The Gold Link in the Chain

TI Executive Insights V3

Forward thinking companies understand the value of visibility and regard it as a strategic and tactical armament in their supply chain strategy. This is a powerful tool that can be developed and sustained in all organizations. The successful industrial companies of the world have taken what was once a weakness and turned it into a golden opportunity!

Today in many companies, supply chain departments are required to be pro-active and develop plans to avoid any disruptions within the supply chain. Bad weather, shortages, defective materials and Gold Linktransportation issues can have a devastating effect on a company’s bottom-line.

The number one goal for any supply chain team is to have quality material to ship regardless of the situation. This is paramount to the success and profitability of the organization. The astute companies of the world are becoming quick, flexible and using their visibility within the supply chain as a competitive advantage! Many companies will turn to a Third Party Logistics (3PL) team to provide a customizable transportation management system which will provide operational process efficiencies, cost reduction, improved visibility and responsiveness across the entire supply chain.

So what is visibility within the supply chain? The most basic definition is the traceability of products in transit from the manufacturer to the final destination. These products could be parts or components used to make an item or the final manufactured good itself. In a broader sense, visibility is the increase of available data that can be analyzed to make recommendations and determine approaches to improve and strengthen a supply chain. There are certainly different levels of visibility, but as risks in the supply chain continue to occur and customer demand continues to be less understanding of disruptions, more companies are recognizing the importance of creating and managing a visible supply chain.

Gold Link 2There are several reasons why companies are trying to develop a mechanism for this visibility. The first is to increase how efficient companies are with inventory. Gone are the days of having “just in case” inventory surplus. Whenever a company has a critical issue within an environment they must address it as soon possible or potentially face lost sales and an overall negative impact on the business.

Last, visibility within the supply chain can give an organization a competitive advantage. If a company can plan for an unexpected circumstance that interrupts the flow of goods and services, an organization could potentially take sales away from the competition which failed to plan for disruptions. In extreme circumstances such as severe weather disruption like the recent floods in Thailand and tsunami in Japan, while consumers felt the crisis was an example of supply chain failure but in actuality, increased supply chain visibility kept Toyota and Honda from having long term shut downs at multiple facilities which would have impacted their bottom line.

So how can a company make their supply chain more visible? Firstly, a company should improve their supply chain visibility by mapping out the supply chain network. Start with the customer and end the value map with their suppliers. A company should look for opportunities to reduce complications, redundancies and surplus within the supply chain map.

Gold Link 3Tactically, once the map is complete the company must determine the critical points within the supply chain network. Innovation could happen within those identified points as the organization evaluates each situation for development. Determine the risks, such as weather interruptions, that have a high chance of occurring and develop a monitoring program for each situation. Allocate a team member to each issue and have them report an update to what’s happening with that situation. Develop an internal process to handle and alert supply chain members to potential disruptions or problems. Communication and visibility are keys to an overall company’s success.

A visible supply chain can eliminate or avoid problems and improve opportunities within a company. Today’s companies have to be flexible enough to deal professionally with these situations as they arise. A properly mapped supply chain will eliminate the vast need for crisis management and allows the company to not only continue with business as usual, but also maximize profits and plan for increased growth.

Some experts would say visibility can be a gold link in a company’s supply chain.