Supply Chain Visibility: What It Is and Why It’s Important
If there’s one thing both customers and businesses appreciate, it’s knowing where their package is.
Businesses rely on increasingly complex supply chains to manufacture and deliver goods, and the efficiency and effectiveness of each stage shape the end product. Fortunately, supply chain visibility is the antidote to a number of trading headaches — including shipment tracking. It provides transparency throughout the trading process thanks to real-time data from raw material suppliers to customer delivery.
And visibility data isn’t only attractive to sellers — it provides insights to every stakeholder in supply chain delivery, including brokers, third-party logistics providers (3PLs), and carriers.
As a result, supply chain visibility optimizes resources, builds actionable insights, and offers businesses of all sizes a competitive advantage.
But what exactly is supply chain visibility, and how can it support your organization?
What is supply chain visibility?
Supply chain visibility is the ability to view and track products in transit. It relies on shared information across trading partners and real-time data throughout production. This data empowers teams with vital information at every stage of the supply chain, from sourcing raw materials to delivering to end users.
Without accurate updates, it’s easy for your supply chain to become muddled. What’s the status on materials? How long until the current batch of product is through manufacturing? When can the customer expect their goods to arrive? If you don’t know where products are, you certainly can’t inform other stakeholders of their progress. The result could be a supply chain disaster, like raw materials arriving weeks late to your manufacturer, who’s busy with another client.
Information is power, and supply chain visibility is essential to building operations that exceed expectations and outpace competitors. Supply chain visibility provides your business with all inventory, activity, and proactive status updates in order to create an accurate picture of goods on the move. Consequently, strong visibility allows you to mitigate disruptions, streamline shortfalls or bottlenecks, and improve the customer delivery experience.
Many companies use third-party supply chain management technology integrated with their enterprise resource planning (ERP) software, which offers up-to-date data about all aspects of the organization’s supply chain. And to capture a more significant market share, businesses choose to improve operations with real-time visibility on shipment locations and statuses, information that enhances coordination in managing complex trading processes.
The ability to manage an increasingly complex global supply network and meet international compliance standards without delays sets businesses apart. Supply chain visibility provides you with the four essential Cs:
- Complexity management with real-time data
- Customer satisfaction through enhanced visibility and faster deliveries
- Compliance with international regulatory requirements from procurement to tariffs
- Competitiveness in increasingly complex markets
These key factors enable your company to meet just-in-time delivery targets, offer transparency from the moment of the order, and build trust with the end customer.
Supply chain visibility: benefits and challenges
Overall, third-party logistics integrations are excellent partners for streamlining trading processes, but they aren’t without a few drawbacks. Here are the key points to consider when implementing supply chain visibility:
- Prevents disruptions: Real-time data means you see delays and other issues before they disrupt supply or delay production, allowing you to act proactively rather than reactively. This transparency throughout the supply chain improves your company's interactions and relationships with external suppliers — for example, you don’t leave your carrier partner waiting on a product — while delivering better value to customers who receive their goods on time. Plus, getting in front of supply chain issues and making the appropriate changes can boost productivity and improve efficiency amidst a changing market.
- Offers a competitive advantage: Supply chain visibility is an essential asset in businesses where even incremental changes can lead to long-term competitive advantage and increased market share. The ability to effectively track supply chain management leads to an agile team environment better equipped to deal with trading challenges. For example, suppose you’re a shipper and send out a 204 (Motor Carrier Load Tender) to a transportation carrier. In this case, you may need to share the same supply chain data with a visibility provider, a factoring company, and an insurance provider. Supply chain visibility technology allows you to transfer data simultaneously with all supply chain partners, even if they use various transaction communication systems. Because you perform this process much faster than competitors, you can ramp up production and expand operations.
- Optimizes resources: In an age of increasing salaries and staff shortages, the ability to automate paperwork and synchronize communication across internal and external stakeholders optimizes your workforce and improves efficiency throughout the supply chain. Additionally, with international sourcing and movement of goods, the ability to automate compliance across diverse countries for tariffs, registration, trade agreements, and procurement rules simplifies compliance. It also reduces the time and money wasted on incorrect documentation.
Suppose your company receives an order for a shipment of computer parts. The parts are sourced from India, China, and Hong Kong and assembled in Indiana, USA. The end consumer is in Washington, USA.
Through a supply chain visualization system, you can simultaneously track the goods from suppliers to the factory while providing real-time updates to freight partners, carriers, and the end customer. All the necessary documentation — including safety compliance, legal and material certifications, order and supplier information, the location and status of various suppliers, and the manufacturing date — are synchronized and available to the relevant parties.
Without the right third-party visibility partner, supply chain management faces a few key challenges, including:
- Increased costs: Carbon copying (“cc”) data across your trading partners may incur additional costs due to custom data mapping or configurations. Even without these unique needs, you may be charged to send that partner a carbon copy of the transaction, doubling costs.
- Constant updates: Many trading partners demand full visibility into the carrier lifecycle. As a result, carriers are under more pressure than ever — they’re tasked with keeping up with this demand and providing trading partners with accurate updates. If their third-party visibility partner is weak, this may entail chasing down answers at each step in the chain. Keeping trading partners informed and cc’ing them on transactions can involve more work and additional EDI costs. And more often than not, trading partners require transaction data formatted in a certain way. Even some brokerages have challenges and gaps in service integrations.
- Lack of visibility and understanding: While a constant stream of data is important, without adequate knowledge to unpack and utilize the data, you may wind up with a lack of visibility anyway. A shoddy 3PL partner can leave you struggling to understand invaluable information and translate it into tangible progress.
Consider this example: Visibility Partner A and Visibility Partner B have specific formats for receiving supply chain data. You’re unable to cc a transaction because Visibility Partner A requires an MS1 segment using city, state, and zip code, while Visibility Partner B prefers just the latitude and longitude in the MS1 segment.
In this case, you must manipulate the data to meet your trading partners’ expectations. Even a minor difference, like the MS1 segment here, requires custom integration work. In other words, it takes more time, money, and resources to build those point-to-point integrations.
4 key data points for supply chain visibility
While visibility is always an asset, you should consider the needs of your industry and company to determine which areas of increased transparency to prioritize. Here's how four key factors inform overall visibility:
1. Cargo location
Access to real-time location data helps you locate bottlenecks and supply shortages. In other words, you can better manage each stage of cargo location, from warehouse management to final product delivery. Internal and external stakeholders also gain insight into the status and movement of goods. For example, given that most customers expect real-time tracking, visibility in cargo locations builds customer trust and promotes repeat or long-term engagement.
Supply chain management forms a significant portion of a company's bottom line — you pay shipping rates at every stage of the supply chain. To accurately assess the cost of a product, rate transparency throughout the supply chain offers more accurate data on the costs of moving, storing, shipping, and delivering products. And for rational cost-benefit analysis, supply chain management technologies provide the most accurate picture of current rates at every stage of production and delivery.
3. Auditing records
Compliance can take significant time from other business endeavors. Robust auditing protocols enhance company transparency and bolster relationships with internal and external stakeholders. Likewise, auditing records with detailed information on past transactions, freight activities, and current orders simplifies compliance. With supply chain visibility, you can easily maintain systematic records to inspect, validate, and review all past orders.
4. Supply chain activities
Many supply chains are growing in complexity. Today’s companies need to keep track of a multitude of documents — management of supply chain activities is a full-time job without the right software to facilitate it.
Data transparency allows you to quickly trace and locate issues within the supply chain with complete documentation. From bills of lading to order receipts, proof of delivery, and invoicing, document management should support your business growth rather than detract from it.
Orderful: Managing EDI trading partners at scale
Keeping up with the demand for increased visibility and meeting the data requirements of your trading partners requires substantial time and effort — conveniently, Orderful’s API challenges traditional electronic data interchange (EDI) infrastructures and eliminates the need for companies to build point-to-point EDI integrations.
As a carrier, cc’ing data across your trading partners can quickly spiral into hours upon hours of work, and a simple partner carbon copy could turn into a custom integration. With Orderful, carriers connect to our application programming interface (API), and we handle all the formatting with your trading partners. Whether you’re cc’ing one visibility partner or updating the same transaction for another partner, we take on the heavy lifting for you. In addition, unlike legacy EDI systems, we don’t charge you to cc data to your trading partners — instead, you receive EDI costs with predictable pricing.
Orderful offers the benefits of supply chain visibility without the extra work of customizations so you can focus on what you do best: delivering exceptional value to end customers while growing market share. Ready to learn more? Speak to an EDI expert, become an EDI partner, or request a transaction.
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