Why supply chain visibility is so important

Jul 3, 2020
Innovation

Our supply chains have found themselves weathering some rough storms lately. From truck and driver shortages, to pandemics, maximum capacities reached at European ports and increased legal and environmental regulation, supply chain systems are increasingly under strain. Organizations are under pressure to lower their freight rates while simultaneously offering higher levels of service, in a more agile way in order to better serve high-demanding customers with fast-evolving needs.

A supply chain ecosystem under high pressure
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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.

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, “visibility is among the top three funded investment initiatives prioritized for many (46%) supply chain organizations”

Transportation visibility is gaining momentum, fast becoming a ‘must-have’ solution for many organizations, regardless of size, geography or industry. The applications for real-time supply chain visibility technology are becoming more universally understood and appreciated. 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.

Predictive real-time transportation visibility is key to achieving a more robust and competitive supply chain, enabling dramatic improvements in five key areas:

1. Providing end-customers with more visibility of their transportation operations

End-customer expectations of a B2B delivery experience have evolved to meet those of consumer experiences (i.e. the ‘Amazon effect’). However, B2B supply chains are becoming increasingly complex and fragmented making deliveries far more challenging to monitor. For this reason, 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.

2. Accurately measuring and improving delivery performance

Blind spots in supply chains prevent valuable insight from reaching management. Without digital automated visibility, companies rely on manual reporting using disparate computer systems or even paper forms, leading to inaccuracies, lack of objectivity and delays in receiving information. This makes measuring OTIF and other metrics difficult, especially when subcontracting carriers, which in turn hinders the ability to optimize operations and avoid the costs of inefficiencies and late delivery penalties.

3. Proactively handling and minimizing transportation litigations

Sometimes, deliveries don’t go to plan for any number of reasons, leading to potential transportation litigation. The use of paper CMR (Bill of Lading) forms can take many days to be received by operations teams from drivers and often lack the detail required for unequivocal root-cause analysis. Once received, the lack of digital storage makes locating previous documentation a highly time-consuming process for transport dispatchers.

4. Increasing productivity through more efficient transportation management

A lack of visibility also creates operational inefficiencies throughout the chain, particularly at delivery sites. In general, most communication between shippers and carriers is done over email, phone and fax, which makes it hard to verify completed deliveries for transport teams. This leads to more time being spent trying to track deliveries than actually analyzing and optimizing their operations. With no advanced knowledge of delays or early arrivals, loading docks are not efficiently managed. An early arrival results in long dwell times while a truck waits for its scheduled dock slot. A late arrival is forced to wait for a gap in the schedule, again increasing dwell times and associated costs.

5. Building a resilient supply chain/ensuring availability of goods at the point of sale

As consumer behaviors and appetites change, so too must supply chains. For example, e-commerce has exploded and there is a growing preference for same- or next-day deliveries. Manufacturers are reducing inventory held and relying on just-in-time approaches. In FMCG, many customers are opting to spend more to have fresh organic produce free from artificial preservatives with a shorter shelf-life. This has led to more local, daily deliveries of stock. This in turn makes it possible for retailers to reduce stock on hand, creating more display space for product. The reduction of a ‘buffer’ is an example of how supply chains have become more vulnerable to disruption.

There are countless other examples of how Shippeo’s visibility solution can add value to supply chains across all industry sectors. The platform provides multimodal end-to-end visibility, even when multiple transportation modes are used. Notifications about predicted delays (or early arrivals) are automatically shared with relevant parties, allowing for more efficient dynamic slot bookings helping to reduce dwell times and helping to minimize the risk of costly stockouts. Accurate shipment status data makes it simple to measure delivery performance and focus on exceptions. It’s also possible to record an electronic version of the CMR (Bill of Lading), allowing for more detailed documentation, photo attachments and which are instantly retrievable when required.

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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