B lind spots in a supply chain can leave organizations struggling to respond to changes and disruptions. These blind spots can range from a pandemic to a local labor strike. They also encompass shocks internal to an industry, such as changing consumer tastes or the entrance of market disruptors. Additional risks that can result from unaddressed blind spots include wasted labor and inaccurate forecasts and commitments, says Carly West, senior director analyst with Gartner’s supply chain practice. These drive up transportation and inventory costs, among other expenses.
Yet the company sourced the powder from a single vendor. If the vendor was unable to supply the powder, the company’s ability to make this product would be compromised for more than one year, while it sought FDA approval for a new vendor. Billions in sales were exposed, even though a year’s supply of the talcum powder ran about $1,000. Visibility can help companies focus on “the value at risk,” Tait says. When companies assess links in their supply chains, they can ask: If this goes wrong, what is the value at risk? And, what might cause things to go wrong? STAY AWARE OF INTERNAL DISCONNECTS BETWEEN FUNCTIONS It’s not only external events that are of concern. Many supply chains are siloed within organizations. Blind spots to internal actions can also hamper performance. Subodha Kumar, professor of statistics, operations, and data science at Temple University, recalls a food company that offered discounts to customers who ordered in bulk. However, poor visibility and communication between sales and operations meant supply chain costs spiked because of the promotion.
PUTTING YOUR COMPANY'S REPUTATION AT RISK An inability to monitor suppliers’ practices creates ethical and compliance risks, given consumers’ rising expectations of social and environmental sustainability. “Brands and retailers need to be able to ensure every supplier they use, even a backup supplier, meets their company’s standards,” says Eric Linxwiler, senior vice president of TradeBeyond, a provider of extended supply chain management solutions for retailers.
BOOSTING VISIBILITY TO SUPPLIERS A rst step in boosting visibility to suppliers is identifying all suppliers and assessing how they t into the supply chain. This analysis should include the degree to which the company depends on each vendor. A supplier that offers a commodity for which substitutes are readily available is likely less of a risk than one that provides a critical material for a key product and that isn’t easily replaced. Tait recalls working with a pharmaceutical company that offered a tableted drug with sales in the billions. The company used talcum powder to keep the tablets from sticking together and held several months of safety stock.
ARE YOU MISSING SALES OPPORTUNITIES?
Poor supply chain visibility can mean missed opportunities, says Bart De Muynck, strategic advisor with Mojix, a provider of item chain management solutions. For instance, customers who can’t locate misplaced items may leave a store without purchasing anything. Or, they might ask a salesperson to order the items, needlessly adding inventory. Visibility allows companies to capture sales and provide a solid customer experience, without in ating inventory or shipping costs. MINIMIZING SURPRISES In supply chain operations, surprises due to poor visibility are rarely positive events, says Andrew Tait, managing director with Sigma7, which provides risk management capabilities. Generally, it’s more effective to use visibility insights to understand and prepare for what otherwise would be a surprise.
Cimtech, which manufactures precision machined parts, welding, tube bending, and assembly for all types of industries, worked with General Electric Appliances (GEA) to gain visibility to projects that could reduce downtime and increase safety in GEA plants.
92 Inbound Logistics • January 2024
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