Achieving next-generation visibility: The three levels of the technology collaboration pyramid
The nature of supply chain visibility is maturing at a rapid pace as it plays an increasingly important role at the heart of businesses. As IDC recently outlined, a supply chain control tower is now a crucial enabler of global visibility of freight movements, analytics capabilities and automated decision-making capabilities.
Three primary forces drive this hunger to achieve greater supply chain visibility. The first is the emergence of the consumer-centric supply chain. People now have increased power and choice, allowing them to buy virtually anything, anytime, across a variety of methods. This has put tremendous pressure on supply chains that were originally designed for volume and scalability to become agile, responsive, and fluid.
The second force is the transformation of previously linear supply chains devoted to shipping pallets and full truckloads to grid-based, or many-to-many, nodal value chains, thus enabling a higher degree of consumer responsiveness. This, in turn, has led to smaller and more frequent shipments, an emphasis on achieving a smooth flow of data, and an increase in complexity in providing inventory visibility.
Finally, we are continuing to see an acceleration of technological innovation that is enabling levels of visibility we could not have imagined before. Beyond using ubiquitous technologies such as geographic positioning system (GPS) signals, we are moving into a world where the Internet of Things and the sensors that enable it are pervasive, and where advanced processing power and machine learning allow the mining and processing of insights from massive amounts of unrelated data. To take full advantage of the exciting possibilities these developments offer, however, supply chains will have to create a new kind of collaborative “ecosystem” that incorporates multiple technology solutions.
New approaches to achieving visibility
For years, individual, closed networks that offer direct connectivity to suppliers and logistics providers have provided a certain level of supply chain visibility. Certainly that visibility continues to be available, but it is becoming widely recognised that this type of network is cumbersome and expensive. Now, as the three forces outlined above continue to converge and spark innovation, we are seeing the emergence of several new approaches to achieving visibility:
- The aggregated networks. One of the more widely available forms of visibility is provided by network aggregators. These usually manifest themselves in the form of supplier portals or mode-specific carrier networks (ocean or truck networks, for example). They often offer more than just “current state” visibility; for example, by providing transactional processing into and out of the network.
- The real-time trackers. Similar in some ways to an aggregated network, this form of visibility focuses on tapping into near real-time location tracking, “bread crumbing” (visually representing a travel path), and geo-fence manipulation to get a better picture of assets in motion.
- The insight creators. The newest generation of visibility capabilities takes a step beyond simply understanding where something is and instead seeks to understand where it is going to be, moving from real-time tracking to being predictive in nature. This approach combines multiple streams of seemingly unrelated structured and unstructured data. Using a combination of advanced processing power and algorithms, it looks to formulate and communicate predictive rather than reactive states.
While the growth of visibility technology is exciting and presents tremendous opportunities, technology alone will not achieve the ultimate goal of supply chain fluidity and resiliency. Visibility without intelligent action is of limited value. A car with advanced sensors and warnings but poor brakes and steering will have difficulty avoiding an identified potential collision; a supply chain with advanced visibility but poor planning and execution systems will have challenges responding to identified disruptions.
A pyramid of technology collaborations
In practice, supply chain visibility will be impossible to achieve with different parties pulling in different directions. As such, collaborative technology partnerships are mission-critical. These need to take place across all levels of the organisation, through the following three levels of the pyramid:
1) The base layer lays firm foundations in the form of structured and unstructured inputs, including data about suppliers, carriers, transactions, events, social media, GPS transmissions, weather, and so forth. This data is ubiquitous, pervasive, continues to grow, and is becoming limited only by one’s ability to frame “the art of the possible”—in other words, to imagine new yet practical ways to acquire it.
2) The middle tier of the pyramid is formed from the different visibility aggregators and insight-generation technologies. Here the spectrum of available and potential technology can vary greatly. Supplier and carrier portals are a treasure trove of transactional and event visibility, but they are often limited to just that, focusing more on data cleansing and integration than on advanced data science. It is in this latter area, which is a difficult core competency to create or acquire, where we move from data aggregation to the creation of correlations and insights.
3)The top of the pyramid represents the operational solutions spanning supply chain planning and execution that would “digest” the inputs from the previous tiers and provide the ability to discern and execute intelligent action in a responsive and resilient way. This top tier represents another core competency that is difficult to acquire. While some might say that supply chain planning and execution solutions are mature and widely available, it takes a higher degree of solution maturity and openness to be able to not just consume but also intelligently act upon this new generation of insights. This top tier requires specific industry context (for example, fashion retail has different operational flows and metrics than industrial manufacturing), sophisticated constraint representation, rapid solving capabilities, and open connectivity.
Using this conceptual model makes it easy to understand that the larger the base of the pyramid, the more innovative the insights generated, and that the more sophisticated the actionable solutions, the greater the visibility provided—and, consequently, the greater the resiliency and value generated. For there to be true supply chain visibility, then, all tiers of the pyramid need to be represented and work together; it cannot be achieved by a single solution providing only one aspect of visibility.
Strategically speaking, this is where supply chain technology is headed over the next decade, evolving to incorporate disparate streams of readily available data from best-of-breed technology solutions providers. This will allow supply chain participants to make more active, dynamic decisions that reduce network latency while increasing supply chain resiliency and protecting profit margins. That, in turn, will give them a competitive advantage, as the availability of a broad spectrum of real-time data enabled by a supply chain visibility ecosystem will allow them to improve their responsiveness.
By increasing real-time visibility across the comprehensive set of supply chain resources discussed above, these collaborative solutions will support a new level of speed and agility; they will do so while providing a factual basis for the decisions that deliver the most profit without compromising service. For companies that keep pace with technology improvements and match them with new ways of working, a significant competitive advantage will be possible as we look toward the next few years.
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