It's the week before Christmas: Do you know where your merchandise is?
If it were a “normal” year and the week before Christmas, companies would probably have a pretty good idea about the location of their merchandise within the supply chain—likely because it would already be on store shelves.
But 2021 has been anything but a normal year, as evidenced by the continued bottlenecks at ports and cargo ships still waiting in lines long enough to disappear over the horizon. And then there are the emerging variants of COVID-19—like Delta and now Omicron—that stall global supply chain operations just when things seem to be improving a bit.
Persistent challenges like these that make it difficult for companies to “see” into their supply chains underscore the ever-growing need for end-to-end visibility and the adoption of digital tools and processes that make it possible.
More Work Ahead
When supply chain stakeholders began to experience the power of the pandemic to create major disruptions, many businesses found themselves scrambling for new strategies to deal with unpredictable and unprecedented supply chain dynamics.
In May of 2020, global consulting firm McKinsey & Co surveyed senior supply-chain executives who worked in various industries and locations around the world. At that time, 93% of those who responded said they planned “to make their supply chains far more flexible, agile, and resilient.”
The firm repeated its survey 12 months later with a “similarly diverse group of supply-chain leaders,” asking them what steps they’d taken to “shore up” their supply chains over the previous year; how the changes compared to initial plans made earlier in the pandemic; and what they expected regarding their companies’ supply chain evolution in the near-term and down the road.
Results were categorized within a number of broad trends, including several that relate to supply chain digitization and visibility:
Risk management: More breadth, not enough depth. Although 95% of respondents said they had formal processes in place for supply-chain risk management and primarily focused on proactive monitoring, “significant blind spots remain in most companies’ supply-chain risk-management setups.” This was evidenced by the fact that while “just under half” said they understood tier-one supplier locations and the key risks they faced, only 2% could say the same about tier-three suppliers and beyond.
Supply-chain planning: A test for technology and organization. Survey results indicated a strong link between organizational planning success and the use of “modern digital tools, especially advanced analytics.” In comparison to organizations that struggled, “successful companies were 2.5 times more likely to report they had preexisting advanced-analytics capabilities.”
Digitization surges but could tail off. Report authors noted that since there was so much interest in advanced analytics, it wasn’t surprising that the crisis catalyzed supply chain digitization: “An overwhelming majority of survey respondents say they have invested in digital supply-chain technologies during the past year, with most investing more than they originally planned.” McKinsey predicts that such digitization efforts “are most likely to focus on visibility, as companies strive for a better picture of their supply chains’ real-time performance.” However, the firm underscores two areas of concern in this context. Even with all that’s happened to upend the supply chain over the past two years, “only 39 percent of companies are investing in tools to monitor risks and disruptions.” Additionally, “Talent remains a major barrier to accelerated digitization…and the skills gap is widening.”
In terms of next steps, McKinsey says supply chains are “at an inflection point,” noting that despite the progress supply-chain leaders have made over the past year, recent events have demonstrated how vulnerable supply chains remain, “with many sectors currently wrestling to overcome supply-side shortages and logistics-capacity constraints.”
What the report’s authors say is even more worrying is that even as these new problems are emerging, some seem to be focusing less on issues impacting the supply chain: “In many sectors, there are signs that the rate of investment in digital supply-chain technologies is slowing down. Talent gaps are wider than ever, end-to-end transparency remains elusive, and progress toward more localized, flexible supply-chain structures has been slower than anticipated.”
The report detailing the two McKinsey & Co surveys was published on November 23, 2021 and ends with this prediction: “The coming months could turn out to be critical for supply-chain leaders. Some companies will build upon the momentum they gained during the pandemic, with decisive action to adapt their supply-chain footprint, modernize their technologies, and build their capabilities. Others may slip back, reverting to old ways of working that leave them struggling to compete with their more agile competitors on cost or service, and still vulnerable to shocks and disruptions.”
Increasing Supply Chain Visibility
As noted, companies have learned many lessons over the past two years, and the need for better supply chain visibility is certainly one of them.
As the results of the McKinsey & Co survey reflect, many organizations are embracing the value of visibility, which Supply Chain Management Review (SCMR) describes like this: “The value of a highly-visible supply chain…is undeniable and necessary for smooth operations. Visibility not only allows a company to connect with their partners and consumers, it also provides a sustainable strategy to build trust, drive improvements, lower risk and react much faster and more effectively should any disruptions occur.”
With so many options available, it can be difficult for organizations to know where to start to increase end-to-end visibility in their supply chains, but the following two resources from Gartner may help.
One is The CSCO’s Guide to Supply Chain Technology Innovations, which we covered in our recent post, “3 Strategies for Adapting to the New-Normal Supply Chain.”
Another Gartner resource is a webinar recently hosted by SupplyChainBrain: The Increased Role of Visibility in Supply Chain: Surviving in the Era of Supply Chain Disruption.
And remember that CLN Worldwide is also a great resource, since increasing supply chain visibility is one of our specialties.
Need help with improving the end-to-end visibility of your supply chain?
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