Despite being valuable to operations, supply chain visibility (SCV) has often been relegated as a low-priority item for most companies. However, since the pandemic and the black swan events following it in quick succession, supply chain visibility is increasingly seen as critical for building a resilient supply chain.
SCV is crucial for businesses seeking to automate supply chains, boost customer loyalty, and reduce costs. End-to-end visibility across supply chains can transform SMEs and provide a roadmap to unlock the next growth phase to help them become market leaders. However, it is not straightforward. A successful SCV implementation has its own set of challenges that the companies should be aware of and prepare in advance when developing the supply chain strategy roadmap.
Here, we explore challenges in achieving end-to-end supply chain visibility along with the best practices for overcoming them. High data quality enables business users to trust analytics tools and make data-driven decisions, which is essential for effective SCV. We will discuss all the challenges, from technology-led to data-related or even team collaboration issues impacting SCV.
Why Does Supply Chain Visibility Matter?
Before diving into the challenges, let us first find out why supply chain visibility is crucial for business success. SCV is about monitoring all movements across the supply chain — from raw materials procurement to customer delivery. Companies can access supply chain data in real-time so they can:
- Respond faster to disruptions.
- Make data-led, informed decisions.
- Manage orders, planning, purchase, production, and inventory more effectively. Remove or reduce Non-Value Adding (NVA) activities.
- Improve supply chain collaboration with suppliers, customers, and key partners.
- Boost customer satisfaction by providing timely and accurate information.
By leveraging data, companies can gain a comprehensive view of their supply chain processes, enhancing decision-making and operational efficiency.
Despite these benefits, achieving supply chain visibility is not an easy task. Let’s discuss these challenges in detail.
7 Supply Chain Challenges in Achieving Visibility
Overcoming Challenges in Achieving Supply Chain Visibility1. Data Integration Challenge
Unified supply chain information is a major challenge for supply chain visibility. The reason behind this is that over the years, different functions within the supply chain have their own set of specialized yet disparate solutions. Enterprise Resource Planning (ERP), Warehouse Management Systems (WMS), and Transportation Management Systems (TMS) are usually siloed in organizations, creating significant challenges when trying to integrate them seamlessly. Having an integration that supports real-time information sharing is incredibly challenging.
2. Lack of Real-Time Data
This brings us to our next challenge of getting real-time information. Supply chain visibility is only as good as the data driving it. Many businesses still try to run their supply chains with the good old Excel and some fancy Macros. This makes the life of supply chain planners difficult as they are always behind the real status. They struggle with outdated or incomplete data that hinders timely decision-making. Without real-time data, businesses face delays in identifying issues like stockouts, shipment delays, or production stoppages, leading to multiple reworks, increased costs, and customer dissatisfaction.
3. Visibility for Collaboration with External Partners
Supply chains often extend beyond internal activities to multiple third parties, such as suppliers, 3PLs (third-party logistics providers), transportation partners, and contract manufacturers. Keeping track of all these external partners and getting them to share our updates quickly can be challenging due to inconsistent technology capabilities, misaligned goals, or even data stewardship. And the lack of visibility with supply chain partners can often lead to inconsistent or incorrect updates. A few such mistakes every month can escalate the supply chain costs considerably and also lower the trust in the value chain.
4. Poor Data Quality
Businesses may struggle with data quality fatigue as they gather more data from multiple sources. This can often lead to confusing data outputs and poor decision-making if the data quality is inconsistent, inaccurate, or irrelevant. While larger organizations have dedicated Master Data Management (MDM) teams, maintaining real-time information flow isn’t easy for them either. Poor data quality issues can include missing data points like missing historical demand for a few buckets, inaccurate BOMs, or incorrect costing. Ethical data collection methods are crucial to address issues of bias, fairness, and transparency.
5. Managing Data Privacy Effectively
In industries with strict regulatory requirements, such as pharma, food, and medical devices, compliance and data privacy concerns can limit the degree of visibility companies are willing to achieve. Companies may be hesitant to share sensitive information with suppliers or logistics providers due to concerns about data breaches or non-compliance with industry regulations. Data privacy is related to the different roles, and giving each person the right access per their job requirement can be challenging. Access controls can hamper the operations’ visibility and effectiveness if it is ineffective.
For instance, the California Consumer Privacy Act (CCPA) has increased public demand for accurate customer data and placed significant responsibilities on organizations to manage personal information. Handling confidential data, including financial data and intellectual property, is essential to comply with regulatory standards and ensure security. Robust data practices are necessary to manage high-quality data and ensure compliance with legal regulations. Data privacy regulations dictate how personal and sensitive data is collected, shared, and utilized, not merely focused on protection against hackers.
Data protection involves a technical framework for the proper handling and security of sensitive data, driven by laws like GDPR and CCPA. Managing financial data securely is crucial to meet regulatory requirements and protect confidentiality. In Europe, the General Data Protection Regulation (GDPR) has significantly impacted data privacy practices, enhancing public demand for accurate customer records. Sensitive data plays a critical role in understanding data privacy and protection, underscoring its importance in compliance with regulations and safeguarding against unauthorized access or breaches.
6. System Obsolescence
With time, as technology becomes more advanced, companies that don’t upgrade their supply chain solutions often get into the system obsolescence phase. Here, while the systems exist in the company, their effectiveness becomes questionable. Such systems rather slow down the process and hamper visibility that is needed and expected from digital supply chain solutions.
7. High Costs of Technology Implementation
The benefits of supply chain visibility are great, but the technology required to realize end-to-end visibility and get real-time information can be costly or out of budget, especially for SMEs. Companies avoid investing in IoT devices, AI-based analytics, and cloud platforms because of high initial investment and substantial maintenance costs.
10 Steps of Overcoming Challenges in Achieving Supply Chain Visibility
Overcoming Challenges in Achieving Supply Chain Visibility
So, while we discussed the challenges in detail, what is even more important is the ability and approach to overcome them promptly and effectively. Here are 10 ways of ensuring that the major and common hurdles of achieving the SCV are covered.
- Integrate Systems: The first step towards the SCV journey is to break down silos by integrating all relevant systems (ERP, WMS, TMS, etc.) into a unified platform. Implement cloud-based solutions that allow seamless data sharing between departments and partners.
- Invest in Data Standardization: Data from different systems often has inconsistent formats, leading to errors and inefficiencies. Standardize data across all platforms, which is essential for ensuring smooth integration. Implement solutions that ensure consistent data formats, better integration, and reduced risk of errors.
- Leverage Real-Time Data Platforms: Invest in real-time data platforms that integrate with your supply chain systems. This is the first step to real-time information and insights. These platforms consolidate data from multiple sources, including transportation routes, inventory levels, physical sensor devices, and supply chain partners like suppliers, providing a holistic view of the supply chain. Leveraging data from these platforms enhances strategic decision-making, operational efficiency, and customer satisfaction.
- Establish Collaboration Platforms: Supply chain visibility cannot be achieved without collaboration with other partners. Create platforms that allow for secure and transparent communication between all stakeholders in the supply chain. Supplier portals, for instance, can help suppliers share critical information on inventory levels, order status, and shipment tracking.
- Develop a Data Governance Strategy: While building collaboration platforms, create clear policies to ensure data is properly managed across the supply chain. Assign data stewards responsible for maintaining data accuracy, quality, and integrity at every stage of the supply chain. Robust data practices are essential for compliance with legal regulations and enhancing decision-making quality.
- Adopt a Phased Implementation Approach to manage Costs: Start by implementing visibility tools in the most critical areas of your supply chain. This phased approach allows businesses to manage costs more effectively while demonstrating the ROI of SCV technologies. As initial gains are realized, companies can reinvest in expanding visibility solutions.
- Use Cost-Effective Cloud-Based Solutions: Cloud-based supply chain platforms offer lower upfront costs loading and provide quickly scalable solutions for building SCV. The pay-as-you-go model from some of these solutions allows companies to adjust their technology needs without the burden of heavy capital investment.
- Focus on ROI and Efficiency Gains: To justify the investment in visibility tools, calculate the potential return on investment (ROI) by identifying areas where visibility can reduce costs, minimize risks, or improve operational efficiency. Presenting a clear ROI case can help secure buy-in from leadership.
- Invest in Secure, Compliant Platforms: Data security should be the top priority while building SCV. Use platforms that meet the necessary compliance standards for your industry, such as CCPA, GDPR, HIPAA, or FDA regulations. These platforms should have robust data encryption and privacy measures to protect all sensitive information.
- Implement Role-Based Access Controls: To maintain data security, use role-based access controls limiting users’ viewing or modifying specific data. This ensures that only authorized individuals have access to sensitive information.
Building Resilient, Transparent Supply Chains with Holocene
Supply chain visibility is challenging, but it can be achieved with the right strategies and technologies. From system integration to supplier collaboration and advanced data analytics, companies focused on SCV can lower costs and risk and deliver better customer experiences. Additionally, data protection is crucial in building resilient supply chains, ensuring compliance with regulations like GDPR and CCPA, and safeguarding sensitive information.
We at Holocene help companies solve visibility challenges with customized supply chain solutions. Our technologies enable businesses to unleash supply chains with visibility, predictive analytics, and collaboration.
Contact us to determine precisely how we can enable you to develop a transparent & resilient supply chain built for today’s industry.
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