Outside-In Supply Chain Visibility

Stephen DeAngelis

January 5, 2015

For years supply chain consultant Lora Cecere (@lcecere) has been telling companies that they need to create supply chain visibility from the outside in. What Cecere means is that companies need to know what is happening throughout their supply chains starting with their suppliers’ suppliers and ending with their customers’ customers. Dr. Dale Skeen, co-founder and Chief Technology Officer of Vitria, points out that a lack of supply chain visibility can result in lost revenue and unhappy customers. Challenges and problems associated with a lack of visibility include, order variations, shipping delays, shortages, and overages that can result in missed and critical inventory and out-of-stock scenarios. [“How End-to-End Supply Chain Visibility Delivers Happier Customers and More Revenue,” Business 2 Community (B2C), 9 January 2014] Those are just some of the things that can affect day-to-day operations. A lack of supply chain visibility can also result in an inability to react quickly when a major supply chain disruption occurs. To learn more about the importance of supply chain visibility as it relates to supply chain risk management, read my article entitled “Supply Chain Risk Management: What in the World is Happening?

Jonah Saint McIntire states, “Hands-down, the most asked question about supply chain visibility is also the simplest: what is supply chain visibility?” [“What is Supply Chain Visibility?Getting Started, 8 September 2014] Here’s McIntire’s definition:

“The practice of capturing and integrating data, creating intelligence, and altering decisions based on the three cross-organizational flows in the supply chain (materials, capital, and information) along with their relevant environmental details.”

McIntire goes on to make a distinction between business intelligence (BI) and supply chain visibility. Although his points are valid, in today’s connected business world, the line between BI and supply chain visibility is blurring fast. Joseph Roussel, a France-based PricewaterhouseCoopers partner, writes, “A supply chain consists of a vast range of activities and interactions that touch virtually all of a company’s functions, as well as those of suppliers and customers around the world.” [“Making the Supply Chain Everyone’s Business,” IndustryWeek, 9 May 2014] He continues:

“No executive — however skilled, innovative, or persuasive — can drive top supply chain performance singlehandedly. Because the supply chain is critical for revenue growth, it should be the concern of the entire senior management team, not just the COO or CSCO. This includes the head of sales and marketing, who relies upon the supply chain to deliver products in a way that is consistent with the overall customer value proposition; the head of strategy, who depends upon it for expansion into new markets; and the head of product development, who relies on the supply chain to achieve time-to-market and time-to-volume goals.”

Larry Lewis, Director of Product Marketing at Kewill, agrees with Roussel. “Supply chain visibility is no easy task,” he writes, “in fact, defining what it means can be a challenge in itself. What is your definition of supply chain visibility? Is it data visualization, business intelligence, and analytics, or is it a collaboration tool used to connect your trading partners and suppliers? The answer is not always that clear because supply chain visibility has to take on all of those roles to fill the promise of true insight and near real-time reporting.” [“Global Supply Chain Visibility is No Easy Task,” Talking Logistics, 22 July 2014] What that means is that executives throughout a company need to be armed with much of the same information (i.e., have the same visibility into the supply chain). McIntire doesn’t disagree with that assessment. He writes:

“Supply chain visibility leverages broad data access, data management tools (software usually), analytical tools, and the authority to interrupt business decisions. So, these tasks usually end up with technical staff and centralized departments. Common practice might be for visibility tasks to be roughly divided by data source (logistics, transport, warehousing, suppliers, sales, etc). Better practice tends towards centralized teams with a mandate to support and review various departments which are consumers of visibility. In other words, an immature visibility model has dispersed creation and consumption of visibility. More mature models centralize visibility practices, so that high-quality visibility services are provided by a technical and independent center of excellence in the company.”

When you start talking about outside-in supply chain visibility, you have to broaden your perspective even more and start thinking about how supply chain partners can become a collaborative part of the picture. Unfortunately, Jessica Twentyman (@jtwentyman) reports, “At many manufacturers, supply chain collaboration is stuck in the dark ages.” [“Cloud is new platform for supply chain partners to get together,” Financial Times, 24 June 2014] She explains:

“When it comes to ordering materials and components, managing inventory levels, or organising the delivery of finished goods to customers, companies are forced continually to chase business partners — mostly suppliers, logistics companies and retailers — via a messy stream of emails, phone calls and even faxes. Worse still, much of the data that could give manufacturers a complete, end-to-end view of their supply chains already resides on the back-end IT systems of these partners: as much as 80 per cent of it, according to some industry estimates. In other words, when a manufacturer receives an order, it has little idea if its partners can provide the materials needed to fulfil it on schedule, the transport capacity required to deliver it, or the shelf space to display it to customers.”

Nader Mikhail, chief executive of Elementum, told Twentyman, “The cloud is the perfect place for supply-chain partners to collaborate for better visibility.” It should be clear by now that there are number of pieces to the supply-chain-visibility puzzle that need to be assembled. It simply can’t be done manually with the timeliness required in today’s fast-paced business world. The more complex a supply chain is the less possible it is for manual processes to be effective. Lewis adds:

“Collaboration is vital to the success of your organization’s visibility plan, and may be the single largest determinant in the success of your project, with very good reason. By their very nature, supply chains operate through collaboration — it is essential to the movement of goods and the method by which your goods make it from point A to Z. This means you have to design a supply chain visibility solution around your trading partners and suppliers. Any effective solution needs to support both your internal and external partners and actively enable them to participate in the flow of goods throughout your entire process for any workflow.”

Lewis agrees with Cecere that supply chain visibility must “extend from the sourcing of raw material all the way to the delivery of finished goods to a consumer.” He concludes:

“While true supply chain visibility is not an easy task, you should view supply chain innovation and disruptive technologies as competitive differentiators if you want to compete and win in today’s quickly changing world. Innovative thinkers and data-driven companies are proving to be the market leaders. To be successful you have to not only invest in supply chain visibility solutions, but think of this as an ongoing journey and process as there will always be new suppliers to onboard, new technology to integrate, data to be mined, etc.”

Although it might seem counterintuitive to create supply chain visibility from the outside in, doing so ensures that the individuals who need that visibility are getting the right data at the right time so that they can make the right decisions. An inside-out system risks missing some potentially important bit of data that could have been captured using the outside-in framework. Joe Bellini, Executive Staff Member at One Network Enterprises, asserts that most companies have a long way to go in order to achieve good visibility. “Despite the fact that they have undergone a number of complex and expensive technology implementations,” he writes, “most C-level and supply chain executives admit that they still have little idea of what is happening throughout their extended supply chain until long after events have taken place.” [“What Can Chess Teach About Big Data, End-to-end Visibility and the Future of Supply Chains?,” SupplyChainBrain, 12 May 2014] He continues:

“It is nearly impossible for their organization to sense an issue and modify or optimize its response in a timely manner. As a result, today’s executives are frustrated — they know their companies are sitting on extremely valuable information assets and yet they are unable to leverage it for the benefit of their organization.”

Glenn VanLandingham, Senior Director and Solutions Architect at Manhattan Associates, adds, “Supply chain visibility hasn’t hit ‘mainstream’ when it comes to supply chain applications. It may not have come to your organization yet. But there’s a good chance it will.” [“Why Your Company Will Implement Supply Chain Visibility Tools,” SupplyChainBrain, 9 October 2013] Technologies that permit companies to create outside-in visibility into their supply chains are rapidly maturing. If you haven’t investigated how they could help your company, I wouldn’t wait too much longer to do so.