenge your operational status quo, you’ll be much better positioned for growth.
Typically, organizations will adjust their mindset when forced to deal with a “burning platform,” i.e., when they’re in a situation where they are forced to act because the alternative is worse, and they have to have greater visibility in their supply chain to correct for it. That’s where the supply chain stands ahead of almost every function in business today; when there’s a problem, there’s no better group who can figure out the problem than the supply chain organization. Healthcare is a great example—look at all the shortages in the supply chain today as they relate to COVID-19 and the critical shortage of things that are needed to save lives. The issue of how to find PPE, ventilators, etc. requires solutions to supply chain visibility, and we’re starting to see some solutions come into play that can help with those problems.
The trend towards outsourcing has led to increased complexity and less visibility. Because of this, it’s important to have multi-tier supply chain visibility, meaning that you need to have visibility not just into your tier 1 suppliers, but also a cross-section of your tier 2 and tier 3 suppliers as well. Efficient product manufacturing depends on a dependable flow of parts from many suppliers. For example, if the button that turns on your iPhone is suddenly in short supply, that inventory shortage can cripple the revenue stream of a company even as big as Apple. The need for visibility goes beyond just your inventory; it relates to the complete makeup of your products.
The top factor when making a business case for adopting a visibility platform like Cloudleaf is to identify the inflection points in your supply chain that create the most risk for your business. What are the things that could damage your company’s reputation if they weren’t done every day with excellence? When you adopt a visibility platform, you gain the ability to quickly adjust and correct the situation before your problem could have a crippling effect on your supply chain—and sometimes, you only have seconds to adjust to a problem.
From a compliance perspective, being able to quickly answer a question related to what temperature your product was exposed to, or if it experienced a high level of shock during transport, can demonstrate that you’re on top of your supply chain and ahead of everyone else. If you can’t answer those kinds of questions quickly, it can reveal how out of touch you are and demonstrate your lack of ability.
Another factor to consider is security. You may be in a business with a high-value inventory and need to have security and visibility across multiple touch points in the supply chain that may not be owned by you, but are trusted to another company in the chain. In this case, have an end-to-end visibility platform most likely would pay for itself over and over again, if you look at the loss levels that you currently face, and the number of products that don’t arrive when they should, or are lost in the supply chain.
Obviously, the coronavirus is a wake-up call for supply chain management. There’s an emerging need to have maximum visibility into your supply chain so that you aren’t left short or parts or supplies, like many have been throughout this health crisis. If you don’t have visibility into what’s going on in your supply chain and in your business, your company will be in jeopardy. You need to start building those capabilities now and have a plan for how you’re going to get to that part-level visibility capability if you expect to have the credibility that’s required in the current market.
If you’re not depending on the cloud for your supply chain, you’re putting your supply chain at risk. The days of relying on a large proprietary system that can serve your needs is dead. Today, you need to be in touch with the innovations coming out of cloud-based solutions if you expect to be competitive in what you do. Cloud technology brings state-of-the-art security measures and practices to the forefront of supply chain management, whereas older retail systems with multi-point access had to be patched together to maintain some level of security.
What are you doing to become more agile? How are you managing risk more effectively than you have in the past? How can you attract top talent to my organization? Those are the top challenges that every CSCO faces. You need to put a plan into place for how you can become more agile, better manage risk, and enhance your talent base. Take a close look at your current talent base to understand how willing they are to learn new technologies and do things differently. You need to build a culture in your organization that’s open to embracing new technologies and capabilities that can create greater agility and flexibility in your supply chain. Your team needs to lean into it, embrace new thinking and new technologies, and be motivated and rewarded to create the next level of advancement.
The shift we’re seeing right now during these times of economic uncertainty is so dramatic. You need to look at this situation as a business problem first and ask, “How can the skill set in my organization help solve for that?” versus simply thinking about meeting inventory churn or cost management objectives.
Target is a great example of this. In a recent call with a group of chief digital officers, I learned that the companies that are doing the best are the ones that started on the digital transformation journey well before the coronavirus crisis hit. Target made the investment to “ship from store” way ahead of any other organization. Instead of shipping their e-commerce orders from an e-commerce warehouse, they invested in technology that allowed them to ship from in-store inventory directly to the customer. The reason they’re able to delight customers right now is because they’ve got more flexibility in their supply chain in terms of how they get they get products to the consumer. That’s why the commitment to doing things differently is so important. You need to commit to following your customer where they’re going – don’t let your traditional business practices hold you in place. Just because it worked yesterday doesn’t mean it’s going to work tomorrow.
Many organizations seem to be waiting for the perfect moment in time where the playbook is written; all they need to do is pick up the supply chain visibility instruction manual and go do it. Of course, that day will never arrive. The key is to dive right in! Embrace the idea of introducing these new capabilities with an understanding that things will get better. Being flexible in today’s world is more important than ever; supply chains are in a unique position to create flexibility for the enterprise today. Look for new, innovative tools such as Cloudleaf that can help you create even more flexibility. Cloudleaf brings a fresh perspective on how to solve for one of the biggest problems in the supply chain, and that’s how to achieve near-optimal visibility.
Bill Marrin is an expert on supply chain strategy. He coaches early stage companies to drive growth.