Why Increasing Supply Chain Visibility Should Be Your #1 Priority

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Visibility has always been important in managing the supply chain, especially at the Tier 2 or Tier 3 level. But for many manufacturers, it hasn’t historically been their top priority.

Achieving cost and risk visibility two to three levels into the supply chain requires a lot of manual effort. Most companies have more pressing concerns consuming most of their bandwidth, so performing the tasks required for increased supply chain visibility is, understandably, a low priority.

Visibility is crucial for managing cost and proactively identifying and mitigating risk. The right tools will help you increase supply chain visibility and help you manage risk and reduce cost, allowing you to better serve your customers.

Your current solution isn’t offering enough insight to serve your customers.

Currently, most companies are managing their supply chain process through manual processes, such as tracking items and costs in Excel sheets and emails.

These manual processes result in missed opportunities to reduce cost and proactively manage risk. For example, a component-level negotiated price is not reflected in assembly. If the component goes end-of-life, this may not be visible until the component can no longer be purchased—causing costly delays.

Without supply chain visibility, you don’t know what you’re paying for (and why), or where parts are coming from. For example, you wouldn’t know what you are paying for the electronic components, whether you are paying market price, or where the components are manufactured for a circuit board assembly (PCBA). It takes too long to email back and forth asking questions, and once you get the data you need it may no longer be accurate.

Increased supply chain visibility leads to lower risk.

Having increased supply chain visibility helps you manage your risk, which is critical as we see continued supply chain disruption due to the COVID-19, tariffs, or other geographical affairs. Visibility allows you to assess how production-ready your suppliers are, as well as their suppliers’ suppliers, down to the component part and raw material suppliers.

If your suppliers aren’t production-ready, you’ll experience supply chain disruption. Builds will take longer and costs will rise, reducing your margin. Meanwhile, internal teams or customers will be unhappy with the lack of progress.

Being able to see metrics like part availability, pricing, lifecycle, lead times, and alternate parts can help your team plan ahead and mitigate when those risks do arrive.

You can leverage data to reduce cost.

Improved supply chain visibility allows you to identify cost-saving opportunities at a time when your business—and your customers—need it.

First, you need to have the necessary data available, either directly from your supplier or a software tool. For example, you need to know what components cost; not just from your direct supplier but all the way down the chain to the raw materials. You also need to consider labor, transportation, and other costs

Next, you need the right tools to help maximize the benefit of this data through analytics or artificial intelligence (AI). An AI-powered procurement platform can offer you real-time data to let you know if you’re overpaying for a part.

Finally, your team must have processes in place to leverage the insights for maximum efficiency. Having the data isn’t much use unless your team is prepared to proactively use the information. The right tools for accessing this information frees up the team’s bandwidth to prioritize and execute. By having as much information as possible—about your current suppliers and potential alternatives—you have stronger negotiating power to help drive down costs.

Stay one step ahead in an ever-changing supply chain.

As companies adapt to an altered supply chain landscape, end-to-end visibility will help differentiate your business. Consistent, quality production—especially during a pandemic—is crucial for your business and your customers.