Expand your supply chain visibility horizon

Supply chains globally are becoming more and more complex and one of the areas that are worst affected by this are the lead times and in transit inventory. This increases the overall supply chain management costs by not only increasing the time period of inventory stay in your premises but also by increasing the inventory obsolescence. So, reducing costs by driving down excessive inventory on hand should be the most important focus area for the best in class organizations and how can we do this? We can do this only if we know exactly, where the problem is or where are the opportunities of improvement that can substantially bring us tangible benefits.

This brings us to the business case for the need of increasing supply chain visibility (there are other factors too but we will just stick to this one in this article). Keeping an eye on the item movements within our organization is the primary metrics of supply chain visibility and be it incoming demand from customers or other channel partners or our own manufacturing or supplier receipts or shipping for that matter, all are mandatory parts of the supply chain visibility. All organizations, in form or another strive to keep things visible so that more informed decisions can be taken in the areas of manufacturing and supplier receipts specially but it is high time that we move to expand the horizon of supply chain visibility (SCV) and include our suppliers into it. Infact, best in class organizations have already started including suppliers into their SCV plans and they track metrics like:

• Receipts of raw material at their supplier’s end
• The shop by shop supplier manufacturing process and major production events
• Events of trucking from supplier end to their premises
• Custom clearance events

Including metrics like above will reduce your vulnerability of failing to fulfill demand on time and also will enable you to plan your own inventory in a much better way so that it stays the shortest time in your premises.

Coming back to internal factors or metrics that need to be included in the comprehensive SCV plan, we need to make sure that while we keep on measuring the manufacturing lead times, supplier lead times, customer-distribution centers proximity and relationships etc. but we also need to expand the metrics to include:

• Capacity constraints
• Shipping schedules
• Forecasted and actual landed cost of shipments
• Inventory rebalance among distribution centers or warehouses
• Shipment delays both before and after shipment and even in multi leg shipments
• Re-routing frequency of shipping specially for multi leg shipments
• Item level genealogy and traceability
• Availability of true and useful information for taking decisions

Expanded supply chain horizon will not only help you in tracking the metrics that might not be seen as directly impacting your operations (but still are) but will also help you in identifying the leakage areas that reduce the overall efficiency of the supply chain.