More than ever, organizations are seeing a need to share critical information with suppliers, whether for operational planning purposes or to increase visibility into the supply chain. The more visibility organizations have into their supply chains, the better able they are to have an in-depth look at inventory, location of materials at any point in time, and supplier processes and patterns that allow for predictability. Visibility also enables organizations to identify and manage possible supply chain risk. Organizations cannot maintain effective risk management programs and respond quickly to supply chain disruptions without access to key information about their suppliers.
As part of APQC’s recent study, Managing the Risk of Supply Chain Disruption, an overwhelming majority (83 percent) of the 198 participating organizations reported that they were caught off guard by an unexpected supply chain disruption in the last 24 months. This indicates that organizations could do much more to prepare for potential supply chain disruptions. The same study found that the majority of participating organizations identified having poor visibility into risk factors among tier 2 and tier 3 suppliers as the top obstacle to their supply chain risk management program.
A separate APQC study on supplier category management featured organizations that have taken steps to improve supply chain visibility. For example, ATMI—a provider of technologies for the semiconductor, life science, and flat panel display industries—developed a proprietary system that increases visibility into the origin of the materials in its products. ATMI’s approach includes an alert system that uses information from multiple tiers of suppliers. The alert system tracks the components of ATMI’s top revenue-generating products down to the base elements, providing the company with a clear picture of where components come from and what the components contain. When disruptions occur, the system alerts ATMI if any of its suppliers (or its suppliers’ suppliers) are affected. This, in turn, enables the organization to find alternative sources of materials quickly, before competitors are even aware of a potential supply problem.
Close relationships with suppliers, along with innovative solutions like the alert system implemented by ATMI, will be needed for companies to achieve greater visibility into their supply chains. Organizations must consider implementing tools that allow data visibility and the smart use of data. For a global supply chain to be efficient, there must be cross-functional responsibility and systems that work well together.
As organizations continue to look at ways to increase supply chain visibility, they will innovate new ways to monitor multiple tiers of suppliers. By using technologies, an organization and its suppliers can exchange information more efficiently and achieve greater visibility. A visible supply chain can improve performance and costs by helping organizations identify supply chain risks and inefficiencies as they occur.