Why organizations are investing in supply chain visibility

Jul 31, 2020
Innovation

Why is supply chain visibility important?

Supply chain and transportation performance are very important to both manufacturers and retailers. According to IBM, 87 percent of chief supply chain officers (CSCOs) say it is extremely difficult to predict and manage supply chain disruptions and 84 percent of them cited lack of visibility as their biggest challenge. Furthermore, according to Gartner, supply chain visibility is the number one funded investment initiatives prioritized for many (46%) supply chain organizations.

Having greater visibility into transportation operations allows shippers to quickly anticipate problems and efficiently manage exceptions, which in turn ensures better quality of service for their end-customers and generates significant financial gains. Improving delivery performance (OTIF) is one of supply chain management’s main objectives, and it remains one of the most important levers when optimizing a company’s costs. This process requires that companies have the ability to reliably measure and analyze their performance on a day-to-day basis.

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However, as B2B supply chains have become increasingly complex and fragmented, deliveries have in turn become far more challenging to monitor. Many supply chains contain visibility blind spots, where the status or whereabouts of a shipment is completely unknown, potentially for days or weeks. In many cases, shippers only become aware of delays once an end-customer complains about a late delivery, negatively impacting NPS and sometimes incurring additional costs such as penalties. What’s more, customer service teams waste a lot of time manually following up on customer queries about late deliveries, rather than focusing on tasks that could be adding greater operational value.

A lack of visibility and the cost of unoptimized supply chains

Supply chain transportation activities have become an increasingly expensive cost for businesses and in turn reducing them has become a big business focus. Several studies have analyzed the significance of logistics costs for companies, as well as the operational benefits of more efficient supply chain practices:

  • A study by ASLOG estimates that logistics costs represent, on average, 12% of a company’s overall costs, and that transportation alone accounts for more than 50% of these costs.
  • In its ‘Global Supply Chain Survey’ report, PwC estimates that companies whose logistics practices are flexible and responsive to issues and operational constraints, achieve a delivery performance that is nearly 30% higher than that of companies who lag behind in this area.

What is a supply chain visibility solution?

A lack of objective data is leading many companies to consider implementing or developing real-time tracking solutions. New collaborative platforms are being developed to address this growing need for visibility and instant access to information. By reliably capturing delivery information and making it readily available, supply chain visibility solutions offer shippers, end-customers, and transportation partners many operational and financial benefits. And thanks to the advent of machine learning, visibility capabilities are now moving from ‘standard’ to ‘predictive’, allowing for more automation of processes and more precise and reliable ETA predictions.

What are the benefits of supply chain visibility?

Real-time transportation visibility platforms help to create a more collaborative ecosystem, improving the visibility of flows, optimizing workloads and enabling objective data to be collected to help shippers and carriers build continuous improvement plans based on confidence and transparency. Real-time transportation visibility solutions bring many benefits including reduced costs, optimized carrier operations, improved inventory management, reduced carbon footprints, objective sustainability goal measurement, increased OTIF performance and boosted supply chain resilience and agility just to name a few.

Find out more in our white paper 5 reasons why you need supply chain visibility or visit Shippeo’s blog or e-books resource center for more insights.

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