Supply Chain Visibility and Its Importance for Business Growth

Supply chain visibility is a game-changer for organizations aiming to stay competitive. Businesses can gain a competitive advantage, improve customer experience, realize cost savings, and streamline operations by increasing supply chain visibility. This blog will explore the concept of supply chain visibility, its benefits, and how it fuels business growth.

Supply chain visibility is the ability to track and monitor all activities and events within the supply chain as they happen. This encompasses the movement of raw materials, work-in-progress items, and finished goods from suppliers to customers. "Real-time supply chain visibility is the complete, end-to-end view of a company’s logistics, inventory and warehouse management processes and people in real time."¹

Enhanced visibility is achieved through advanced technologies such as the Internet of Things (IoT), AI, and data analytics. These tools, often supported by cloud storage and computing systems, enable businesses to gain comprehensive insights into their supply chain operations, resulting in more efficient management and proactive decision-making. Efficient and proactive decision-making are core goals of effective supply chain management, as they streamline operations, reduce costs and support a superior customer experience.

Supply chain visibility hinges on several key components and mechanisms that work together to provide a comprehensive view of the entire supply chain, including:

Real-time tracking and monitoring of goods can add a significant competitive edge to a company's operations. IoT devices and sensors, such as radio frequency identification (RFID) tags and GPS trackers, enable this by providing live data about the location and condition of inventory as it moves through the supply chain. This information helps businesses react swiftly to any disruptions or delays. For example, the FedEx SenseAware system allows customers and staff to track the condition and location of packages, along with expected delivery dates. The Maersk shipping company uses a remote container management system, which includes sensors that track humidity, temperature, and other critical factors for the perishable products it transports.²

Effective supply chain visibility relies on seamless data integration and communication among all stakeholders. Integrating data from various sources into a centralized system ensures that all parties have access to accurate and up-to-date information, which fosters collaboration, transparency and data-driven decisions.

Artificial intelligence (AI) and machine learning (ML) are essential for predictive analytics and demand forecasting. These technologies analyze historical and real-time data from IoT monitoring systems to improve demand forecasting and allow businesses to optimize inventory levels and reduce waste while avoiding inventory shortfalls.²

Increased visibility in supply chains offers many benefits that can transform the efficiency and effectiveness of business operations.

Enhanced visibility helps businesses identify potential risks and disruptions early. By monitoring real-time data, companies can react swiftly to mitigate risks, minimizing the impact on operations. This proactive approach ensures smoother supply chain operations. Early identification of disruptions and proactive risk management are essential to a company using a lean supply chain strategy.

With real-time insights and comprehensive data, businesses can optimize their supply chain processes and reduce waste. Improved visibility helps streamline operations, reducing bottlenecks and lowering operational costs. The enhanced efficiency directly impacts the bottom line by maximizing resource utilization.

Better visibility into inventory levels at every stage of the supply chain allows businesses to make better decisions about managing their stock. Reducing the chances of overstocking or inventory shortages helps companies meet customer demand without tying up excess capital in inventory.

Real-time tracking of shipments and more accurate demand forecasting enable businesses to deliver products to customers on time. Meeting delivery promises consistently boosts customer satisfaction and fosters loyalty.

Supply chain visibility supports sustainability initiatives by providing insights into the sourcing and movement of goods. By ensuring compliance with environmental, human rights, and regulatory standards, businesses not only meet legal requirements but also enhance their brand reputation.

For example, Lenovo was awarded the 2023 Association for Supply Chain Management (ACSM) Award of Excellence for making an Impact in recognition of sustainability efforts across its supply chain network. Lenovo's press release noted, "A sharpened focus on forecasting, parts harvesting, and extending lifecycles have all contributed to improving PC parts recycling. In addition, logistics initiatives have had a significant positive impact on operations, including exceeding ocean shipment targets and reducing logistics carbon footprint."³

Measure the effectiveness of supply chain visibility efforts by tracking key performance indicators (KPIs). These indicators help business managers gauge their performance and make informed decisions to improve operations.

Monitoring order accuracy ensures that shipments meet customer specifications and are error-free. High order accuracy rates reflect well-managed inventory and fulfillment processes.

Tracking on-time delivery rates helps businesses understand their reliability and efficiency in meeting customer promises. Timely deliveries enhance customer satisfaction and loyalty.

Inventory turnover measures how quickly inventory is sold and replaced over a period. A high turnover rate indicates efficient inventory management and strong sales performance.

Lead time tracks the duration from placing an order to delivering the product to the customer. Shorter lead times signify efficient supply chain processes and quick response to customer demands.

Monitoring the rate of returned goods helps identify issues in product quality, fulfillment, or customer satisfaction. Lower return rates indicate better alignment between customer expectations and delivered products.

Although supply chain performance is not the only driver of results in some of these areas, supply chain leaders can get a clear sense of the health of their supply chain operation by closely monitoring these KPIs and using the data to enhance overall supply chain performance.

Advanced technologies, properly implemented, can provide comprehensive, up-to-the-minute insights into every aspect of the supply chain. These are some of the technologies helping supply chain managers improve operations today.

The Internet of Things (IoT) plays a crucial role in real-time tracking throughout the supply chain. Sensors embedded in devices, packaging, materials, and even warehouse fixtures can collect data on the location and condition of goods, allowing businesses to monitor inventory levels and transit status. Common IoT devices that support complete visibility in the supply chain include wireless temperature sensors and intelligent refrigeration units, GPS trackers, and radio frequency identification (RFID) tags.²

Cloud-based platforms offer centralized access to real-time supply chain data, enabling collaboration, analytics, and visibility for stakeholders from anywhere, fostering improved decision-making and collaboration.

Artificial intelligence and big data analytics help in processing vast amounts of supply chain data from various sources, enabling businesses to identify trends, predict potential problems, and make informed decisions about demand trends, inventory management, and risk mitigation.

Modern supply chain software systems are available in various configurations. Enterprise resource planning (ERP) systems seek to integrate all functions for running an organization, from planning to purchasing, sales, marketing, finance and HR.⁴ Some packages focus on supply chain activities, offering robust capabilities in SCM functions. Other packages provide even more specialized solutions, such as warehouse management systems, transportation management systems, and demand planning software.

Choosing the right tools for an organization requires careful consideration of several factors, including budget, company size and complexity, legacy systems, and industry requirements. Software considerations include scalability and integration capabilities.⁴

Modern software platforms can help improve supply chain visibility and efficiency and support organizational collaboration and decision-making while helping reduce costs. However, several factors can thwart organizational efforts to achieve supply chain visibility, including:

With the increased integration and reliance on cloud computing, sensitive information about inventory levels, shipment details, and other proprietary information is more vulnerable to data compromises. Robust data and cybersecurity measures are essential to reduce the risk of exposing this sensitive information.⁵

Investing in technologies like IoT and AI can be expensive, especially for small businesses. This significant financial barrier often hinders adoption. Focusing investments on solving the most pressing challenges and clearly understanding the investment's impact on profitability can help leaders find the path forward.

Integrating data from various sources in a diverse supplier network into a single system is complex but is crucial for achieving transparency. Ensuring seamless communication between systems rests on integrating four primary data sources: suppliers, logistics, manufacturing and enterprise systems.⁶

Employees and stakeholders may refrain from adopting new technologies and processes. Stakeholders and vendors may have security concerns or need to see the advantages the changes offer them. Careful change management, including comprehensive training and showcasing the benefits, can help overcome this resistance. Ultimately, successful technology implementations depend on leaders who can motivate their teams, and leadership is central to Seattle University's Online MBA curriculum.

Enhanced supply chain visibility contributes significantly to business growth by enabling more strategic and informed decision-making. Business growth is a product of creating efficiencies in the manufacturing and delivery process and increasing customer satisfaction. By optimizing a product's journey from raw material to customer delivery, improved visibility supports growth in both these areas.

Companies can streamline operations to boost profitability by leveraging cloud-based solutions that provide real-time insights based on comprehensive data and advanced forecasting techniques. Reliable delivery and effective inventory management further enhance customer satisfaction, fostering brand loyalty and repeat business.

Additionally, these insights into operations enhance risk management and help a company build a resilient supply chain by warning of potential disruptions. Companies can improve their ability to solve problems before they occur.

Integrating data streams and systems to achieve supply chain visibility is a strategic initiative that can provide large-scale competitive advantages, including streamlined and more resilient business operations, improved customer experience, and higher profits. By understanding and implementing real-time tracking, predictive analytics, and data integration, companies can transform their supply chain operations and drive significant business growth.

Develop your supply chain management expertise, including leadership, financial management and data analysis skills in the Seattle University Online MBA. In addition to cutting-edge information on supply chain management, the Online MBA provides a grounding in global economics, international business and negotiations to help you lead organizational growth and success. Contact an admissions outreach advisor to take the next step in your supply chain management career with Seattle University.