A clear view

From the October 2023 print edition

It’s impossible to solve a business problem if you don’t know what caused the dilemma, or even if a one exists.

In supply chain, that includes knowing where goods are. Meanwhile, the world remains chaotic and complex, and supply chain operations have become increasingly intricate. That makes it as important as ever to strive for visibility.

The task of ensuring visibility provides supply chain professionals with the opportunity to show their value, says Alma Arzate, CSCMP, PMP, C.P.M., CPIM and senior director, global supply chain logistics, at Apotex, Inc. To begin, Arzate says, when talking about visibility, think of the supply chain as a network of interconnected processes and systems, rather than the linear ‘chain’ that comes to mind. Even within a single company, it can be a struggle to visualize all the steps in a relatively simple supply process. When multiple partners are added – suppliers’ suppliers, customers’ customers, freight forwarders, ocean, air and land carriers, customs agents, governments, and so on – connecting all the dots becomes challenging.

“The systems that each of the partners use are not interoperable, meaning, they are not designed to work together,” Arzate points out. “Information latency is another factor: we receive daily data from some partners, but only weekly data from others. Once we get this information, it’s a bit like reading a newspaper.

A lot of these events have already occurred, and your ability to influence them has also passed by.”

Stay connected
Bernie Uhlich, president and managing director of Uhlich Associates Inc., likens the complexity of maintaining supply chain visibility to an air traffic control system – there are schedules to meet, competing expectations, and communication is vital. To keep visibility, supply chain professionals must be connected to their partners and well informed with reliable and timely data.

Companies need a holistic, systems approach to ensuring visibility, says Uhlich. Supply chains consist of multiple ‘nodes,’ similar to a network. This can include suppliers in disparate locations like India, China, and Northern Ontario, to name a few examples.

“The first thing is, you’ve got to understand, what does my supply chain look like?” Uhlich says. “What do we want to have visibility of?”

A next step to ensuring visibility is to have a plan to deal with issues as they arise. Companies can run into problems, for example, when they place a purchase order with a supplier for a product without making follow-up arrangements for what happens if the supplier runs into problems along the way. There can be a lack of communication, no feedback loop, or a dearth of shared rules of engagement with suppliers.

“There’s no communicated plan or horizon for a reaction,” Uhlich says. “If you’ve got a three-month window to get the thing you probably want your plan to go on for three months, and maybe six months so that the next orders are in the queue. And you can keep tracking the orders within that. You know there’s a reasonable horizon where you can still react if there’s a problem.”

Supply chain visibility has been challenged as the global economic situation has reduced the willingness of companies to share data internationally, says Opher Baron, distinguished professor of operations management at the Rotman School of Management at the University of Toronto.

That reluctance can also stem from legislative requirements surrounding privacy and confidentiality issues. Yet such data sharing is important in supply chain, for example due to import and export requirements.

Choosing the right technology, incorporating collaboration tools within the supply chain, and allowing the right data to flow are good first steps to help improve visibility, Baron notes. A further step involves companies changing how they view inventory. Many organizations got accustomed to a just-in-time approach to their goods. Keeping more inventory available than they have been used to as safety inventory now makes more sense.

Reducing complexity
Reducing the complexity of the buying process can also help improve visibility, Baron says. In the case of computers, for example, it’s now possible to purchase different cores, motherboards, cables, monitors, and other related products.

“There are so many options, which makes everything more complex,” he says. “Reducing the number of options and the number of items you are dealing with is something that can help you. Rather than managing a million SKUs, you’re just managing a thousand.

It makes a big difference. You don’t need as much visibility as before. You don’t need to share as much data as before. You don’t need to manage as many suppliers as before in some cases.”

Products are in constant movement, and the ability to see where they are at a given point is a huge competitive advantage, Arzate says. Visibility helps organizations put
in place service and performance indicators. For example, if an organization has visibility into the shipping cycle time from a supplier overseas to a distribution centre in Canada, that cycle time can be incorporated into the replenishment planning processes.

“If it is a reduction, you will then be lowering the quantity of inventory you usually have in transit,” Arzate says. “If it is an increase, you will then need to factor that additional cycle time to avoid product shortages.”

There’s a need to expand visibility across supply networks, both within an organization and beyond its four walls, she says. There’s also a role for leveraging new technologies and implementing new systems. Yet the most important element in heightening visibility is collaboration, both across functions as well as an entire company. That collaboration helps to build bridges between disparate data sources, Arzate says.

“To accomplish these goals, you will need to challenge yourselves and your team members to think differently, put together an effective project plan and a change management plan, overcome constant roadblocks, gain executive alignment to secure resources, and perhaps secure funding,” she says. “At the end of the project, once you start seeing the data flowing, visualized in a way that had never been seen before, you will be able to mine it, drive insights, and help improve the performance of your company.”