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Cons of Poor Supply Chain Visibility: The Domino Effect and Increasing Costs

The efficiency levels of a supply chain have the power to make or break businesses. We are not exaggerating. Today two of the most important competitive differentiators--price and customer experience--are governed by the way a business manages its supply chain. A single disruption in supply chain processes can lead to a whole series of distortions. While some of these disruptions are not under your control, most can be tackled using modern technologies.

Factors like responding to uncertain weather conditions, compliance, poor inventory management, inability to predict demand, poor 3PL management among others trigger a series of uncertainties and inefficiencies across a supply chain. This creates a domino effect adversely impacting the core aspects of a supply chain. Delays in delivery, rising logistics costs, long production cycles, increasing risks, poor customer experience, non-compliance, poor inventory management are some of the drawbacks of a supply chain domino effect.

Instances of Domino Effect

Talking about inefficiencies in a supply chain, the term ‘strategic fit’ is a must to understand and ponder upon. Strategic fit means the degree to which an organization is matching its resources and capabilities with the opportunities and challenges in the external environment. It directly relates to the ability of one’s supply chain to deliver accordingly. For instance, during holiday seasons demand for online shopping and food delivery drastically surges. Now if a retailer or restaurant does not have accurate insights on how much demand will be generated, it will become impossible to scale operations. This, in turn, will result in lost business opportunities, reputation damage, customer churn, poor profitability and more.

Another instance of supply chain domino effect can be traced back to an organization’s inability to predict risks and ETAs. Imagine transporting freight through a theft-prone area. Chances are your goods will be stolen. This will give rise to a series of inefficiencies. It will cause lapses to deliver TATs, losses that might go up to thousands of dollars, non-compliance with OTIF standards and bring down customer trust. Even something as simple as ETAs can trigger a supply chain domino effect. 

Imagine shipping wires, tools, and equipment to a telecom customer. The customer needs to build a new tower in a remote location. You have informed the customer that his shipment will reach in a given time. But unfortunately, things do not go according to plan and now the delivery is running almost a day late. The customer isn’t aware of this delay. Result? A domino effect! Owing to the customer’s lack of knowledge about the ETA, the entire engineering team’s man-hours for a day get squandered. The next set of engineers who were supposed to take over the task from the first team is now on its way only to wait for another day. This is how the hours keep adding up and the estimated time to make the tower up and running goes way beyond the budgeted time. And for your telecom customer, this ripple effect can result in losses adding up to millions of dollars.

Inventory management is one more aspect that gets tough to deal with in case of an inefficient supply chain. Retailers have a limited space to stack inventory, if it’s not completely filled then one is not utilizing the resources properly and if it overflows then there is a management problem, both these cases are the ripple effects of an inefficient supply chain.

A supply chain domino effect can come in many forms but there is one thing that’s common between the problems we discussed. It’s a lack of visibility. Be it customer demand, risks or ETAs, poor visibility of supply chain operations is a major driver behind the supply chain domino effect.

How a Supply Chain Visibility Software Can Help Deal with The Domino Effect

Traditional methods of executing supply chain activities have little or no defence against the domino effect. Why? Mainly because the systems running the supply chain work in silos. There is no interoperability resulting in a lack of transparency.

Advanced supply chain visibility software ties together disparate IT-architecture like ERP, WMS, OMS, 3PL systems, GPS networks and more. All the data generated by these systems are seamlessly fed into a central location and displayed to different stakeholders on an easy to use dashboard. This eliminates repetitive data entry and puts the right information needed in front of the user to improve efficiency and customer service. Now, how does this help?

Such software breaks the IT silos in a supply chain allowing stakeholders to get a unified view of all the data generated by different systems. Owing to this, one can manage delivery KPIs better, get a real-time view of ground-level activities, quickly get to know about delays, optimize routes, eliminate unnecessarily diversions and stoppages, avoid vehicle idling and more.

Advanced supply chain visibility software keeps customers abreast with real-time information on delivery progress. In case of delays, it automatically informs the customer. It leverages machine learning to generate the most efficient and risk-free routes to complete a delivery. Predictive intelligence capabilities allow such software to generate accurate ETAs so that customers have a contingency plan ready in case of delays. It can even plan routes depending on the weather forecast.

It’s not easy to address the supply chain’s domino effect, but with advanced supply chain visibility software, one can surely manage to curb the impact of such an effect. Result? It improves profitability, mitigates risks, makes customers happy, shrinks supply chain disruptions and empowers businesses to become proactive with regards to delivery operations.

FarEye for almost a decade has been empowering global enterprises to address the supply chain’s domino effect by helping them gain predictive visibility. Signup for a quick demo here to understand how we are doing it and why 150+ enterprises, across geographies, bank on us. 

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