PurchTips edition #458

Why is Visibility critical to realizing Supply Chain Agility / Adaptability?

The underpinning of agility is visibility.

Visibility is a Critical Enabler to:

• Acquire the fundamentals of what is going on in your supply mechanisms
• Perform Supply Chain Diagnostics
• Determine the best corrective actions to reduce risk and supply disruptions
• Mobilize and orchestrate Stakeholders and Supply Chain Actors to act accordingly

Visibility on the interaction between these dimensions is vital to supply chain success. These areas are complex components and a thorough understanding of the cause and effect relationships between them is critical. The goal here should be the acquisition of visibility as quickly as possible.

According to a Deloitte Study 65% of procurement leaders claim that they have no or limited Visibility of their supply chains. Many may argue that Supply Chain Visibility is a Core Input for realizing Resilience, Risk Mitigation, and Supply Sustainability.

Limited visibility can:

1. Negatively impact Supply Decision-Making Processes
2. Negatively impact the Capacity of Supply Departments ability to anticipate disruptions
3. Compromise the capacity for Proactive Supply Planning
4. Increase the probability of failure due to supply chains becoming more complexed, due to shifting demands and customer requirements
5. Increase Supply / Demand Imbalances and Bullwhip Effect
6. Exposure to fraud, theft, and maverick spending
7. Increase the Total Cost to Serve and Total Cost of Ownership
8. Reduce Supply Chain Performance
9. Loss of Value in your supply chain
10. Increase the burden of meeting compliance with regulatory demands

Table 1, Current Levels of  Supply Chain Visibility

Source: Deloitte. Leadership Driving Innovation and delivering impact

Note:

“Compliance is an up and coming factor, and manufacturers are expecting a lot more regulations for environmental compliance, around packaging for trade compliance and things like pedigree, for understanding where your product is coming from,” Noha Tohamy, at AMR Research

Question 1:

What type of Visibility do you have on your Procurement and Supply Chain Activities?

Question 2:

Did you know that visibility impacts the Degree of Supply Chain Maturity?

Note:

State 1, depicts Ad-hoc Reaction

State 2, depicts Anticipation

State 3, depicts Integration

State 4, depicts Collaboration

State 5, depicts Orchestration

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Procurement and supply chain are fields that have changed tremendously throughout the years. They are much more multi-faceted disciplines than they were even just a few years ago.
If you’re a procurement or supply chain professional and you haven’t adapted to new ways of carrying out your work, the world is passing you by. But it’s not enough to try to get to where procurement and supply chain are today. You must prepare for the future of these important business functions.