What is supply chain visibility and why is it important? (2024)

What is supply chain visibility (SCV)?

Supply chain visibility (SCV) is the ability of parts, components or products in transit to be tracked from manufacturer to final destination.

The goal of SCV is to improve and strengthen the supply chain by making data readily available to all stakeholders, including the customer.

What is supply chain visibility and why is it important? (2)

Supply chain visibility software

SCV is typically a part of the enterprise resource planning (ERP) system. However, SCV has recently become even more integral as companies have increased the outsourcing of supply chain planning and, therefore, lost some visibility and control over it.

SCV, empowered by supply chain management technology, improves these issues by delivering real-time logistics data and insights into various aspects of the supply chain.

So, for example, through this technology, a company might review metrics that indicate impending supply chain shortages before they become severe and find ways to adapt, remove bottlenecks, or reposition to meet goals, compliance requirements, and delivery obligations.

Aspects of supply chain visibility data

Increasing supply chain visibility through data encompasses a variety of data collection activities. The following are some of the common data collected in SCV:

  • Order status. Real-time visibility of cargo movement through the supply chain ensures operational efficiency, as the company knows when to expect the delivery of goods from the distributors.
  • Auditing records. This includes various compliance and regulatory information throughout the supply chain. This is critical for ensuring that business processes are conducted lawfully.
  • Shipping details. This includes real-time data on the shipment of goods. Through SCV software, this can be shared by all the relevant stakeholders at once.

Why is supply chain visibility important?

Some of the expected benefits of supply chain visibility include the following:

  • Measurable KPIs. As a result of globalization, supply chains have become highly complicated. Monitoring the supply chain in real time with relevant key performance indicators (KPIs) can help avoid last-minute logistical disruptions that affect profit margins.
  • Competitive advantage. Relevant data on traceability of product orders can serve as a substantial competitive advantage. The data allows a company to know precisely when materials need to be ordered, when to contact the suppliers and when the customer's product will be delivered.
  • Forecasting. The real-time data of the entire supply chain ensures that supply and delivery times for a product are adequately forecasted. This helps improve business operations, tracking raw materials, decision-making and delivery of information to the customers.
  • Customer satisfaction. Through inventory management, SCV helps maximize customer satisfaction by quickly meeting customer demand.
  • Compliance. Global supply chains are subject to many compliance obligations related to procurement, distribution and taxation on the goods. As a business owner, it's essential to monitor the movement of goods through the supply chain and ensure they are being handled in a compliant way.

This was last updated in March 2022

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What is supply chain visibility and why is it important? (2024)

FAQs

What is supply chain visibility and why is it important? ›

Supply chain visibility is the ability to track different goods and/or products in transit, giving a clear view of the inventory and activity. It enables shippers to improve customer service and cost controls through management of inventory in motion, proactive status updates, limiting disruptions and risk mitigation.

What do you mean by supply chain visibility? ›

Supply chain visibility (SCV) is the ability to track individual components, sub-assemblies and final products as they travel from supplier to manufacturer to consumer. The scope — for example, are raw materials included, and will the item be tracked with forwards and backwards tracing — depends on the product.

Why is visibility important in logistics? ›

Visibility into transportation and logistics enables companies to optimize routes, reduce costs, and improve delivery times. By identifying inefficiencies and streamlining operations, businesses can enhance productivity and reduce overall costs, thereby increasing profitability.

How does supply chain visibility contribute to better decision making? ›

Supply Chain Visibility Benefits

Track goods in near real time: When supply chain teams have a detailed, up-to-date view of their entire product lifecycle, and tools such as AI to help them analyze the data, they can make better decisions that improve the flow of goods through their network.

Why is end to end supply chain visibility important? ›

End-to-end supply chain visibility provides a competitive advantage because it allows you to serve your customers better. Some benefits to expect include: Greater inventory control. Better customer experience and satisfaction.

What are the factors of supply chain visibility? ›

The 4 key elements to achieve high supply chain visibility include a single source of truth for the operational data, immediate alerts to identify supply issues, historical data to facilitate improvement & forecast, and simulation of alternative plans to see the next best actions.

How do you get supply chain visibility? ›

Five Simple Tips to Improve Your Company's Supply Chain Visibility
  1. STEP 1: IDENTIFY PAIN POINTS. ...
  2. STEP 2: DEFINE YOUR GOALS & EXPECTATIONS. ...
  3. STEP 3: BREAK THE CHAIN, BUILD A NETWORK. ...
  4. STEP 4: INVEST IN GOOD TECHNOLOGY. ...
  5. STEP 5: MEASURE RESULTS & LOOK FOR WAYS TO IMPROVE.
Dec 20, 2023

How important is visibility? ›

The impact of your hard work also needs to be visible to others. Workplace visibility is vital to getting your name mentioned in the room where decisions are made, being included in career-shaping projects, and eventually, landing a promotion.

What is the benefit of visibility? ›

By gaining full visibility, you can improve command over inventory and, on top of that, reduce the credit cycle by knowing when shipments change custody.

What is the role of visibility? ›

Visibility is also important and can be productive in identifying problems before they erupt into larger issues. Problems surfaced as part of a walk-thru, department visit, casual conversation or simply “being there” can be addressed proactively before they reach a level of crisis or escalated concern.

What is an example of supply chain visibility? ›

Supply chain visibility works on two levels: low and high visibility environments. For example, in a logistics providing company, one generally plans for shipment. But sometimes a power disruption at the client's factory might cause a delay in their shipment, affecting the logistics company.

How improving supply chain visibility can reduce supply chain risks? ›

Visibility in every tier of the supply chain has many benefits. These include: Lowered risk through increased knowledge of potential disruptions. Increased communication across tiers, which allows for rapid responses to changes or problems.

Why is shipment visibility important for the shipment? ›

Real-time visibility improves the tracking and tracing of shipments across different modes of transportation and geographies. It helps companies plan and forecast, allowing them to adapt instantly to changes and prevent unexpected situations.

What are the three major benefits of inventory visibility? ›

With improved visibility, you have the ability to: Optimize stock levels across your network. Save on logistics costs to offset the cost of shipping or any promotional incentives like free shipping. Calculate safety stock to avoid stockouts.

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