Realising end-to-end transparency in the supply chain
Critical to many aspects of the supply chain and its process, those without supply chain transparency stand to impede their decision-making capabilities due to the lack of real-time information. “It is necessary to have access to the right real-time data, to know where goods are, and how processes work,” says Jonathan Wright, Managing Partner, Service Line Leader at IBM Services. “It also makes real-time collaboration with outsourcing partners and suppliers next to impossible, which reduces a company’s ability to be flexible.”
Presenting unique challenges to the industry, “these known cracks in global supply chains are part of a range of concerns for executives, addressing them is critical to the vision of future supply chains.”
What does end-to-end transparency mean?
“End-to-end visibility means being knowledgeable about every aspect of your supply chain to ensure a better and consistent customer experience. It enables your supply chain to more effectively and quickly react to unforeseen risks, as well as changing customer and market demands. It can also allow you to make more informed business decisions through visibility solutions like DHL’s MySupplyChain when it comes to moving products and fulfilment centres closer to customers.” Mark Miller, Program Manager Products, DHL Supply Chain (Americas)
Why is end-to-end transparency important in the supply chain?
Real-time data and technology have transformed from a ‘nice-to-have’ to a ‘necessity’. Generating granular, real-time, security-rich data about supply chains coupled with technology (robotics, automation, hybrid cloud, IoT, edge computing, and blockchain) can power intelligent workflows.
“These ‘Intelligent Workflows’ are AI-driven, embracing automation where possible, and facilitate horizontal integration and adjustments across functions, providing 360-degree visibility of the supply chain and potential disruptions. It’s no coincidence that recent research shows that leading supply chain organisations use real-time intelligence 34 per cent more often than their peers,” says Wright.
By harnessing intelligent workflows to improve reliability and reduce risk, Wright adds that “intelligent workflows can help companies address dilemmas (workforce dislocation, inventory issues, and customer service disruptions) caused by the pandemic or other crises. As we move forward, it’s tough to predict the parameters of a post-pandemic world. But intelligent workflows can help build a smarter, more resilient global supply chain and narrow the gap between unimaginable and anticipated.”
Agreeing with Wright, Mark Miller, Program Manager Products at DHL Supply Chain (Americas), says, “the COVID-19 pandemic exposed a number of vulnerabilities with today’s supply chains, causing unexpected disruptions and shortages. The experience highlighted an important fact that a number of supply chain managers already knew - supply chain visibility and transparency is a must. The key is understanding that nothing short of end-to-end supply chain visibility will provide the agility needed to deal with unforeseen risks and unexpected disruptions.”
How does the supply chain industry achieve end-to-end transparency?
While often a daunting task for most companies to pursue solo, “achieving end-to-end supply chain transparency can often require partnering with a third-party logistics (3PL) provider that has knowledge, experience and has invested in visibility tools and digitisation to manage the data flow,” says Miller, who explains that DHL’s own MySupplyChain tool is an example of this type of platform, “providing customers [with] a view of inventory positions, warehouse order visibility and transportation tracking across the entire network, enabling you to turn newly-available, end-to-end supply chain operations insight, into competitive [a] advantage. The ability to drill down into indecisive data, track-and-trace, and to share files has been a large, game-changing initiative for DHL Supply Chain and its customers.”
Wright identifies three core focal points for any organisations looking to achieve end-to-end transparency in the supply chain:
1.Drive innovation-to-value with intelligent workflows
“COVID-19 has proven, companies with flexible, agile, and transparent supply chains are able to better respond to disruptions,” says Wright, who believes it's important to:
- Adopt an ‘inside-out’ approach to digital transformation by partnering that data with robotics, automation, hybrid cloud, connected IoT, and edge computing.
- Incorporate wisdom from external sources that provide weather, demand fluctuation, and other essential logistical data.
With the need for quick response and time to value increased by the impact of COVID-19, “companies should start with implementing AI-driven solutions that integrate with their current state architecture to accelerate toward a digital supply chain, these can start adding value in less than a month,” adds Wright.
2.Strive for autonomy through automation
“Leverage automated processes and self-learning software,” says Wright. “Emulate the top-performing supply chain organisations with workflows that are self-learning, self-correcting, and self-directing,” freeing up resources to focus on higher-value work.
3.Impart agility with instant and transparent insights.
Finally, “embrace agile operating models, which can provide near-instant insights in support of an organisation’s workforce, ecosystems, and fluid work unit teams,” says Wright, who expects to see these operating models to be a top competitive advantage over the next three years.
The challenge of end-to-end transparency
Duncan Brock, Group Director at CIPS, identifies the key challenges as:
- the complexity of looking at every tier in the supply chain, and the resource needed to make the exercise useful and robust
- Concerns over sharing information and undermining competitive advantage
- The accuracy of the information collated
- Definitions of what constitutes transparency may differ between sectors
What technology is being used to realise the value of end-to-end transparency?
“It does depend on the business goals and what’s already in place,” says Duncan Brock, Group Director at CIPS. “Our research into digitalisation of supply chains found that 30 per cent of companies had cloud computing in their business,” making it easier to access information across the entire business. Alongside cloud computing, Brock adds that “24 per cent of firms have stores of big data with a wealth of customer information at their fingertips, though many firms are still unclear how they can use this goldmine effectively, the data is a rich source of risk and opportunity.”
Other types of technology being used in the industry include radio frequency identification (RFID). While not new to the industry, the technology is becoming smaller, which increases its range of uses to support the automation of inventory management. “These tags can store data, and so goods can be pinpointed to a specific location or actual supplier or producer, making identification of any problems so much easier. Consumers are becoming more interested in this too as they want more detail on where goods are coming from,” adds Brock.
With the levels of technological sophistication rapidly increasing, “companies are hard-pressed sometimes to keep up,” says Brock. “But with so many support functions in place, it is becoming increasingly difficult for companies to plead ignorance about what’s happening in their supply chains. And that can only be a good thing.”
The benefits of end-to-end transparency
“Modern-day supply chains are complex and huge with diverse supplier networks coupled with a global consumer community. Running a smooth supply chain operation while avoiding disruptions was hard already. 3PLs like DHL Supply Chain can provide 360-degree visibility across several key areas like track and trace, inventory, operational performance, business analytics and customer service. Gaining visibility into the supply chain means ensuring complete transparency through the process.” Mark Miller, Program Manager Products, DHL Supply Chain (Americas)
End-to-end transparency trends in the supply chain
Reflecting on the current industry landscape, Wright, Miller and Duncan Brock, Group Director at CIPS, identify three key trends in the industry: intelligent workflows, ecommerce, and digital processes.
At the centre of five key supply chain trends - customised customer experience, self-correcting operations, agile operating models, transparent, ethical networks, and dynamic computing configuration - Jonathan Wright, Managing Partner, Service Line Leader at IBM Services, identifies intelligent workflows as a key trend in the industry that can power responsiveness in the supply chain.
With the rise of ecommerce driving consumer expectations for quick, easy and reliable access to products, “gaining end-to-end visibility of your supply chain ensures a more agile supply chain focused on better customer experiences,” says Mark Miller, Program Manager Products, DHL Supply Chain (Americas), who explains that having greater visibility into how your supply chain is performing, combined with inventory and capacity data,“allows you to make informed decisions on inventory placement to move fulfilment closer to consumers.”
“Generally, the trend is companies are moving towards full transparency, supported by digital processes that can give them more detail more easily and at each stage of their supply chain,” adds Duncan Brock, Group Director at CIPS. “here is more pressure from boards and investors to understand the supply chain more deeply and for more detailed reporting.”
As a result of COVID-19, the supply chain industry will reflect on their response to the outbreak and what they could have differently, “this will inevitably lead to a deeper dive into all the stages of their procurement and supply chain processes and could result in not only different suppliers but potentially new products and operations.”
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”