Visibility + Velocity = Supply Chain Success
Visibility + Velocity = Supply Chain Success
The need for speed is changing how supply chains are managed. Increasing rate of flow results in better customer experiences, a stronger bottom line and more shareholder satisfaction. Getting there requires supply chain leaders to focus on actions that drive velocity through the system. Eliminating decision-making barriers that limit performance minimizes friction. Leveraging cloud computing to link processes brings transparency to the supply chain. And locating manufacturing close to customers reduces time to market.
While the concept of the supply chain has been around for more than 40 years, the ability to incorporate real-time data is new. Organizations that quickly learn to harness the power of today’s data possibilities will thrive. A real-time supply chain characterized by visibility and improved velocity will optimize business outcomes – and help companies achieve competitive edge.
“Faster inventory turnaround means more, free cash flow,” explains Tom Linton, Chief Procurement and Supply Chain Officer at Flex. In an interview with Supply Chain Digital, Sept. 7, 2017, he said: “The velocity of a supply chain is directly linked to the health of the balance sheet, so a faster supply chain is a better supply chain.”
3 Truths Driving Supply Chain Visibility and Velocity
1. Real Time Is In, Control Towers Are Out
Flex’s Linton, co-author of “The LIVING Supply Chain” (Wiley 2017) with Robert Handfield, Ph.D., believes massive data warehouses (or control towers) that contain information from multiple logistics systems and production facilities impede visibility and velocity. “Real-time supply chains are the anti-control tower,” he writes.
Compare a supply chain relying on instant access to current information to one that’s batch- or report-based: One provides real-time visibility that enables rapid, accurate response. The other uses data from last week, several days ago or even yesterday, so it’s less reliable.“If you are watching your speedometer, you don’t want information on your vehicle’s velocity from … even a minute ago. You want to know how fast you’re going right now,” Linton says. “To make informed decisions based on insight pulled from data, we need the data to be as fresh and current as possible. In this way visible real-time information leads to increased supply chain speed.”
Dated data isn’t the only problem with control towers. They’re also only accessible by a limited number of people. Critical decisions require signoffs that slow things down. And integration with relied-upon partners isn’t part of the process. “The LIVING Supply Chain” authors tell us it’s time to retire tired supply chain themes.
2. Transparency Requires Business Process Convergence
The ability to present diverse sources of information into a single view creates the speed that accelerates the supply chain. The cloud links separate automated processes. It centralizes knowledge by connecting planning, procurement, manufacturing, warehousing and fulfillment information across multiple companies within the global supply chain. Linton calls this “business process convergence,” and considers it a key success factor. Cloud computing’s power, scale and low cost make sharing information needed to create relationships along the supply chain a reality.
Real-time data that’s visible and accessible through the cloud becomes the focal point for problem-solving. This, in turn, makes for better customer experiences and stronger competitive advantage. “We are moving to the era of real-time supply chains that involves understanding and predicting what internal users and customers need … even before they recognize they need it,” says Linton and Handfield in an article published in Supply Chain Navigator in May 2017.
3. Manufacturing Facilities Close to Customers is Smart Strategy
Market proximity increasingly makes sense. A regionalized approach speeds the process of getting products to market, saves money on shipping (raw material in and finished product out). It also mitigates the impact of tariffs on goods from around the world. “Globalization is becoming regionalization, and regionalization is becoming intranational,” said Linton in the Nov. 6, 2018 issue of The Wall Street Journal. He notes that worldwide labor parity – where unemployment rates decline while wages increase – is driving the return of manufacturing to where the buyers are.
This change is precipitated by material shortages and supply chain bottlenecks, which, according to the U.S. Census Bureau, were the highest in a decade in the second quarter of this year. Linton and Handfield explain in the July/August 2018 issue of Supply Chain Management Review that supply chain optimization has historically involved turning knobs on a supply chain design that’s broken. Changing this way of thinking are the insights revealed in their work, which boil down to a simple equation: Adding visibility to your supply chain increases velocity. And velocity is the most important element of supply chain success.
Flex Pulse® connects all parties, factories and suppliers to a centralized nerve center providing consolidated, real-time data – accessible on any device in regions around the world – and delivers insights that make a difference.