Executive Briefings

Supply Chain Visibility: First Comes Visibility, Then Comes Needed Improvements

Analyst Insight: Global competition, ongoing business transformation, and the increased lead-times / complexity of global supply chains are creating a situation where pipeline inventory and landed costs have increased dramatically. But before a company can reduce pipeline inventory or landed cost, it needs visibility into them. Hence, improving supply chain visibility is a key strategic imperative that has been, and is, growing in importance in managing the multi-enterprise supply chains.

In Aberdeen's December 2008 study Supply Chain Visibility Excellence: Reduce Pipeline Inventory and Landed Cost, 57 percent of respondents indicated that supply chain visibility was currently a high priority for improvement, with an additional 28 percent indicating it was a medium priority. Increasing visibility is a critical strategy for enterprises aimed at reducing costs and improving operational performance in the context of their complex and multi-tiered global supply-demand networks.

Leading companies view visibility as a core component of achieving their operational supply chain targets. Inventory management and delivery-related metrics are among those that can be improved most with increased visibility. Through its impact on inventory levels and other operational metrics, supply chain visibility helps companies reduce the amount of working capital tied up in excess inventory.

In this study, Best-in-Class companies are:

• 1.5 times as likely as Laggards to treat in-transit inventory as available inventory for safety stock calculations and 46 percent more likely than all other companies (including Industry Average and Laggards combined) to have online visibility into accrued supply chain costs

• Almost three-times as likely as Laggards to adopt commercial TMS or business intelligence solutions for supply chain visibility

• Almost twice as likely as all other companies to leverage role-based visibility within the organization and into external partners

The Outlook

In 2010, companies will continue placing heavy emphasis on increasing end-to-end supply chain visibility, as a means of improving their supply chain performance. In order to move toward a more connected and visible end-to-end supply chain, companies should:

• Extend visibility within and beyond their enterprise
• Utilize dynamic business intelligence
• Move to adaptive and collaborative supply chain execution

In Aberdeen's December 2008 study Supply Chain Visibility Excellence: Reduce Pipeline Inventory and Landed Cost, 57 percent of respondents indicated that supply chain visibility was currently a high priority for improvement, with an additional 28 percent indicating it was a medium priority. Increasing visibility is a critical strategy for enterprises aimed at reducing costs and improving operational performance in the context of their complex and multi-tiered global supply-demand networks.

Leading companies view visibility as a core component of achieving their operational supply chain targets. Inventory management and delivery-related metrics are among those that can be improved most with increased visibility. Through its impact on inventory levels and other operational metrics, supply chain visibility helps companies reduce the amount of working capital tied up in excess inventory.

In this study, Best-in-Class companies are:

• 1.5 times as likely as Laggards to treat in-transit inventory as available inventory for safety stock calculations and 46 percent more likely than all other companies (including Industry Average and Laggards combined) to have online visibility into accrued supply chain costs

• Almost three-times as likely as Laggards to adopt commercial TMS or business intelligence solutions for supply chain visibility

• Almost twice as likely as all other companies to leverage role-based visibility within the organization and into external partners

The Outlook

In 2010, companies will continue placing heavy emphasis on increasing end-to-end supply chain visibility, as a means of improving their supply chain performance. In order to move toward a more connected and visible end-to-end supply chain, companies should:

• Extend visibility within and beyond their enterprise
• Utilize dynamic business intelligence
• Move to adaptive and collaborative supply chain execution