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4 Reasons for visibility within a supply chain system

Visibility encompasses not only sensing data but also how to analyse it and take appropriate action across a supply chain system. A supply chain system allows collaboration and communication between internal and external trading partners and should give visibility to activities up and down the supply chain. Significant benefits are gained from this end-to-end visibility, such as higher order fulfillment rates, improved customer service levels, increased operational efficiency, higher profitability, and revenue growth.

Order Fulfillment Rates

Order fulfillment rate is the percentage of customer or consumption orders satisfied from stock at hand. It is a measure of an inventory’s ability to meet demand. Also called demand satisfaction rate. The best solution to gaining visibility may be to invest in cloud technology capable of managing big data. This facilitates communication and the ability to make quick, informed decisions. Bearing in mind that order management and fulfillment has long been considered one of the core competencies of the supply chain—and business—success.

Customers Service Levels

Meeting the needs and demands of customers is by far the biggest challenges facing today’s supply chain professionals. Not only do customers expect to receive their products in a timely manner, they also want choices of when it comes to when (and how) those products are delivered. Visibility allows for business to respond as quickly as possible, know customers, fix mistakes, go the extra mile, think long term – A customer is for life. Customer Service Level has an impact on both existing customers and potential customers. A recent survey found that 68% of consumers would react by telling family and friends about a bad experience by posting it on a social network. And as each Facebook profile has an average of 229 friends, the reach of this experience can quickly reach thousands.

Operational Efficiency

One of the ways companies measure efficiency is with order fulfillment processes by looking at the Perfect Order Metric. A perfect order is one that is on time, complete, and undamaged, along with the correct paperwork to accompany it. This metric is similar to the fill rate. To determine the fill rate, divide the amount of work or product a supplier has provided by the total amount of work or product necessary. Imagine that a customer requests 60 cases of product from a business and the business has shipped 20 cases. The fill rate is 20 divided by 60, or 33.3 percent. Visibility of operational efficiency allows for continuous process improvement.

Profitability and Revenue Growth

As organizations look to increase revenues by expanding their product portfolios, they’re also introducing complexity and risk into their supply chains.  A 2017 global survey by supply chain consulting firm Geodis found that visibility has become a bigger concern among companies in recent years. In the report, 70% of respondents described their supply chain as “very” or “extremely” complex. Only 6% of those who participated in the study were confident that they have full visibility of their supply chain.  This has been attributed by the peerless research group study to the lack of necessary systems to handle the visibility (transparency).

Visibility enables the business to increase profitability by reducing cost and risk within the supply chain system. Achieving an increase in the business surplus which creates value within the supply chain simultaneously impacting revenue growth. As a supply chain management professional you are expected to leverage these benefits to facilitate business sustainability and competitiveness.

 

 

 

 

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