Editor’s Note: The following is an excerpt of a research report published recently, “Realizing the Full Business Benefits of Supply Chain Visibility.” The research, conducted by Adelante SCM and commissioned by Kaleris, highlights the main objectives companies have for achieving end-to-end supply chain visibility; the biggest dark/blind spots in the supply chain today; and the capabilities required to realize the full business benefits of supply chain visibility. Please visit the report page for more information about the research and to download the full report.
“Although visibility has become a popular buzzword in the supply chain literature it remains an ill-defined and poorly understood concept.”
So begins a research paper published in January 2007 (“Antecedents of supply chain visibility in retail supply chains: A resource-based theory perspective”) written by Mark Barratt and Adegoke Oke, researchers at Arizona State University at the time. In the paper, the authors define supply chain visibility as ‘‘the extent to which actors within a supply chain have access to or share information which they consider as key or useful to their operations and which they consider will be of mutual benefit.”
Barrat and Oke note that “it is assumed that if companies across supply chains have visibility of demand, inventory levels, processes, etc., that organizational performance improves.” They add, however, that “previous studies have examined the benefits, in terms of improved performance, of information sharing in supply chains, albeit mostly from a modeling/simulation perspective […] The results of these studies are generally inconclusive and vary subject to the differing structure of the supply chains under examination.”
Sixteen years later and the connection between supply chain visibility and realized business benefits remains fuzzy for many companies. The important word here is realized. Does having better supply chain visibility on its own translate into cost savings, service improvements, reduced risks, increased agility, and other business benefits?
History and experience have shown that visibility alone is not enough.
A prerequisite to achieving business benefits is having high data quality. As Barrat and Oke highlight in their paper, “the information [shared must be] accurate, trusted, timely, useful, and in a readily usable format…If the information passes this initial test it must then be incorporated into the decision making processes of the recipient who may now make a more informed decision enabled by better visibility of the sender’s current situation (derived from the shared information). It is this more informed decision making that potentially leads to improved performance.”
Simply put, without high data quality, companies could potentially find themselves in a “garbage in, garbage out” situation, making decisions based on inaccurate and outdated information.
However, assuming this data quality prerequisite is met, making “more informed decisions” is not enough either to realize the full benefits of supply chain visibility.
The reason companies want supply chain visibility is not just to see, analyze, and make decisions; they also want to do something with the data and insights collected. It’s the doing — the actions taken to improve their supply chain operations, proactively address issues, and drive innovation — that ultimately delivers business value.
From a technology standpoint, therefore, implementing a supply chain visibility solution by itself is not going to deliver much value unless it receives timely, accurate, and useful data from all important nodes and trading partners across the network, and unless shippers, carriers, logistics service providers, and other network participants also have execution capabilities like transportation management (TMS), warehouse management (WMS), yard management (YMS), terminal operating systems, and port community systems that leverage the data and insights obtained to optimize and automate business processes.
What are the main objectives companies have for achieving end-to-end supply chain visibility? What are the biggest dark/blind spots in the supply chain today? What capabilities are required to realize the full business benefits of supply chain visibility?
Those are the main questions we explore in this paper, which includes insights from a November 2022 survey we conducted with members of our Indago supply chain research community — who are all supply chain and logistics executives from manufacturing, retail, and distribution companies — to get their perspective on this topic.
For the survey results and additional insights on how to realize the full business benefits of supply chain visibility, please download the research report.