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Why companies are investing in supply chain visibility

Arjan Kerkhoff | 07. Oct 2020
5 minutes read

Every day, billions of products are being picked, packed and shipped around the globe. And as consumers, customers or vendors, we would like to know if our goods will be arriving as scheduled. That is why supply chain visibility is a must in today's environment. 

If you take a detailed look into  global supply chains, it is not usual to always have an overview of where the different ocean vessels, trains, trucks or final mile carriers are. Nowadays, we like to stay connected and preferably have full visibility at any time. When you have ordered something online as a customer, you expect to have full visibility on where you order is, and when delivery will take place. E-commerce players have even created a new terminology around the millions of incoming calls and emails they receive around ordered goods, namely WISMO: Where Is My Order. 

You may wonder why there is constant talk about the importance of visibility. As Covid-19 has shown us, demand for some products may suddenly change. If you quickly have to cope with a strong demand, the challenge is to meet this in order to boost your company results. Selling ‘No’ to a customer may lead to a customer never returning back. Visibility is a core part of logistics. Lets dive deeper into what you can improve with visibility and how to achieved it. 

 

The lack of visibility may have a serious financial impact

Apart from the earlier mentioned e-commerce sector and their WISMO costs, the container industry is example of how visibility can make a big difference for a business, in particular the impact on demurrage and detention charges.

In this industry, it is important to know exactly where your containers are and keep extra costs as low as possible. It is a good idea to check the status of empty containers after the goods have been unloaded, on a regular basis. Carriers charging detention easily and from experience, these extra costs can become serious pain points until the empties have been registered as “delivered back”. Another benefit of knowing where your containers are, is that if you need another container for outbound, you possibly can swap and use a previous inbound container. Operations will be faster, smoother and it will lead to a reduction in CO2 due to the decrease in the number empty containers rides.

It is also important to have visibility in regards to custom procedures or warehouses that are expecting incoming goods. They are planning capacity around the arrival to proceed with the handling of the goods. Extra delays at a gate and costs  may be avoided if you know upfront that the estimated time of arrival will be delayed. 

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A different view on what you can do with more visibility

You may consider your supply chain as being `in transit’ until the goods are in hands of the final receiver. A big advantage of working with ‘in transit’ stock is that it creates flexibility at any stage in the supply chain. ‘In transit’ may imply that goods are in a container on a truck or a vessel, in a local yard, in a distribution center and even on a final mile delivery.

When you know where your goods are, you are able to react in an agile way and meet your customer’s expectations. Instead of shipping your goods from a central location, you may ship them from a location closer to your customer which increases customer satisfaction and reduces delivery costs.

Investing in supply chain visibility is no longer a nice to have. It is a need-to-have. The sooner you invest in this, the more benefits you will notice to grow your business and your customer satisfaction.

With modern technology and data sharing, your supply chain will go from a static one with some visibility to a dynamic one with full visibility.

 

How do I get more visibility?

When you have decided to invest in getting more visibility, the question becomes if you are going to build it yourself or buy this from specialized companies.

The advice is to invest at little as possible in systems which do not belong to your core and will cause some legacy which may lead to huge unforeseen investments at a later stage. With advanced technology you can create more visibility on top of your existing TMS/WMS/TES or other legacy systems.

Gartner states that  "visibility is not a capability that is immediately established but is a journey companies must undertake to receive the benefits that visibility provides" which is important to keep in mind going forward. Use it as a collaborative tool between all the different parties in your network, and achieve supply chain excellence. 

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