Corporate business practices are attracting increasing social, legal and regulatory scrutiny. Gaps in business transparency increase your exposure to risk on multiple levels—from supply chain disruptions and product recalls to legal and regulatory penalties.
Not surprisingly, supply chain visibility has risen from sixth most important strategic priority in 2015 to third in 20171. While achieving full visibility is a daunting challenging, it is also more critical today than ever before. Here are five reasons why.
- Meet customer expectations. Consumer-driven digital platforms like social media and e-commerce are empowering customers to become more discerning in their buying decisions. Consumers today have greater awareness of the implications of sustainability and product safety and are demanding greater transparency and disclosure. To satisfy these demands, you need visibility across the entire supply chain, from sourcing raw materials to delivery of finished goods. Without adequate visibility, processes and functions become isolated. Communication fails, processes are disrupted and frustrated customers begin looking for other options.
- Manage complexity. The ability to anticipate and address business risk effectively has been severely handicapped by supply chain complexity. A modern supply chain may have hundreds, even thousands of interconnected components and contributors. To keep them all running smoothly, managers need insight into exactly what goes into each product, and the ability to retain this visibility across multiple lines simultaneously. Businesses that take a wider, holistic perspective across operations can better manage this complexity and more easily collaborate with suppliers. The result: increased efficiency, less risk and stronger relationships.
- Comply with regulations. Adopting a globalized supply chain requires compliance with regulations and laws of different markets. Understanding the norms and customs of your different suppliers and managing the variations in quality and regulatory demands can become a prime source of aggravation if you don’t create the correct sourcing framework. Supply chain visibility can help. The reason: visibility helps you track the constantly changing landscape of government regulations and compliance and can help minimize your risk exposure.
- Increase efficiency. Supply chain transparency gives you better control of your inventory, materials, and shipping. It can also help you identify inefficiencies and wastefulness in your supply network. According to a recent survey, 70 percent of businesses that applied supply chain visibility solutions realized a return on that investment within 13 months.2 While a transparent supply chain cannot completely eliminate risk, it can help cut costs by pinpointing or even anticipating capacity limits due to obstructions in the pipeline or impending end-of-life parts.
- Reduce risk. The distributed nature of today’s supply networks creates growing levels of risk for global businesses, making visibility both complex and critical. As businesses continue to expand into global markets, managers will make operational decisions based on the information that is available. Unfortunately, if the right communications systems aren’t in place, a lack of information or inaccurate data can lead directly to an increase in risk. By implementing technologies that increase visibility, organizations can significantly minimize risk of brand exposure, missed deadlines and damaged deliveries.
1 GEODIS, “GEODIS 2017 Supply Chain Worldwide Survey,” 2017 2 Supply Chain Insights Report, Imports & Exports Made Easier with Global Trade Management Software, March 2015