Successful logistics companies must know how to run lean and agile supply chains. But until relatively recently, organizations approached that task by making decisions based on incomplete information – or gut instinct. That changed with the arrival of real-time supply chain visibility technology.
In this post, we’ll review the origins of this watershed development, and examine how supply chain managers can use real-time visibility to stay nimble and manage the shifting dynamics that are impacting everything from sourcing raw materials to the delivery of final products.
New Challenges to Supply Chains
In the 1990s, Stanford Professor Hau Lee, who was studying the reasons behind a logistics phenomenon known as the “bullwhip effect” found that shifts in customer demand can result in big changes in the supply chain. Lee estimated that a 5% change in demand in a typical supply chain would cause as much as a 40% change upstream in a supplier’s manufacturing schedule. The reason? A lack of transparency.
It’s also true nowadays. Organizations need tools to guide fact-based decision making so they don’t waste time or make knee-jerk responses to raw material shortages, production glitches, carrier issues, labor strikes, or acts of nature.
In the face of these many challenges, the only way to mitigate disruption is to ensure end-to-end supply chain visibility.
Learning from COVID
After the COVID-19 crisis erupted early in 2020, supply chains came under pressure. The first few months of the pandemic witnessed big increases in load volumes amidst sharply higher demand and panic buying. By early Spring, however, the supply chain had returned to normal demand patterns. Still, the pandemic served as a wake-up call.
One of the lessons from COVID is that supply chain managers need to be able to quickly gather intelligence from different systems or different business units operating in various parts of the world where processes vary. That task becomes fraught if they don’t have the right digital systems that help manage coordination and collaboration processes among different members in the supply chain.
Another lesson: In order to remain agile in the face of future crises, operators need a real-time view into the supply chain so they can respond automatically to abrupt changes.
Supply Chain Visibility in Action
Say a food and beverage company that delivers supplies to a grocery retailer can provide real-time updates and chat with their end customer or carrier in real time through a native instant messaging app. That helps the retailer better plan their inventory. When they look to allocate products to a store, they know when the truck is arriving and people know in real time where items are, allowing managers to make smarter decisions on the fly.
Or when product recalls occur, you can look into a common digital platform to find the location of every single truck carrying every single SKU before it gets to the final retailer and unloads its cargo. That’s the epitome of agility.
The ability to collaborate through one platform with all supply chain stakeholders is a tremendous boon – it’s also a major improvement from years past when companies would need to look in their ERP program, then call each carrier and wait for the dispatcher to locate each truck (because they first had to call the driver.) That process could take hours. Now, they can simply type in the SKU number to put all the transactions on a map and in a load card view on the screen.
Companies need to be able to predict and create risk mitigation strategies that account for the unexpected. If you can’t deliver products to your customer on time, the next best thing is to proactively notify them.
With the use of advanced software platforms, such as FourKites, companies know the status and location of their loads in real time. For example, by using predictive capacity management tools within the FourKites visibility platform, grocery manufacturers can collaborate with other grocery manufacturers and food retailers who share common lanes to improve utilization. Collaborative shipping has many advantages, including higher vehicle fill rates, more efficient use of driver time, lower transportation costs and reduced emissions.
How Visibility Drives Agility
Best guesses don’t cut it. Agile companies need instant access to the best and most up-to-the-moment information about the state of their supply chain. They also need a system to help them sift through massive amounts of data and help them prescribe the best course of action.
Before FourKites created the real-time transportation visibility software category in 2014, everyday logistics management relied primarily on phone calls, emails and faxes – in other words, their best guesstimate when shipments might arrive.
FourKites broke new ground with a real-time supply chain visibility platform that could harvest and aggregate data in a way that hadn’t been done before. What’s more, it was a configurable system that allowed users to derive the prescriptive insights they needed.
That big advance came just as C suites were starting to put increased emphasis on supply chains as a strategic and competitive differentiator. Walmart initially drove the change when it told its vendors they would be fined a percentage of the cost of goods sold if they missed their scheduled delivery times. That caught the eye of CFOs when they saw these big
charges appear on their balance sheets, adding extra motivation to use data to drive efficiency.
Supply Chain Visibility Benefits & Use Cases
Real-time supply chain visibility has allowed shippers and carriers to handle any number of challenges that previously would have beyond their abilities to resolve. Here are just a few examples to consider:
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Issues and disruptions happen every single day, offering different scenarios for how agility plays out from a visibility solution standpoint. As supply chains mature, real-time, predictive visibility is vital to improving operations and elevating the customer experience. Real-time visibility into shipment location is foundational to that experience. Being able to seamlessly share location data with your carriers, drivers and customer service teams ensures that customers will not only have the most up-to-date information, but that you’ll be able to take immediate corrective actions when issues arise. That’s a textbook demonstration of agility in practice.