For many organizations, the operability of their supply chains directly drives business growth. Retailers, manufacturers and many other sectors rely on these complex networks to transport products and put them into the hands of clients and consumers. As organizations expand into new markets, however, their supply chain environments will become more intricate and vulnerable to far-reaching and costly service disruptions.
Financial advisory and risk management consultancy group Deloitte released a survey of 600 corporate executives earlier this year, gauging their current views on the challenges and demands of operating a supply chain. Researchers found that the modern supply chain environment is rife with pitfalls and risks capable of sidelining operations for an extended period of time. According to Deloitte's industry experts, this can be largely attributed to the increasing complexity of these networks, which make them more delicate and prone to delays. A seemingly trivial operational slowdown at one end of the supply chain can have an extensive ripple effect through the system, disrupting shipments down the line.
"Supply chains are increasingly complex and their interlinked, global nature makes them vulnerable to a range of risks," said Deloitte principal Kelly Marchese. "This increased complexity, coupled with a greater frequency of disruptive events such as geopolitical events and natural disasters, presents a precarious situation for companies without solid risk management programs in place."
According to "The Ripple Effect: How manufacturing and retail executives view the growing challenge of supply chain risk," 48 percent of survey respondents stated that risk events with negative outcomes had occurred with greater frequency over the course of the last three years. Officials representing high-tech organizations reported even higher rates, with approximately two-thirds stating that they had witnessed an increase in the number of harmful supply chain incidents.
The lasting effects of these disruptions are becoming more detrimental to business operations as well. Fifty-three percent of the survey participants said that the fallout from these scenarios had become more expensive to cope with in the same time frame. Furthermore, 13 percent stated that recent supply chain incidents were "much more costly" than earlier events. Due to the complex nature of their supply chain environments, members of the industrial, high-tech and diversified manufacturing sectors were the most likely to report that they faced more expensive operational risks.
Supply chain visibility reduces risk
To effectively meet the growing challenges inherent to the modern supply chain environment, organizational leaders will need to implement solutions that will provide a greater level of oversight across the entire network, allowing key team members to quickly identify emerging issues and address them before they can escalate. To that end, supply chain visibility tools are absolutely vital for monitoring the various components of enterprise and partner networks and ensuring that each part is functioning normally.
Patrick Penfield, director of Supply Chain Executive Management Programs for Syracuse University's Whitman School of Management, stated that this technology can help executives maintain more effective and reliable operations across their entire enterprise. According to Penfield, businesses are faced with a number of risks, including hardware malfunction, labor issues and inclement weather events, all of which can have a devastating effect on transportation and production. Further exacerbating these conditions is the increasing demand from customers and clients to receive products and services whenever needed. Although delays are inevitable, they have also paradoxically become unacceptable. Penfield explained that comprehensive supply chain management solutions provide company leaders with the resources to immediately identify production or shipment problems, such as a freighter that has been delayed indefinitely. Given enough forewarning, officials can then look for viable solutions for most issues, including finding an alternate supplier or route.
"A visible supply chain will eliminate or avoid problems and improve opportunities within a company," Penfield wrote. "In today's world, we know problems are going to occur regardless of how well we plan. Today's company has to be flexible and smart enough to deal with these situations. We can no longer carry a 'victim' mentality and accept situations without trying to anticipate these problems. Supply chain visibility is a strategic weapon in your process arsenal. This is a method that can be developed and sustained in all organizations. The great companies have taken what was once a weakness and turned it into strength!"
Boost productivity with greater visibility
Many companies that rely on supply chains operate within a siloed environment. This means that departments and organizational members cannot readily view or share important information related to various portions of the enterprise. If these businesses migrated to a fully integrated supply chain management solution, their various systems and databases could be synced, allowing management to view every step of the network and optimize operations for the greatest effect. According to a report issued by the Aberdeen Group, for instance, manufacturers could see precisely when an order was placed to a supplier, when the requisite raw materials arrived and when the finished product cleared quality control testing. In addition, officials could receive updates regarding the status of materials at every stage of production. With this great level of insight, company leaders will know precisely what is in production and how much more will be needed to fill current demand. This capacity will translate into fewer resources being wasted on unnecessary production measures and drive greater revenue streams.
Supply chain visibility resources can benefit customer-side operations as well. Once a finished product has left an organization's warehouse, managers still need to be able to track these shipments to ensure they arrive at their destination on time and in the expected condition. With these tools in place, officials can view the status of a given shipment at any time, giving them up-to-date expected delivery times that can be relayed to concerned clients or customers. In addition, businesses can set up their supply chain visibility software to generate proof of delivery notifications when a shipment has reached its destination. This will allow officials to accurately determine if products have been delivered within agreed upon time frames and quickly clear up any confusion.
"Having supply chain visibility translates into being able to meet customers' needs," a director for a medium-sized durable goods firm stated, according to the report. "At this time, our best opportunities for improvement are on the inbound side, namely, in getting more visibility into our suppliers' production capacity. ... We believe that higher visibility is partly contributing to lower lead time variability, reduced inventory, shorter lead times, increased fill rates and other supply chain operational improvements."
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