The Imperative of Supply Chain Visibility

Supply chain visibility was the focal point of SAPinsider research report "Modernizing Logistics and Inventory Tracking" in 2021 due to the intense focus it had received during the pandemic. Rather than dwindle, the focus has increased significantly since then. As survey responses for our July 2022 research report, Supply Chain Planning in the Cloud, have started to come in, we can see that end-to-end supply chain visibility today has become paramount. You can share your insights for this research by participating in the research survey. Supply chain visibility has been a pain point for companies across industries for many years. But the magnitude of repercussions from lack of visibility has increased exponentially in recent years, and the primary reason is evolving customer behavior and demand. Organizations today serve much more demanding customers and expect an immaculate customer experience. In supply chain parlance, this translates into the expectation of receiving the right product, in the right quantity, at the right time. The supply chains that most organizations need to leverage to deliver customer expectations are becoming increasingly complex due to global footprints, product proliferation, systems complexity, and evolving intricacies of key processes like logistics and inventory management. These complexities lead to more risk exposure across the supply chain. This increased risk, in turn, significantly increases the probability of supply chain disruptions, which may then impact customer satisfaction. In order to better manage supply chain risks and disruptions and build capabilities to deliver the right product in the right quantity and at the right time to enhance customer satisfaction, organizations need better visibility, control, and planning in their supply chains. They need to build real-time visibility through digital tracking into their key supply chain processes, like logistics and inventory management.

What Does This Mean for SAPinsiders?

As highlighted in SAPinsider research report "Modernizing Logistics and Inventory Tracking, in order to strategically and successfully modernize their logistics and inventory tracking and planning capabilities, SAPinsiders need to take some strategic actions:

• Understand your current digital tracking maturity capability. Start by understanding where your current state lies — not only in terms of technology but in making the best use of that technology. Do you effectively use data generated by foundational digital tracking technologies like barcodes and RFID? For example, leverage RFID for inventory planning and telematics for fleet monitoring. Digital transformation capabilities are more culturally intense, and hence it is imperative that you have a set of processes and people culture in place at the beginning of your modernization journey. Build a detailed grid of your current state capabilities in the three key areas of people, processes, and technology. A typical grid will have your sub-processes as rows, with capabilities assigned in the three categories as columns. This will help you develop a detailed modernization plan.

 

• Focus on the data aspect before insights and analytics. While we all want to reap the benefits from any investment as soon as possible, a firm groundwork in terms of data infrastructure is critical. There are three key areas, from a data perspective, that you need to be aware of. First, identify all your key data sources and ensure that you have the infrastructure in place to collect the data. Remember that near real-time is a key aspect of digital tracking, and hence your data ingestion capability must support this. If you do not have this in place, then this is the first step toward your modernizing imperative. Second, ensure data integration of all siloed and fragmented data sources. And third, ensure data quality, integrity, and consistency. This is not only the critical but the difficult part. Once you have this firmly in place, leveraging analytics will be much easier.

 

• Build stepwise analytics capabilities. If you executed your visibility data strategy correctly, there are some advanced analytics methodologies that you can leverage on that data. Examples are reinforcement learning algorithms for inventory management and deep learning for logistics planning. But if you are not firmly established in the game, the best strategy is to start with elementary analytics methodologies, like descriptive and diagnostic analytics. This approach helps you build a gradual culture of analytics, redefine processes based on learning, and help establish a foundation for advanced approaches, like prescriptive and predictive analytics and eventually AI- and ML-based algorithms.

 

• Harness the power of the cloud, edge analytics, TinyML, and AIoT. The power of having access to good, near-real-time data visibility is immense. But the best way to leverage this near-real-time data is by leveraging the cloud. Whether it is cloud-based visibility and planning platforms, or the end-to-end data and analytics infrastructure based in the cloud, the cloud must be a critical component in your visibility modernization journey. And this is where you can strategically leverage edge computing and TinyML to add enhanced capabilities to your tracking and data-based planning infrastructure. An ideal configuration is that your fundamental analytics is distributed at the edge, with a centralized algorithm interfacing with the TinyML algorithms on edge devices. This architecture allows you to more easily scale to advanced analytics approaches, like deep learning, at a later stage.