Seeing is believing: why visibility is crucial to a successful supply chain
For the better part of two decades, one of the holy grails for leaders has been the prospect of using technology to instantly locate the status of anything in the global supply chain. Billions of dollars have been invested in visibility technology that helps companies see and manage the entire end-to-end process. Progress has been made, but at the same time, the bar of success is a moving target, as other technology advances continue to change consumer expectations and the associated operational realities.
In a recent survey on supply chain digital transformation, 94% of respondents identified supply chain visibility as a key enabling technology. However, if you were to ask 50 professionals to define that term, you would likely get 32 different answers. The reason: Depending on the industry or job function, the value of “sight” is profound and all-encompassing. Practitioners need answers like: Where is my stuff? What are the material requirements in the plan? What is the status of production? What partner can help us in Indonesia? What is the status of the payment? What is the estimated ETA at the distribution centre? These are just a few of the questions that supply chain visibility systems are expected to answer.
A supply chain visibility system must be capable of capturing information of any kind, from any partner, all in real-time. It must also connect related elements such as shipments, orders, invoices, production status, manifests, and payments – and enable entire partner networks to see and operate based on the same information. It must provide functional capabilities such as proactive alerts, reporting and execution. And, it must be capable of supporting anything and everything in the supply chain while also continuing to evolve with our changing world.
Consumers demand a resilient supply chain, even though few know what it is
Consumers' expectations have changed significantly – and will only continue to evolve with time. Amazon’s impact on retail is well documented, but it does not end there. A supply chain that cannot support a model that delivers “any product, to any location, in 24 hours” is going to become problematic for any company that makes and ships goods. If one company can’t do it, there will be others that can, because the technology required to excel is getting better, faster and cheaper all the time. But one thing is for certain: supply chain visibility will be at the centre of any operation that is built for speed and agility.
Over the past decade, there have been countless stories highlighting how supply chain visibility technology helped companies identify problems to avoid costly plant shutdowns or take advantage of peak revenue windows. In many cases, the ROI is in the tens of millions of dollars.
I recently spoke with the VP of logistics at Electrolux who described how a container ship fire at a small port in Indonesia nearly cost the company half of its holiday sales in Brazil. If it were not for the visibility solution, the company would not have known the impact of the disruption until it was too late.
Supply chain visibility systems will continue to mature with time
Existing investments in supply chain visibility systems will not go to waste. These have become foundational systems that link ERP with other systems and global partners. They do a lot of the heavy lifting of pushing orders, plans, shipments and commercial documents into the cloud for easy access and sharing.
The information that is currently embedded within most supply chain visibility systems today can also be infused with new technologies. Data collected via scanners and mobile devices can provide enhanced real-time updates to cargo location or temperature. Advanced machine learning tools can assess holistic situations to provide smart recommendations around how to address disruptions, optimize asset utilisation, or identify pending problems.
Huge innovations in the last-mile delivery space present opportunities, as well as risk – and visibility will be key. Uber-like delivery networks are already disrupting the parcel delivery space, with drivers using their own mobile phones to transmit accurate location and milestone information back to the visibility system. These hyper-granular delivery details not only give consumers the information they want about their purchases, but also help insure the integrity of the shipper’s cargo to avoid theft or improper handling.
As autonomous vehicles come on line in the very near future, the industry will again be faced with a new opportunity to innovate in areas surrounding the new machines. Will they transmit more information? Can they change course due to an unexpected detour? Will goods be safe? We can expect visibility solutions to expand their scope and enable shippers and carriers to get better and faster with their supply chains.
The pace of innovation is increasing at such a rapid state, it is nearly impossible to predict what will happen next. As with any change, things may not be smooth to begin with, but in time, and with some trial and error, technology matures, more innovations happen, and the art of keeping billions of consumers happy becomes easier.
Upgrading RFID and Automated Track and Trace Solutions
During the COVID-19 pandemic, global supply chains faced the challenge of rapidly adjusting their business priorities to new customer preferences. Local supplier backlogs, winter storms, and the Suez Canal backup in March underscored the need for efficiency and visibility across the supply chain.
According to Christof Backhaus, Digital Lead Product Supply and Smart Label Project Lead at Bayer, companies must now place critical importance on tracking and tracing their products. “All large enterprises in the world dealing with finished goods,” he said, “seek functional and technical solutions to real-time channel inventory.”
Indeed, RFID’s real-time tracking data allows executives to make quick, well-informed decisions in moments of supply chain crisis - and rather than unfolding across days or weeks, it only takes a matter of minutes.
Why does RFID remain relevant despite digital disruption?
Essentially, RFID uses radio frequency waves to transfer data wirelessly between a scanner and a tag. In contrast to barcode technology, which requires a stationary scanner, RFID tags can be pinged from anywhere in the world, allowing companies to track real-time movement through the supply chain. RFID tags can also scan unique SKU numbers and distinguish between varying product sizes, colours, and styles: a critical feature for increasingly personalised end-user products.
Though the first patent for RFID tags appeared in 1973, higher accuracy rates, lower costs, and advances in sensor and data technology have made it newly accessible to a wide range of companies. Today, the technology is used in logistics networks, manufacturing and delivery networks in the pharmaceutical industry, and any business where efficiently tracking and monitoring product location is critical: raw materials, consumer products, cars, electronics, retail, and agriculture.
What are the key benefits?
Overall, automated track and trace solutions keep labour costs low, optimise operating costs, mitigate security risks, use capital effectively, and assist companies in adhering to regulatory requirements.
Below are three in-depth dives into how RFID benefits major industries:
- Pharmaceuticals: RFID tags help manufacturers safeguard sensitive products such as vaccines, tracking where they are and when they will arrive in real-time. Sensors closely monitor temperatures to ensure regulatory compliance. If anyone tampers with a shipment, the sensors alert the company.
- Logistics: RFID identifies process gaps and frequent anomalies by monitoring a product’s lifecycle from shipment to delivery. This data helps decision-makers predict the most efficient routes and therefore optimise their distribution schedules.
- Retail: Sensors help guard shipments against theft and provide critical intelligence when shipments go missing. Before adopting RFID technology in 2203, UK retailer Marks and Spencer relied on barcodes to scan inventory. When they made the switch, their productivity increased from a maximum of 400-600 items scanned per hour to up to 15,000 items scanned per hour. Building on their initial success, the retailer expanded the use of the technology and is still using it today.
Regardless of the industry, RFID promotes accuracy, immediacy, and efficiency. Companies reduce human error by automatically scanning products, keep track of inventory even in geographic locations with poor connectivity, and help streamline warehouse operations by identifying exact product locations.
Which recent innovations have changed the game?
With recent developments in cloud technology and IoT, a multitude of cloud-based alternatives have emerged to challenge traditional RFID technology. One of these cutting-edge solutions is Sony’s Smart Label - an intelligent shipping label that runs on AT&T’s global cellular network.
As with any good innovation, Sony’s proprietary technology started with a customer need ready to be solved: the Bayer Crop Science Division lacked an international IoT solution that could track seed products from start to finish throughout its distribution channel. Millions of dollars of revenue stood at stake, so Bayer turned to Sony to develop a smart label that would set the organisation up to manage its supply chain with end-to-end visibility.
Sony’s printable and disposable adhesive label allows companies to track the condition and location of their products worldwide and act upon the vast amounts of data it collects. The process is simple: the label activates when attached to the package, connects to AT&T’s secure LTE-M network, and sends data to the Smart Label Cloud in real time.
In sharp contrast to other smart label solutions that place trust in a patchwork combination of Wi-Fi, radio-frequency identification, and other limited coverage connections, the Sony Smart Label connects solely through a secure and universally-available cellular network. “Working with Sony,” says Robert Boyanovsky, the vice president of Mobility, IoT and 5G at AT&T, “we provide full visibility of every item shipped.”
Most importantly for companies on the edge, the Smart Label integrates with existing enterprise systems to achieve full visibility, thus adding value without disrupting supply chain process flow.
Why is this important now?
Companies that previously delayed introducing RFID and other automated track-and-trace technologies can capitalise on recent developments that lower costs, improve accuracy, and supercharge traceability.
Clearly the technology has value in today’s uncertain global marketplace, and can help decrease the costs of tracking goods. To quote Christof Backhaus, the Project Lead at Bayer, “the Smart Label indicates how much product is in the market, from the packaging line to the end customer.” Companies no longer have to spend a small fortune to take advantage of recent IoT developments. “Due to the technical composition [of the label],” Backhaus explains, “we don’t require additional infrastructure, manual scanning, or other expensive tools.”
Over the decades since RFID was first introduced, support for introducing it to company supply chains has also improved. AT&T’s IoT Professional Services Organisation, for example, supports companies through the end-to-end design and integration process--from installation to deployment and project management.
Companies that invest in traceable and visible supply chain solutions stand the best chance of survival, adjusting in real-time to natural disasters, shipping backups, and slowed-down supplier turnarounds as a result of the global pandemic. “Smart Label promises to help businesses like Bayer realise the full potential of the IoT,” says AT&T’s Boyanovsky. “[We can] deliver improvements in revenue and cost savings and make supply chains more efficient.”
Certainly, company executives will be hard-pressed to ignore recent innovations. In an age of uncertainty, RFID and its challengers herald a welcome sense of supply chain security. The next step? “Our sales team,” Boyanovsky adds, “is prepared to engage with prospective customers now.”