Supply Chain Visibility. If It Seems Simple, Look More Closely.

The most significant risk to today’s supply chain is the supply chain leader’s entrenched beliefs in historical practices. Functional excellence and enterprise transactional efficiency dominate the digital supply chain agenda. As a result, we find progress stalled on building multi-tier supply chain visibility.

Unlearning is hard. Building supply chain visibility requires rethinking conventional approaches. Today, companies are stuck. Over the past decade, the measurement of supply chain visibility shows that supply chain leaders are not making progress. Given the levels of uncertainty and variability, closing this gap grows in importance.

Supply chain leaders need visibility across all modes and functions to improve insights. Signals surround the supply chain but are not used effectively in traditional Information Technology (IT) architectures.

Embracing the Need for Change

Driving improvement starts with a clear definition. There are four primary visibility data streams: manufacturing, supplier, logistics, and enterprise. Annually since 2015, we have measured the gap in each of these process streams at Supply Chain Insights. Bottom-line conclusion: the industry is not progressing but is going backward with more significant gaps, despite multi-million dollar investments.

With unprecedented variability and economic uncertainty, the focus of supply chain leaders is financial viability. In a recent survey by Supply Chain Insights, 48% of manufacturing companies greater than 5B$ in annual revenue have a digital supply chain program. It sounds like progress could finally happen to improve visibility. Right? Unfortunately, the answer is not so fast. Most leaders are unclear on what digital means and mistakenly focus on improving supply chain visibility using traditional approaches. In the industry, as analytics capabilities improve, there is no clear roadmap to define core capabilities.

Why is visibility so hard? The factors are many: alignment, data latency, supply network latency, semantic reconciliation, and channel translation latency. All are barriers. Current processes are batch with data moving across Application Programming Interfaces (APIs) from one relational database technology to another relational database technology. Traditional approaches for integration add latency to data processes.

However, the IT issues are more manageable than the organizational barriers. Each function (sales, marketing, manufacturing, planning, logistics, and procurement) has a different data structure embedded in processes to drive functional excellence. The functional definitions of excellence are not aligned, often throwing the supply chain out of balance.

In addition, teams feel the need to touch data and engage in manual processes. As variability increases, process latency (the time to make a decision) grows exponentially. In our research, we found that organizations took four-to-six months to decide based on market data at the height of the pandemic.

The Global Supply Chain Pressure Index shown below signals the need for change. Supply chain disruption remains higher than at any time in the past decade. Organizations need to change their approach. Supply chain visibility and the inability of supply chain leaders to rethink their approach is a problem.

What Is Supply Chain Visibility?

So, why can we not crack this nut and solve this problem of supply chain visibility? Why are we stuck? The Fourth Industrial Revolution, 4IR, or Industry 4.0, conceptualizes a rapid change to technology, industries, and societal patterns and processes in the 21st century due to increasing interconnectivity and smart automation. In 1999, British technologist Kevin Ashton coined the term Internet of Things (IoT) to define a network connecting people and objects. When published, most people thought the topic was science fiction. Today, the Internet of Things – a vast network of connected objects collecting and analyzing data and autonomously performing tasks – is becoming a reality. Thanks to the development of communication technologies such as 5G and data analytics real-time data is growing in volume and relevance. The problem is that supply chain processes are inside-out. As a result, there is no easy way to interoperate with channel, supplier and logistics data generated by IoT unless we rethink enterprise architectures.

Supply chain visibility is the trackability or traceability of products and services including order status and physical product shipments from conversion to receipt. This includes logistics activities and transport as well as the state of events and milestones within a multi-tier network. The design of a effective solutions requires the building of role-based solutions to drive prescriptive and predictive analytics to drive action.

_{Five Lessons to Learn to Improve Network Visibility}

If you are struggling with the black holes in your supply chain and the inability to use network data. Sit back and reflect on five lessons from the last decade.

Lesson 1. Get Clear. One of the biggest issues is using the term visibility without clarity. Map your supply chain black holes. Understand the issues of latency and semantic reconciliation.

Action Item. Form a cross-functional group and reflect on the problems over the past year. Use this insight to understand your supply chain visibility opportunity. Build a guiding coalition to side-step the market hype of shiny objects and build a workable solution.

Lesson #2. Supply Chain Is A Team Sport. Enable the Flow of Information Across the Team. The management of data in supply chain visibility should meet the needs of multiple roles across the organization. Supply chain should be a team sport, but in most organizations, IT organizations have anything but a team to work with. The disparate requirements and shadow IT investments are a problem. Go for the win, and build cross-functional visibility based on role-based persona requirements.

Action Item. After mapping the supply chain black holes due to latency, size the prize. How valuable would it be to close these gaps and decrease the time to get data and make a better decision. This answer is different for each organization, but needs to be answered to drive forward.

Lesson #3. Tight Integration Increases Fragility: Decreasing Resilience. Unfortunately, most supply chain leaders do not understand the differences between integration and interoperability. Integration is not the answer. Instead, data needs to flow across disparate technologies with minimal latency with a focus on preservation of the semantic layer. The good news is that through the use of NoSQL and low-code approaches this is a possibility. Unfortunately, only 7% of business leaders are innovators willing to explore new approaches.

Action item: Learn a new language. Clearly define the differences and capabilities in supply chain visibility approaches between integration and interoperability. Focus not on the integration of processes, but the synchronization and harmonization of data. In the industry, there are many poorly written RFPs that only confuse the market.

Lesson #4. Network Capabilities Stalled Due to Buy-outs and Acquisitions. The supply chain is increasingly dependent on network flows (movement of goods and services through multiple nodes and trading partners). Over the last decade, due to solution consolidation and Venture Capital buyouts, innovation in building network solutions stalled. The sad reality is that multi-tier network solution capabilities are relatively unchanged over the decade despite the evolution of technology possibilities. There is no easy way to drive interoperability between the thirteen primary multi-tier network providers. (For the details, see the footnote.)

The problem? There are four. Each network solution operates in an island. In addition, the steady consolidation and Venture Capital buyouts thwarted innovation. Large providers capable of driving interoperability —Amazon
AMZN
, Google, and MicrosoftMSFT
—sit on the sidelines moving forward on limited visions for enterprise applications. Confusion reigns with the evolution of Internet of Things platforms by Internet of Things providers like FourKites, Project 44, and Transvoyant. Don’t confusion signal generation with the ability to use data across the network.

Actions to take? Manufacturers and retailers need to get clear on building network capabilities and build a buying center. One of the issues in building supply chain visibility is the lack of a clear vision and buyer. Current customers of existing networks need to force large players like SAP and Infor to drive interoperability between networks with single sign-on. Companies working with Amazon, Google, and Microsoft need to push them to get series on building network capabilities.

Solving the Problem Requires New Thinking. Don’t make the mistake of thinking that improving supply chain visibility happens through implementing Enterprise Resource Planning (ERP) and conventional planning applications. Two decades of IT investment clearly supports that this is not the answer.

Actions to take? Clearly define a new vision and explore new thinking by investing in understanding the Art of the Possible of Web 2.0 and 3.0 capabilities in analytics and the meaning and use of real-time data.

Conclusion.

Supply chain visibility is a big opportunity but also a problem. Opportunity abounds but remains elusive due to conventional thinking.