MHI Solutions Improving Supply Chain Performance
Visibility throughout the supply chain has routinely topped supply chain leaders’ list of critical needs, but the actual implementation of strategies designed to achieve end-to-end visibility has not been evident—until now.
“Studies conducted by Gartner two years ago demonstrated supply chain executives’ concern about the need for visibility throughout the supply chain, but it wasn’t until this year that we are seeing companies implement and deploy technology to enable visibility,” says Christian A. Titze, research director for the Supply Chain Group at Gartner. “People recognize that businesses can no longer operate in silos and focus only on operations within their four walls.”
A number of drivers have moved supply chain operators toward greater visibility in the supply chain. Increasing global competition and the growth of eCommerce have created a more complex environment to source, fulfill and deliver products with the speed and accuracy demanded by customers. At the same time, shareholders and customers pressure businesses to improve operating performance with cost-effective, efficient strategies.
For many industries, regulatory requirements have increased the need for end-to-end visibility, points out Ken Boyd, marketing director for MHI member Supply Chain Services. “About 50 percent of our customers are in the food and beverage industries so they have an inherent need for traceability,” he explains. The ability to track products from “field to fork” and retain that information is essential for potential product recalls for consumer safety. Product recalls are costly to execute, but if a customer can track a tainted product to a specific field, packaging company or warehouse or truck, the number of products that must be recalled is minimized, which speeds the recall and reduces expenses, he explains. “The same consumer safety concerns exist in many industries including pharmaceutical and other products.”
Visibility benefits and barriers
The most obvious benefit of supply chain visibility is greater insight into movement through the supply chain, says Scott Fenwick, senior director of product strategy for MHI member Manhattan Associates. Better information about inventory levels and lead time required to replenish inventory enable a business to better manage inventory costs. “If a retailer’s product is shipped from overseas, there is a lot of variability in lead time so the retailer may order more to make sure there is a buffer in case the next shipment is delayed,” he says. The additional inventory on the shelf increases costs and, in the case of perishable products, can lead to waste.
Access to data that is used to analyze causes of delays such as customs, weather or port traffic gives businesses an opportunity to put processes in place, change shipping routes or methods, and produce more reliable shipment schedules.
Accurate insight into existing inventory—volume, specific products and location—is another benefit of supply chain visibility, points out Boyd. “Knowing that 100 boxes of red shirts are available and will be delivered as ordered, versus 99 boxes of red and one of blue shirts, improves customer service and saves money downstream,” he says. “Having the right product delivered at the right time eliminates the expense of returned product and lost sales.”
By Sheryl S. Jackson