Today, what logistics and supply chain directors really need is software that helps them with logistics management and logistics execution. Limited control, lack of transparency, and poor integration across the supply chain are some of the main factors that brands are currently dealing with when moving their goods across the world, causing a great deal of frustration. “Without end-to-end supply chain visibility, information becomes siloed, creating unnecessary and corrosive segmentation,” states SupplyChain247.
To better grasp why visibility over one’s supply chain is so important, it is first necessary to understand the various levels of Party Logistics (also referred to as PL). Party Logistics models can make a supply chain look very different using multiple levels of outsourcing called: 1PL, 2PL, 3PL, 4PL and so on ). Figuring out what is the best PL model for a business can help greatly optimise their supply chain, lower their costs, gain coordination, and reduce visibility challenges. “The enhanced visibility that a 4PL solution brings, including demand and inventory data , drives the understanding of why products need to move and evolve from moving things right, to moving the right things” says Jacco Weterings, Global Lead Logistics Business Product Owner – NeoNav at Maersk. An in-house logistics department (normally 1PL with no logistics outsourcing) can be a cost-effective setup for companies, but it can take away time and focus from the company's main priority: their business and customers’ needs. For this reason, ensuring a partnership that offers the best level of visibility is key.
Why companies should optimise their supply chain visibility
The word "visibility" has been used a lot within logistics over the years, but the full meaning is yet to be uncovered. Today, according to SupplyChain247, the definition is bigger and it is used to refer to “a more holistic solution that extends beyond transportation to cover all order flows and inventory across both in-house and third-party locations”. Businesses that have complex supply chains, typically involving multiple locations partners and systems, are often subject to a range of challenges. According to EY, “in order to reduce the impacts of supply chain issues by increasing visibility across the end-to-end supply chain, companies are investing in digital and analytics” but in 2020, SupplyChain247 reported that “86% of supply chain stakeholders reported they don’t have all the necessary tools to facilitate end-to-end visibility”.
How can supply chain optimisation tools help gain visibility?
As supply chains grow more complex, logistics providers have adopted technology and artificial intelligence to automate and simplify processes. Mixing the physical flow of goods with the digital world of logistics, the best supply chain optimisation technologies are digitally enabled supply chain and logistics management services.
Supply chain optimisation technologies can be an impact-driven, highly integrated solution orchestrating the full supply chain. They can support with supply chain management over the entirety of a business’s volumes. These tools are often identified in the industry as “the future of 4PL” and can resolve logistic problems by simply sharing data in real time. The data is integrated across suppliers, breaking down existing silos and providing visibility on inventory, transportation, and performance.
New tools are expanding the visibility on great decision making. They allow businesses to understand a supply chain through the product lens rather than just looking at the cargo movements. They allow to see if a product is going out of stock or if it is overstocked. Tools like these are already in place or are currently being upgraded to resemble “control towers”, making supply chains impactful and streamlined. This technology allows real-life supply chain challenges to be solved quickly, thanks to a series of demand, capacity, inventory and buying forecasts. This includes a complete overview of their supply chain so that planning can be easy in terms of production, inventory levels, etc. This connection between real-time planning and execution can dramatically improve decision making and resilience. In this scenario, one integrated logistics partner can orchestrate the end-to-end supply chain, combining expertise with technology that is standardised, automated, and scalable.
What are the benefits of using supply chains visibility tools?
Using a complete visibility tool for managing supply chains can support businesses with the following benefits:
- Improved financial performance: lower inventory, less accidental costs, reduced administrative or handling costs, resulting in better revenue, working capital, and gained economic resilience to those that make use of it.
- Clearer decision-making: the optimisation of supply and demand networks using reliable data gives the opportunity to look at the entire supply chain, anticipate changes and change the course of actions as you go, to achieve optimal product availability at a lower cost.
- Resilience: increased visibility gives reliability, responsiveness, and agility, which equips businesses with control over disruptions: using advanced analytics that enable actionable insights to support strategy and commercial objectives when most needed.
- Better customer experience: at times customer confidence can decrease because of the inability to anticipate potential disruptions and act on them. End-to-end visibility can help companies mitigate this challenge without any disruption to the final delivery of orders.
- Sustainability: visibility over CO2 emissions across the supply chain, and better knowledge on where to optimise for less environmental impact.
- Extended connectivity: real-time order tracking across carriers and modes is very important for companies, as it can help gain a holistic picture of their supply chains which in turn delivers better efficiency.
- Peace of mind: one overarching platform. A gained unified processes in a “control room” fashion, via the removal of silos with a single source of truth, across internal and external logistics service parties, with improved overview and productivity.
The future in this area of digital logistics is bright. These tools will continue to evolve to provide a new type of 4PL management product that is 'ready to serve'. By getting all the data virtually into such a system, businesses can improve their supply chain, understand where problems are, and get specific visibility on their entire business.
By understanding a product’s demand, production and inventory, businesses can take much better decisions both in tranquil times as well as during a crisis (for example, natural disasters or supply chain congestions) while taking all the all these elements into consideration through a complete managed service.