What’s wrong with supply chain visibility?

supply chain visibility

The CIO is showing me the system he’s spent a couple of years implementing. It’s certainly impressive. There on the screen in front of us is a supply chain director’s dream come true: end-to-end visibility.

So what now?’ I ask. He’s obviously put an enormous amount of effort into combining various systems. What I really want to know is whether it’s all been worth it.

‘We’ve already given our partners apps so they can see what’s going on.’

‘And you’re happy with the results?’

‘Well, you know, it’s a bit slow.’

I can hear the disappointment in his voice. This isn’t the first time a visibility initiative has failed to live up to the hype. Once again I find myself wishing we’d had a chance to chat much earlier. Here’s what I would have said.

(1) Expectations are way too high
Many companies treat visibility as a kind of silver bullet. They believe problems somehow get resolved once you can see them.

This may be true in very simple situations. For example, if you have five trucks and you can see that one truck is blocking the others, of course visibility helps.

In complex situations (such as supply chains), visibility provides a wonderful bird’s eye view of the chaos. It doesn’t help resolve it.

 (2) Seeing isn’t solving
Visibility tells you what’s happening in the present. This can be helpful, but it certainly isn’t enough.

In order to influence outcomes and improve KPIs, you need to be able to answer critical questions such as:

– What decisions should we make in the face of a wide range of dynamic variables?
– What will be the impact of our decisions on all those variables, and our KPIs?

For example, how should orders for a particular machine be re-sequenced if a priority order comes in? How should trucks be re-routed to pick up other shipments? Or, if you’re in charge of an airport, how should personnel be reassigned to cope with constantly changing circumstances?

Supply chain planning involves a huge number of interdependent, dynamic variables. In such a complex system, visibility alone is of limited value.

(3) What’s needed is ‘targeted visibility’ i.e. decision support
Intelligent decision support constantly calculates the impact of decisions, thereby enabling planners to respond in the best possible way: Now this has happened, your best response is to do this and then this. And so on.

Planners can use decision support in two ways: to determine how to respond to changed circumstances, and to see the impact of the decisions they are considering making.

Instead of simply looking at the present situation, planners are able to look forward to the results of their decisions and ensure that the impact is as positive as possible.

(4) Achieving overall KPIs is crucial – you also need optimization
Decision support helps planners make better decisions, but it doesn’t help them get as close as possible to your business goals. For that, you need optimization.

Optimization is about looking at the big picture. Given all your resources and the current situation, how can you optimize overall KPIs such lowest cost, best customer service and minimum overtime? An optimizer will constantly calculate what should be done and give you answers based on your chosen KPIs.

What success looks like
An overarching graphical representation of the entire supply chain is rarely helpful. Achieving business goals requires ‘targeted visibility’ – the ability to see the effects of decisions at a local level – and the ability to look at the big picture and optimize accordingly.

Arjen Heeres

About Arjen Heeres

There are few things in life that give me more satisfaction than uncovering hidden optimization potential. My interest in this intersection between business and technology began at university where I researched the application of intelligent technologies to business problems, and earned a master’s in management science from the University of Groningen. I’ve been the COO of Quintiq since 2000, and have helped countless businesses in all kinds of industries realize their optimization potential. What a privilege!