The Holy Grail
As consumers, when buying stuff online, we are pretty used to receiving an instant order confirmation and a neat little track & trace link. That bit lets us track where our goods are at any given moment and also reports when our stuff will arrive at our doorstep.
Unfortunately, things run quite differently when it comes to handling global logistics processes across many players and company boundaries along international supply chains. Anyone who has ever ordered a few containers of goods from overseas as a company knows that this is still a black box for most of those involved.
That’s why we all talk so much about supply chain visibility being super important. It’s practically the Holy Grail of the logistics world: everyone’s talking about it, and yet achieving it remains wishful thinking.
A child of the 1980s
So, what we are talking about, here, is supply chain visibility. And this, of course, is very closely related to supply chain management. That’s why we first have to understand what that is all about. And that’s quite a big deal, already, as we’ll see next.
To put it in simple terms, the core idea of supply chain is based on the idea that a business or corporation is just one single link in a longer chain of value creation stages. Supply chain management is therefore the coordination of all internal and cross-company business processes, especially logistics processes.
However, the dilemma starts with the definition. When asking Wikipedia, we’ll learn that there are countless definitions of the term “supply chain management”, none of which has yet been able to finally establish itself. Ultimately you will probably find not a single logistics company in the world has its own definition of supply chain management.
Instead of asking for a proper definition, maybe it’s easier to go after the origin of the term supply chain management. While executing supply chain management has probably existed since the emergence of division of labor in the Neolithic Age, the term supply chain management came up in the 1980s. How could it be otherwise: the term was coined by some smart advisors of an US-based strategy consultancy. The concept then became popular in the 1990s and grew to mainstream know-how by the turn of the millennium.
Anyhow, the concept was born in the 1980s, i.e. at a time when almost all management theories and corporate management concepts referred to corporations and large companies. This was also the case with the concept of supply chain management, which focused primarily on the widely ramified supply chains of the automotive industry with the then almost omnipotent OEMs as the linchpin.
The large car manufacturers such as GM and VW were the role models and archetypal references, when the concept of supply chain management emerged. It is in this particular tradition, that the concepts and methods of supply chain visibility are to be found. And this holds true, still today, for the methods and approaches to achieving supply chain visibility.
Where’s my stuff?
So, the supply chain is a string of different companies and individual players, each of whom adding value on their stage of the process and have an overview over a limited part of the supply chain. Given that, the core idea behind all supply chain visibility concepts is to bring together the different perspectives, create transparency and provide an overall view of the entire chain of activities.
The perspective of this overall view is, of course, the customer being the target point of the value creation processes. The goal is to satisfy the customer’s need for information, i.e., to be able to answer questions such as: “Where is my stuff?”, “When will my goods be delivered?”, and in a more elaborate form also answer the question: “What goods and capacities are available to me at which stage of the value chain?” The latter is quite a typical OEM question, which is based on the desire for total control of the entire supply chain down to the last link.
The Visibility Paradox
This is exactly, where the visibility paradox comes into play.
What’s so paradoxical about it is the fact that countless players claim to have supply chain visibility at their disposal or to be in a position to make it available to others. At the same time, however, the topic is seen as the greatest challenge among experts because it seems to be largely unresolved.
This discrepancy is serious and persistent. This might be best illustrated by the following example.
Some time ago, Vernon Francis from the University of Dallas wrote a scientific study on this topic. He called it “Supply Chain Visibility. Lost in Translation?”. His findings and conclusions can be summarized roughly in the following three points:
- He first stated, ” The use of the term Supply Chain Visibility is ubiquitous.”
- Mr Francis then describes from his work: “A recent internet search returned over 348,000 entries. A cursory review of these entries shows that most of the links are to vendors of SCM software, to 3PLs, and to others claiming to have or to provide Supply Chain Visibility.”
- Eventually, he noted, “However, achieving SCV remains an important issue, consistently ranking near the top of surveys by SCM professionals uncovered in this research.” In short, it remains unsolved. And consequently, Vernon Francis also asks the question: “What causes this difference in perception?”
The relevance and persistence of this discrepancy can be seen in the fact that the aforementioned study was conducted in 2007, some 14 years ago, and little has changed to this day. Even today, the topic is hyper-contemporary, as experts and studies (Gartner, etc.) continuingly consider it one of the top challenges, today. The only notable difference between the year 2007 and today is that googling the term, today, returns around 80 million hits instead of some 350,000 entries, then.
It’s not about connecting data …
So, the pursuit to control the supply chain remains a bit of a difficult subject.
Certainly, many companies have structured supply chain tools today that provide transparency for their immediate suppliers. But in fact, even that remains difficult, as supply chain data is spread across multiple systems, locations and departments. Undoubtedly, achieving visibility across multiple tiers is an even greater challenge. This is still rarely achieved today, because supply processes and structures simply change too often, therewith making hardwired data integrations obsolete, too quickly.
It shows that the prevalent methods of achieving supply chain visibility are essentially ineffective. It turns out we’re not going to solve the challenge with more data integration and electronic logging devices.
Instead, we have to discard some of the dogmas that still dominate most approaches to solve these problems today. The first dogma is the concept that throwing together all available data from those distributed IT systems and logging devices of all players along the supply chain will provide us with a true and comprehensive reflection of the physical supply chain.
The second dogma is about total automation. It’s a widely shared conviction that better supply chain visibility can be achieved through an ever-increasing degree of automation and an exclusion of manual activities to the greatest possible extent.
… it’s about connecting people!
It’s obvious that it can’t work that way. Especially not in a world with rapidly changing conditions.
After all, it’s still a people’s business with people working together in supply chains. People from the most diverse contexts. People from all regions of the world. People who work in different companies and thus also have to follow different organizational structures. And it is these people who make decisions every day that have relevance for processes along supply chains.
We need to enable these people to communicate with each other, to exchange information with each other as easily and intuitively as possible, and to give every conceivable actor in the supply chain low-barrier access to be able to contribute, regardless of whether they have been long-standing partners or you are communicating with partners along the supply chain for the first time. Only by this, we will achieve supply chain visibility in a way that helps all parties involved to make the right decisions. Only this will deliver sufficient resilience -another buzzword- to reliably deliver results even in the face of disruptive changes such as the current Covid pandemic.
We at limbiq.com are relentlessly working on smart solutions to overcome this Visibility Paradox. We are happy to get your feedback on these topics and exchange viewpoints on how to make Supply Chain Management as easy as possible. Maybe we can meet at on of our upcoming webinars related to this.