Visibility: the future of supply chain management

The supply chain is increasingly being seen as a competitive component for an organization. This has been driven by two things: sales and costs. First, “You can’t sell empty space” (as J. Sainsbury would say), so every effort must be made to get the product on show and available. Second, supply chain directors are being asked to do more for less... more formats to serve, deliveries to homes and pick-up points as well as more countries to source from; essentially a better service with the same or less budget. That is a tough place to be.

The focus on globalization has certainly had a profound impact on supply chain strategy. Products no longer come from local, national, or regional suppliers. Today, cheaper stock can be imported from the Far East, for example. However, this is only truly worthwhile if the end-to-end costs add up. If stock ends up being stored for months due to over-forecasting, for instance, it may not really be cost-effective. Every element of the supply chain must be coordinated to gain the biggest advantage. In truth the supply chain may still be unfashionable, but it is being recognized as critical.

End-to-end visibility will become far more important to companies over coming months and years. Numerous companies, not just the final retailer, are involved in the manufacture, shipping, storage, and delivery of a product. Ideally, all of these supply chain systems need to be integrated and able to communicate with one another in a common language. It’s a very complex tangle at the moment, and I believe that in the future we will see a concerted effort to achieve better end-to-end integration and visibility because when you can see the supply chain, you can manage it better.

To grab market share, a lot of retailers com¬menced their multichannel offerings a little too hastily. They are now beginning to realize just how difficult it is to make those multichannel supply chains work cost-effectively, and there is currently a great deal of work being done in this area. It is essential that these multichannel supply chains receive the right levels of investment and attention because when problems occur, they are very visible and can do a lot of damage to a company’s reputation.

The nature of the supply chain process means there is very little, if any, margin for recovery if something goes wrong along the way. Retailers have to be confident that any changes to their systems and processes will be as seamless and risk-averse as possible. Retailers are essentially looking at technologies that not only bring business benefits to their supply chains but also mitigate that risk at an early stage. They also want a very quick return on investment.

I expect many companies to adopt more sophisticated supply chain solutions that allow them to track products all the way through the distribution and delivery phase, right up until they actually hit the shelves. Perhaps more importantly, they will aim to track by exception. There is also the danger of functionality overload and the potential for confusion and missed benefits. A pragmatic approach in this area will definitely suit the supply community.