Visibility Within the Supply Chain

By Patrick Penfield
Whitman School of Management
Syracuse University

Companies today are under great pressure to eliminate disruptions from their supply chain. Bad weather, labor disputes, shortages, defective materials and transportation issues can have a devastating effect on a company’s bottom-line. Today in many companies, supply chain departments are required to be pro-active and develop plans to avoid any disruptions within the supply chain.

The number one goal for any supply chain department is to have quality material to build or ship regardless of the situation. This is paramount to the success and profitability of the organization. The great companies are becoming quick, flexible and using their visibility within the supply chain as a competitive advantage!

So what is visibility within the supply chain? The most basic definition is the trackability of products in transit from the manufacturer to the final destination. These could be parts or components used to make a final product or the final product itself. In a broader sense, visibility is the increase of available data that can be analyzed to make recommendations and determine strategies to improve and strengthen a supply chain. There are certainly different levels of visibility, but as risks in the supply chain continue to occur and customer demand continues to be less understanding of disruptions, more companies are recognizing the importance of creating and managing a visible supply chain.

There are several reasons why companies are trying to develop a mechanism for this visibility. The first is how “lean” companies are with inventory. Gone are the days of having “just in case” material. Whenever we have an issue within a lean environment we need to address it as soon possible or face shutting down the operation and losing a sale.

In our global economy many companies now source products from low-cost suppliers who ship these goods via ocean freighter. The issue we see with this situation is being able to react to demand especially if it takes several weeks to arrive. Will we lose a sale when this product is on the water? How can we expedite this shipment?

In today’s world we are seeing more weather turbulence and catastrophes. Hurricane Katrina was the costliest and one of the five deadliest hurricanes in the history of the United States, according to the National Hurricane Center Tropical Cyclone Report. Many organizations had significant issues in trying to receive and ship material from the closed Port of New Orleans. Hurricane Katrina was a great test for companies and many were up for the challenge due to their ingenuity.

Lastly, visibility within our supply chain can give us a competitive advantage. If we can plan for an impending situation we could potentially take sales away from our opponents.

Some situations may be seasonal or happen infrequently. A pharmaceutical company I worked with had several plants in the Caribbean basin. Their issue had to do with hurricane season which tended to impact their supply chain and customer responsiveness. In order to deal with this situation they would hire interns for the summer hurricane season. The interns would monitor the weather situation on each island. If there was threatening weather such as a hurricane, the intern developed a plan to fly product to the U.S. main land in order to make sure that their distribution centers had a supply of product. An infrequent situation that occurs in the business world are labor strikes.

All companies should know when labor contracts are expiring with suppliers and they should be pro-active to this situation. One year prior to the expiration of a contract put in place a plan to work around the potential strike.

So how can we make our supply chain more visible? Firstly, a company should improve their supply chain visibility and map out the supply chain network. Start with the customer and end the network with your suppliers (use flowcharting software such as Visio). Look for opportunities to reduce complexities, redundancies and waste within the supply chain map.

Once the map is complete determine the critical points within the supply chain network. Brainstorm what issues could happen within those points and evaluate each situation. Select the issues that have a high chance of occurring and develop a monitoring program for each situation. Assign a department member to each issue and have them publish a monthly update to what’s happening with that situation. Develop an internal process to handle and alert supply chain members to potential disruptions or problems.

Every quarter companies should hold a supply chain visibility meeting to talk about situations that are occurring in their organization and to also update their monitoring programs. A supply chain visibility program should dovetail with a disaster recovery process. Every company should be preparing for worst case scenarios.

A visible supply chain will eliminate or avoid problems and improve opportunities within a company. In today’s world we know problems are going to occur regardless of how well we plan. Today’s company has to be flexible and smart enough to deal with these situations. We can no longer carry a “victim” mentality and accept situations without trying to anticipate these problems. Supply Chain visibility is a strategic weapon in your process arsenal. This is a method that can be developed and sustained in all organizations. The great companies have taken what was once a weakness and turned it into strength!

Patrick Penfield teaches Supply Chain Management and is the Director of Supply Chain Executive Management Programs at the Whitman School of Management, Syracuse University. He can be reached at 315-443-3428 or Pcpenfie@syr.edu.
 

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