The past few years have brought unprecedented challenges for business leaders, especially when it comes to supply chains. Without end-to-end visibility and actionability into their supply chains, CEOs have been left scrambling to overcome disruptions. With this kind of big-picture thinking in place, however, it’s possible to identify material flow to make better, more informed business decisions.
Everyone knows that 2022 has been one of the most challenging years ever for supply chain visibility. We can see it in shortages of our favorite foods and beverages and empty big-box store shelves. And that’s before we factor in skyrocketing inflation.
This year put the issue into stark focus for many of the CEOs I work with, from private equity directors to family business owners. Even though 2021 was a record sales year for them, their net incomes were comparable to 2019. In most cases, that’s because they didn’t factor in the unexpected costs of supply chain issues and inflation.
Even worse, businesses are facing labor and raw materials shortages, and lingering uncertainty around supplier lead times has caused them to lose trust with customers on deadline dates. Plus, the resulting layoffs and salary cuts are starting to impact employee morale. Meanwhile, traditional tactics that CFOs rely on, such as budget cuts, are not fixing the deep, underlying operational issues. In addition, finance leaders can’t always predict the next points of failure within their businesses and plan around them.
Where does all this leave you as the CEO? It might be time to start looking seriously at your end-to-end (or E2E) supply chain visibility. According to a supply chain investment survey by KPMG International, only 13% of executives have complete visibility into the end-to-end supply chain, while 80% say responsive operations and supply chains are the biggest priorities in their organizations’ digital transformations. So, where are CEOs falling short, and where can they improve?
Why E2E Visibility and Actionability Matter in the Supply Chain
E2E visibility is big-picture thinking. It is seeing everything in your operations from where raw materials get sourced — even raw materials you don’t necessarily use — all the way to where the final consumer uses the product, even if that consumer isn’t necessarily your customer.
Think about a soccer player envisioning where the ball will go before they pass it. When you see it all, your earnings become more predictable, which means your strategy as a CEO aligns better with your target goals. And there are solutions that can help fill in the details of this vision.
How the Right Tools Can Help You Achieve E2E Visibility and Actionability
You already have tools at your fingertips that can help you visualize E2E. These include sales and operations planning solutions to help plan across all your decentralized supply chain networks; data aggregation and segmentation platforms that bring together demand, supply, and capacity so you can understand your material flow and identify choke points; and commodity and external supply chain data visualization platforms. These will all work to help you understand potential risks and vulnerabilities in your supply chain to make better decisions companywide. Here’s what’s at your fingertips using E2E visibility:
- Identify vendors that no longer deliver on-time and in-full or no longer exist.
Most retailers share on-time and in-full (or OTIF) scores monthly or quarterly. These scores are important because they encourage suppliers to make on-time deliveries and ensure they meet delivery dates.
Late deliveries have consequences beyond bare shelves. As a supplier, you might get hit with fines if you don’t get orders to the destination OTIF. But with E2E supply chain visibility, you can optimize transportation and avoid the worst of these fates. Most importantly, you can stand out from competitors trying to deliver the same products with the same challenges. In turn, you’ll be able to eliminate cost overruns, keep customers happy, and continue to grow.
- Locate transportation bottlenecks.
The state of freight transportation in 2022 is fraught with challenges, from the pandemic to the invasion of Ukraine to myriad supply chain and shipping issues. E2E visibility can help you identify several options to reduce risks related to transportation delays and high costs.
You can pursue a more consistent supply by using diverse and widespread suppliers, or you can move production locations to reduce the distance a product has to travel. Lastly, you can evaluate your insurance policies and commercial contracts to see if you can adjust them.
- Determine which products don’t sell or improve market share.
Items that can’t be sold — whether they’re irrelevant, out of style, or useless — aren’t doing you or your customers any favors. Furthermore, they can prevent you from optimizing your inventory. Keeping deadstock beyond 12 months can impact the movement of smaller items and hamper your inventory management.
- Reoptimize your product mix.
Picking up on the real-time nuances of your fluctuating products isn’t easy, especially if your company has hundreds of thousands of products across numerous locations and channels. One study found that around 65% of retailers regularly run out of their most popular products, while 63% see excess inventory in products that don’t sell as well.
Demand sensing, as practiced with E2E visibility, is sensitive to sudden real-time fluctuations that wouldn’t be found in traditional forecast models. It can help you understand whether something that positively impacts one SKU negatively impacts another, resulting in a net loss. Instead of focusing on top sellers and ignoring everything else, look at the middle layer, where reoptimizing your products can improve your bottom line.
- Respond to unplanned events more quickly.
Supply chain disruptions can hurt your business, so always be ready with a plan B that can be executed with your current capabilities. Because the processes are interconnected, a single disruption can affect all other operations and result in significant losses. These disruptions include natural disasters, product issues, transportation problems, and pandemics. Using E2E supply chain models can help you not only manage unplanned events, but also predict them from the beginning.
E2E actionability is the need of the hour for every CEO. But the most forward-thinking ones — the CEOs who think like playmakers and point guards — will change the game. They will be the next generation of leaders, uniquely positioned to use material flow data and embrace E2E visibility to get better rates with suppliers, be honest with customers about expectations, and run the right inventory and production policies to ensure they meet their earnings targets quarter after quarter.
Written by Ali Hasan Raza.
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