Accurate and timely visibility of your orders, shipments, and inventory can create many opportunities for lowering end-to-end supply chain costs. But the value doesn’t end with cost reduction. Supply chain visibility can have significant impact on revenue generation as well. Here are some examples of the benefits your organisation could receive by improving the visibility you get from your logistics providers.
Recognise revenue faster
Most organisations have very clearly defined rules about when they can recognise revenue. Often revenue recognition is tied to a supply chain event like a product being shipped or delivered. Having timely visibility allows you to book revenue more quickly and with fewer mistakes. Recognising revenue faster usually means invoicing customers faster as well which speeds your cash-to-cash cycle.
Improve product availability and order fill rate
When you don’t have available inventory to fill orders you lose sales. Better visibility about in-production orders and in-transit inventory allows you to more effectively allocate your inbound supply pipeline to sales orders. When unexpected supply chain disruptions affect available product, proper visibility makes it possible to dynamically reallocate inventory across your sales order backlog. Additionally a solid understanding of historic lead times by your suppliers and carriers is a key factor in planning safety stock levels. To optimise fill rates it’s critical to position the right inventory levels in the right places and that requires great visibility data.
Increase sales with consistent service levels
Better visibility can help organisations improve delivery performance to their customers. Early warning of late orders or shipments makes it possible to implement contingencies. Perhaps stock can be sourced from another location. Or maybe product can be reallocated from a less important order. In some cases in-transit product can be diverted or re-routed on a faster transportation mode. But if you don’t have the visibility, you are blind to the existence of a problem and by the time you realise you’re going to miss a delivery date, it’s too late.
React more quickly to demand fluctuations
Want to build a demand-driven supply chain? You’re going to need accurate data about your supply pipeline. Transparent visibility between you and your suppliers is critical to responding to sudden demand changes. The sooner you can communicate information about demand to suppliers and carriers, the more likely they can collaborate to help. After all, it’s in their best interest to fulfil bigger orders and move heavier shipments. Reacting to fluctuating demand effectively involves speed and agility. Visibility is critical to provide you the ability to make faster and more informed decisions.
Retain more customers with proactive
Although your customers would love to see perfect customer service they can often forgive an occasional service failure…if you can manage the incident proactively. When you provide early warning to customers about a late shipment, it allows them to mitigate the impact. This creates transparency between the supplier and customer that supports collaborative problem solving. By using visibility to identifier risks and proactively manage them, you develop a sense of partnership with your customers that will ultimately retain them.
Align supply chain operations with overall
Supply chain execution has become a competitive differentiator in many industries. By integrating supply chain capabilities into product development and marketing strategies, organisations can often create new revenue sources or business models. But it’s rarely possible to effectively build supply chain into high level strategy unless the supply chain processes are well-defined, managed, and optimised. This kind of process management requires great data. Ultimately the operational KPIs used for the supply chain should be linked with overall strategic objectives to keep all parts of the organisations aligned with the strategic plan.
Improving your supply chain visibility can offer many potential improvements to business performance with quantifiable return on investment. NNR Global Logistics understands the link between visibility and your bottom line so we have invested heavily in developing world-class visibility tools. Our Videre SCM web application offers end-to-end visibility across orders, shipments and inventory. Then we take it to another level by providing ‘analytics’ and data exploration tools to help you identify trends and patterns in your supply chain. These features can help you unlock huge opportunities for optimisation.
However, the first step on that journey will be getting the fundamental visibility systems in place. Few organisations have really mastered supply chain visibility yet so it’s not too late to build visibility into your business planning.
John Berry, IT Director, NNR