Do you know your suppliers’ suppliers? Tier 1, 2 and 3 supplier visibility helps supply chain companies get to know their business partners, increasing their supply chain’s agility and resilience.
Visibility means being able to track components and raw materials throughout the supply chain in real-time, ensuring the physical flow of goods stays on track. Companies and suppliers are sharing data—including sales and inventory data—to better predict inventory levels, proactively find sources of disruption, anticipate missed shipments and more. Transparent, visible end-to-end supply chains help ensure continuity of supply.
To achieve visibility, supply chain companies must collect data from their suppliers and turn it into actionable insights. But how can those insights help?
You make data-informed decisions.
Having the right amount of inventory is one of the supply chain’s greatest challenges. Estimating demand is extremely difficult, especially with limited data. Having supply chain visibility means you see your suppliers’ inventory levels, sales/demand forecasts and historical sales data. This data can help supply chain companies track patterns and disruptions over time, which helps companies monitor and adapt over time.
Here are a few examples:
The COVID-19 pandemic has revealed multiple ways supply chain visibility can help increase agility and resilience (the ability to adapt to changing market conditions quickly and efficiently without major disruptions to your operations.) Effectively using real-time data is vital, especially when demand is volatile, supply is uncertain and capacity is short, as has been seen during the COVID-19 pandemic.
A prime example is the personal protection equipment (PPE) shortage. Chinese suppliers make the largest share of the PPE market, and when Chinese factories began closing in early 2020, the amount of PPE available plummeted while the demand for such goods grew exponentially. As hospitals were rushing to supply their healthcare professionals with PPE, the shortage escalated.
With supply chain visibility, companies could have seen a potential issue with all their suppliers being based in a certain area. The concentrated location of these PPE suppliers reduced the supply chain’s resiliency and chances to accurately forecast the demand of these products. Being resilient means responding and adapting, which can come from diversifying your suppliers’ locations, as well as protect against labor shortages and other challenges.
Natural disasters test the supply chain’s resilience. With supply chain visibility, companies can monitor and predict how natural disasters could affect their flow of products.
For example, if a hurricane is forecasted to make landfall on the east coast and most of a company’s Tier 2 suppliers on the east coast, their operations might not be resilient. Diversifying supplier locations helps ensure a continuous flow of goods, regardless of the weather forecast.
In this circumstance, Tier 3 suppliers’ locations are just as important. Tier 3 suppliers can be the source of raw materials, and if a weather event is heading to where your company sources raw materials, you could be in trouble. Some raw materials might not be able to be harvested or shipped during weather events, so spreading your Tier 3 suppliers out in various locations is just as important.
Technologies can help support supply chains as they dig into their visibility data. Machine learning (ML) algorithms allow companies to see how events can affect the supply chain by finding novel outliers that disrupt patterns (anomaly detection). If an ML algorithm pings a tsunami that could affect the location of a supplier, a supply chain company could tap into a secondary supplier to not disrupt their flow of goods.
Scheduling and location changes can cause havoc when transporting goods. Luckily, IoT-enabled devices can mitigate the risk of mismanaging or misplacing goods, as well as help protect against theft. Supply chain companies can set specific geographic parameters on products with these sensors, which communicate location information to insurers and authorities.
Sensors can communicate the location of shipments and deliver updates on container conditioners, which is especially important for perishable or fragile items. Sensors can notify companies when container conditions dip below maintenance specifications and requirements. This data helps supply chain organizations over time identify when issues crop up, allowing them to better predict issues.
Hard (real-time sensor data) and soft (business-process context info) attributes provide supply chain companies a comprehensive picture of their operations, helping them make more accurate predictions, lower risk and increase revenue. The combination of attributes eliminates blind spots in the supply chain.
Hard and soft attributes’ data can be superimposed onto a digital twin. The replica captures data assets, warehouses, material flows and inventory information to illustrate the real-time state of a supply chain. This information helps supply chain organizations see data points in their environmental context, analyze root causes, identify historical data and optimize processes.
Leveraging technologies and data can help bolster supply chains, making them more resilient and agile.
Supplier visibility gives supply chain companies access to their suppliers’ data to help plan and manage assets to better predict inventory levels and obstacles. Making the most of the data that comes from supplier visibility is the key to taking advantage of this supply chain trend.