Bringing Clarity to Visibility Solution Investments
Q: How do you define visibility?
A: Visibility is understanding the location and current status of key assets—whether on-time shipments or inventory stockouts. Visibility boils down to three elements: orders, shipments against orders, and inventory.
Q: Why is supply chain visibility such a challenge for companies?
A: Visibility is hard to quantify. Companies may make incremental improvements where pain is the greatest without investing in a more holistic visibility solution. What makes it even more difficult is that visibility involves players outside the enterprise—suppliers, carriers, and manufacturers—and trying to get these partners to collaborate toward mutual benefit.
Also, some enterprises confuse electronic data exchange (EDI) capabilities with true visibility. EDI provides a certain amount of information—whether a purchase order has shipped, for example—but it doesn't necessarily offer granular-level detail. There is always a subset of trading partners that lacks this capability, which creates black holes and distrust in the system. EDI is part of visibility, but in and of itself, it's not a visibility solution.
Q: What key factors should a buyer consider when evaluating visibility solutions?
A: Visibility solutions should allow enterprises to see everything going on in their supply chain. This entails several factors. First, make sure the visibility platform is interconnected—with no limitations as to partners that can join the network. Second, the platform should be holistic so that access stretches upstream and downstream in the supply chain. Third, visibility solutions need to be versatile. They need to collect and render information so that it is usable by different parties inside and outside an organization. Finally, visibility solutions should be customizable. While everyone is sharing the same version of the truth, different functions can see and leverage information in their own unique way.
Q: What ROI should you expect from a visibility solution?
A: Benefits are both subjective and quantitative. Having better supply chain visibility will inherently improve a business's ability to sense and react to change faster and more efficiently. Turning it into firm ROI is more challenging. But some areas are easier to quantify. With inventory, for example, visibility allows companies to analyze inbound shipments to identify and eliminate bottlenecks. If you can squeeze hours or days out of lead times, you can carry less inventory.
Moreover, shippers can level out lead-time variability or better manage exceptions—stockouts, for example—by recognizing backlogs and taking necessary steps to correct them.