Supply Chain 101: What is Supply Chain Visibility?
In the next installment of the “Supply Chain 101” blog series, Nulogy VP Industry and Market Strategy, Hank Canitz, explains concept of supply chain visibility, and why it’s so important.
Hello and welcome back. We’re continuing our Supply Chain 101 series this week to focus on the critical issue of supply chain visibility.
In our first blog post in this series, we defined the terms “upstream supply chain” (which includes raw materials and related suppliers) and “downstream supply chain” (which includes post-manufacturing entities such as distributors and retailers) and explained their respective roles and functions in delivering products to market.
Our second blog focused on contract packaging and the essential role contract packagers/co-packers play in the upstream supply ecosystem.
Today, we’ll be defining supply chain visibility, and why it is such a hot industry topic these days.
Supply chain visibility is derived from the process of tracking the movement of goods and inventory throughout all supply tiers: from raw materials, to manufacturing, to packaging and retail distribution. These tracking workflows give supply chain leaders the information needed to gauge the statuses of orders that flow through their networks, as well as any roadblocks or disruptions that may arise. The proper management of order flow also helps keep a handle on costs through fact-based inventory, capacity, production and quality management and status updates to limit disruptions and mitigate risk.
Although visibility into one’s supply chain can present opportunities for improving operational efficiency and responsiveness, many of today’s medium and large-sized fast-moving consumer goods (FMCG) companies are not actually gaining true supply chain visibility. Let me explain.
...Many of today’s medium and large-sized fast-moving consumer goods (FMCG) companies are not actually gaining true supply chain visibility.
Today’s FMCG companies have incredibly complex supply chains, which over decades have grown from simply internal operations to encompass those of their partners and customers—as well as their partners’ partners and customers’ customers, at both the upstream and downstream levels!
So, when we discuss the concept of “end-to-end” supply chain visibility, we are discussing visibility into an ecosystem that can include multiple levels or echelons of suppliers, multiple levels of internal operations, and multiple echelons of customers. This end-to-end definition of supply chain is often referred to as multi-echelon, consisting of a company’s operations and multiple layers or echelons of partners. Thus, “end-to-end” supply chain visibility is significantly more expansive and complex than the linearity that the term “end-to-end” implies.
As you can expect, gaining granular, near real-time data visibility into one’s end-to-end supply chain (as we have defined it) can be a challenge for many enterprises. There are a few reasons for this.
When many companies refer to enabling data visibility into their supply chain, especially visibility into their “end-to-end” supply chain, they sometimes consider “end-to-end” as everything within the four “walls” of their organization, neglecting upstream and downstream data visibility. (Read my first Supply Chain 101 installment for a refresher on distinguishing between the upstream and downstream supply chain.)
For example, despite large FMCG companies’ increasing reliance on upstream partners (such as contract manufacturers and co-packers) as strategically important assets for bringing new products to market, many have not enabled granular, near real-time data visibility into the flow of goods and materials in their upstream ecosystem of partners.
Additionally, some companies have invested into either downstream or upstream visibility capabilities, but not both, and certainly not at a level of sophistication that can provide the deep, near real-time operational data needed to adequately respond to demand volatility or disruption.
Consequently, these companies lack true “end-to”end” visibility into their supply chain—that is, visibility into the entirety of their organization’s processes, combined with that of their upstream and downstream partners and customers (and their partners and customers, and so forth).
So, what’s the solution to enable deep, near real-time data visibility into the end-to-end supply chain?
A relatively new supply chain software category, Multi-Enterprise Supply Chain Business Networks (MESCBN), provides the most promise for supporting end-to-end supply chain visibility. Gartner, in its 2022 Magic Quadrant for Multi Enterprise Supply Chain Business Networks, defines Multi-Enterprise Supply Chain Business Networks as “cohesive technology platforms that support a community of trading partners that need to coordinate and execute on business processes that extend across multiple enterprises.”
MESCBN platforms are purpose-built to support “end-to-end” supply chain visibility.
MESCBN software platforms support a community of trading partners that need to work, share data, communicate and collaborate on business processes that extend across multiple enterprises, with an end-to-end/shared focus.
In other words, MESCBN platforms are purpose-built to support “end-to-end” supply chain visibility.
To this point, we have established the complexity of today’s supply chains, as well as the challenges of enabling deep, near real-time operational data visibility across the end-to-end supply chain. We have also introduced the MESCBN platform as a purpose-built solution for enabling that data visibility.
One final question remains: What’s the value of digitalization for these companies and their supply ecosystems?
Increased agility and resilience: In a world increasingly fraught with disruptions, it is more critical than ever for enterprises to respond quickly to sudden changes in demand, or disruptions to inventory and partner capacity. An MESCBN platform connects all partners in a supply ecosystem on a centralized platform where near real-time data flows freely, enabling rapid updates and more responsive communication between partners as they collaborate dynamically.
Stronger partnerships: On a centralized platform where operational data flow is transparent, all parties “sing off the same song sheet”, meaning all relevant information is shared and transparent to the appropriate partners, which can align their actions and responses. This transparency enables multi-enterprise collaboration and fosters stronger partnerships and relationships between all parties in the ecosystem.
Continuous long-term improvement: Due to a continual flow of operational data for the supply ecosystem, performance metrics can be easily aligned and established to nurture long-term growth for all companies.
Nulogy helps us expand and push the envelope in terms of how much visibility we can achieve and how far ahead and proactive we can be.Nicole Barrick, Director of Global Manufacturing Services, Church & Dwight
Further, research conducted by PwC in 2021 uncovered that investments in supply chain visibility generate 8% additional revenue and reduce costs by 7%. In this study, Judith Schneider, Principal at PwC Germany and one of the main authors of the research, states “that in recent years, the frontrunners in supply chain digitization have invested in ecosystems in which all supply chain partners are digitally connected.”
At Nulogy, we believe the single most effective way to gain supply chain visibility is through a Multi-Enterprise Supply Chain Business Network (MESCBN) platform. The Nulogy Multi-Enterprise Supply Chain Business Network Platform optimizes upstream supply ecosystems composed of brand manufacturers, contract manufacturers and packagers, third party logistics providers, and raw material and packaging suppliers to accelerate supply chain responsiveness and collaborate at the speed of today’s market.. Moreover, the Nulogy MESCBN Platform enables visibility across all partners in the supply network. It is not surprising that some of the best-run supply chains run Nulogy’s MESCBN platform.
To learn more about the Nulogy MESCBN Platform and how it can deliver near real-time visibility and dynamic collaboration to supply ecosystem partners, download the 2022 Gartner Magic Quadrant for Multienterprise Supply Chain Business Networks.