Escape the Reactive Stage of Supply Chain Maturity in 4 Steps

Supply-chain-visibility-boxesBy Bryn Lowry

Turning visibility into actionable insight is a topic that’s been written about in hundreds of blog posts and industry publications over the past year. Yes, end-to-end visibility is a game-changer for supply chains, but getting there requires a fundamental shift from traditional efficiency-focused supply chains to demand-driven value networks.

It also requires a shift in operating model, from point-in-time status of product flow from EDI and barcode scans to continuous real-time Internet of Things (IoT) signals. This shift drives visibility from delivery to customers back through integrated business planning, into operations, and back to the supplier network. Gaining this level of intelligent visibility allows you to move from aged, static data to real-time data that enables you to know which action to take, and to have systems at the ready to provide an alert or trigger a response. The end result is that you can be much more responsive to market and customer variability, which drives significant value for you and each partner in the connected supply chain.

To get started on this journey, you’ll need to assess your supply chain in-depth, so that you can identify which stage of supply chain maturity your organization is in. There are five stages of supply chain maturity, as defined by Gartner. In this blog, we’ll take a closer look at Stage 1 – React.

If you’re in this initial react stage, your organization is focused on reacting to events. Information such as the location, condition (vibration/shock, ambient temperature, humidity, pressure), timestamp and count can only be revealed after the fact, since in Stage 1, organizations are most likely using dated RFID technology placed at choke points, which is not 100% reliable.

In this reactive stage, companies most likely have significant visibility gaps in their supply chain, caused by:

  • A lack of an end-to-end, holistic view of the supply chain ecosystem – starting with information from trading partners of suppliers to work in process to delivery to customers.
  • A reliance on large, legacy IT investments such as ERP systems, which limits companies’ ability to collect new types of data, not just structured data from older technologies like EDI and barcode scans.
  • Dated RFID technology for capturing information at the edge.
  • A complex web of enterprise architectures consisting of IT systems, processes, and data architectures, which are difficult to integrate and create silos of data.
  • Project improvement efforts that are narrow in focus. These efforts are typically singular in scope within manufacturing, distribution, procurement sourcing, and customer management teams, rather than integrated into a holistic supply chain improvement effort.

So what is the path forward? How can companies move from this initial reactive stage into a more mature, proactive supply chain model? It starts with identifying where your visibility gaps are, how many you and your supply chain partners have, and what kind of impact these visibility gaps have on your business. Armed with this information, you can focus investments on top areas for business improvement and ROI.

To completely close your supply chain visibility gaps, follow this process:

Step 1: Understand volatility and its impact in the business—demand, supply, operations, and finance.

Step 2: Identify the critical problems (lost revenue, waste, costs, lost opportunities).

Step 3: Discover high-impact dark spots across the network and make them visible capabilities.

Step 4: Leverage analytics and a visibility platform to increase visibility and drive value.

By following this process, you are well on your way to doubling or tripling the visibility across your supply chain. With this increased level of visibility, think about how you could create value up and down the supply chain, lower costs, and delight your customers.

One of our manufacturing customers put it this way: “Our limited visibility into tooling led to challenging internal audits. Even with software systems to track those tooling inventories, we often could not find tools and as result, suffered millions of dollars in write-downs. We implemented Cloudleaf and gained 100% accurate visibility into 32,000 tools. The solution paid for itself extremely quickly.”

To get started, download our whitepaper Supply Chain Visibility Index: The Definitive Guide.