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The power of brands investing in visibility solutions

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A couple of years ago, cost reduction and productivity optimization drove investment in supply chain processes. These factors, while still important, were sidelined by the unprecedented chaos caused by the COVID-19 virus. The crisis not only threatened the competitive position, but also the survival of many companies that were unable to meet customer expectations in these new circumstances. This disruption shifted the focus to efforts to ensure business continuity by developing resilience and flexibility.

Even today, the consequences of the pandemic continue to impact the supply and demand for commodities, both directly, through business closures and supply chain disruptions; and indirectly, as a result of stagnant economic growth, particularly in the case of commodities.

Late last year, McKinsey revealed the vulnerability of manufacturers by showing that few had visibility into their supplier networks beyond those of tier one. Also, an EY survey showed that supply chain visibility will be a top priority for organizations over the next three years.

Achieving visibility into the supply chain is a major challenge for producers, distributors, and retailers. Visibility at every node along the chain has proven to be a critical tool, enabling companies to more reliably predict the effects of change, disruption, or increased demand. It also makes it easier for companies to be more responsive and agile in meeting customer expectations.

The concept of full visibility, also known as end-to-end visibility, means that companies can locate any product, delivery, event, partner, or report on any device at any time of the day. Ideally, it should also provide information at all stages of the global distribution process, from inception to delivery and payment.

What we mean when talking about supply chain visibility.

In a KPMG & JDA survey of industry executives, only 13% indicated having end-to-end visibility despite the Global Supply Chain Survey revealing that 70% of companies perceive their supply chain as “very” or “extremely” complex. This finding reflects the uncertainty, risk exposure, and disruptions to which companies are exposed, coupled with scrutiny from governments, consumers, NGOs, investors, and other stakeholders.

For example, the food industry must be transparent about ingredients, health issues, food fraud, animal welfare, and child labor. By not having visibility into their supply chain, companies are at risk of failing these obligations. The ability to fully comply with the various guidelines related to business practices, sustainability mandates, and tracking and tracing laws is key for business development.

For maxiaNET, supply chain visibility is the ability to track or trace products from the production source to the point of sale, including logistics activities, transportation, and constant monitoring to ensure compliance with legal regulations and agreements between supply chain partners. 

Some of the contributions of visibility for businesses and brands are:

  • Instant access to crucial information for decision making.
  • Improved and efficient end-to-end processes, including at the point of sale.
  • Transparency and ability to see current “blind spots” in the supply chain.
  • Optimized logistics and transportation efficiency.
  • Improved use of human resources.
  • Improved monitoring and business metrics.

Undoubtedly, visibility is a fundamental tool that enables risk anticipation and intelligent decision-making. If one link in the supply chain fails, a domino effect is caused, creating delays in all subsequent workflows and, therefore, financial and reputational losses.

To be successful in the present environment, it is imperative to transform the way each link in the supply chain works and communicates with the others. Adopting visibility could help respond to present and future challenges.

A guaranteed return investment

The main objective of a supply chain is to provide items and materials at the lowest possible cost in terms of quantity, quality, and time, by executing the best strategies to ensure that the product arrives in optimal condition in the hands of the customer. However, market circumstances in recent years have pushed manufacturers and retailers into a price war in which, in the long run, the only one affected is the consumer.

In the quest for low prices, companies generally cut costs in key activities such as visibility, customer service, procurement, transportation of goods, among others. All of which have a direct impact on product quality. Something very noticeable in the food industry is that by cutting costs in product visibility, products can become exposed to environmental conditions that affect their quality, get damaged during transportation, or arrive at their destination later than planned.

Fortunately, one reason visibility has become increasingly important is that more consumers are demanding it. For example, researchers at the MIT Sloan School of Management found that consumers may be willing to pay 2% to 10% more for products from companies that provide greater supply chain transparency.

Gathering more detailed information on supply chain performance also helps companies identify opportunities for improvement, such as eliminating unnecessary intermediaries and effective long-term planning.

In our case, we have experienced with some business partners that investing between 1% and 10% of the cost of production in visibility strategies could generate up to 20% in brand growth, which eventually translates into increased sales.

In today’s world, supply chain transparency has become crucial to managing uncertainty, risk exposure, and disruptions in the flow of goods. Our bet matches EY’s philosophy: in the best-case scenario, end-to-end supply chain visibility will soon become the norm. Logistics will take a quantum leap forward, and companies will reap the rewards of more dynamic, responsive, and digitized delivery networks.

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