Supply Chain Visibility | 3 mins read

What is Supply Chain Visibility? And Why it Matters

what is supply chain visibility and why it matters
Chloe Henderson

By Chloe Henderson

Supply chains involve several different companies, from the initial supplier to the final distributor or retailer. This makes it difficult to maintain communication with each party.

However, by establishing open communication with each participant, businesses can heighten their supply chain visibility to adequately monitor processes, preventing disruptions.

What is Supply Chain Visibility?

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Supply chain visibility is a company's ability to monitor all product activity as it moves through the various phases of the supply chain to the customer. This includes tracking raw materials as they are molded into final products and sent to distribution centers. It also refers to tracking customer purchases, from order fulfillment to final delivery.

While this may seem like a straightforward task, in order to gain full visibility, managers need to complete thorough supply chain analytics. Otherwise, management may lose sight of inventory directly outside of their operations. This could result in logistical issues, such as late deliveries, delayed production, and poor inventory management.

To gain high visibility, businesses throughout the supply chain need to have open communication and transparency regarding their responsibilities and concerns. Starting with internal operations, managers should record and share important documents, such as-

  • Supplier order receipts
  • Order status updates
  • Manufacturer's production schedule
  • Reported delivery date
  • Shipping details
  • Regulation policies

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This should be stored in a centralized database, such as integrated management systems, where all parties can access the information. By sharing real-time data, every party involved is able to correlate schedules and plan seamless transitions through the supply chain.

A high visibility environment enables coordinators from the supplier, manufacturing, and distribution companies to plan logistical needs in advance. This includes product order volumes, delivery dates, inventory storage, and transportation needs. Even after the planning stage, management teams should remain in contact to inform each other of unexpected delays so they are able to adjust their processes as needed.

Supply chain visibility not only aligns the work efforts and expectations of organizations, but it also mitigates the risk of disruptions and aid decision-making as well.

Why Supply Chain Visibility Is Important

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Maintaining visibility of the supply chain throughout all operations has become increasingly important as networks continue to expand. It ensures companies are-

  • Adequately Managing the Supply Chain Complexities
Many businesses now handle various supply chain phases internationally, requiring extensive planning, logistics management, and visibility to ensure operations run on schedule. Even companies that handle functions domestically have to consider consumers worldwide if they want to expand and offer their products globally.

High visibility enables companies within large supply chain networks to remain transparent and make quick decisions. By capitalizing on cloud-based management software, organizations can establish a centralized database to share real-time data and create an open line of communication. This reduces the risk of delays due to poor information exchange.

  • Meeting Customer Demand
Now more than ever before, businesses have to fight to attract customers as they are faced with staggering competition. Consumers have countless options, enabling them to demand lower prices, more product variances, and faster service. This requires companies to operate at their optimal performance in order to keep up with customer demand and remain competitive.

With enhanced visibility, organizations can promote productivity, data sharing, and inventory control to ensure orders are fulfilled accurately and delivered on time. By continuously monitoring product movement, managers can standardize processes to produce consistent results to meet deadlines.

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  • Remaining Compliant
Beyond performance and customer demand, visibility enables companies to stay up to date on state and federal regulations to ensure all internal processes are compliant.

Otherwise, government restrictions may change, rendering operations non-compliant and costing the business significant fines. Minding regulations is especially important for international organizations that enter trade agreements and handle global tariffs.

By staying informed of changing laws, companies can alter their terms and processes to remain compliant and avoid supply chain delays.

  • Monitoring Performance
With management software, companies are able to view their performance with generated reports that offer metrics, such as key performance indicators (KPIs).

These values define how well each internal system is performing by measuring production, fulfillment, and profit levels. This enables management to improve certain processes to boost overall operational efficiency.

How Inventory Software Can Help

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Gaining visibility in the supply chain can be near impossible with manual methods as networks continue to expand. However, inventory software, such as inventory control and ordering systems, automate data sharing and communication to enhance visibility.

Inventory management software uses real-time data, such as fluctuating stock levels, and machine learning to produce generated reports and advanced analytics on each item's performance.

Advanced systems can integrate with other management software, including point-of-sale (POS) solutions, to update inventory quantities with every transaction. With access to KPIs, including turnover rates and profit margins, management can decide how to optimize inventory orders to boost sales and generated revenue.

By integrating ordering software, businesses can even automate reorders to avoid under and overstocking items, minimizing inventory expenses. Modern ordering systems can also connect companies directly to suppliers and consolidate orders to reduce purchasing costs.

Therefore, organizations should consider implementing inventory software to improve their supply chain visibility and automate data collection and sharing.