What is Supply Chain Visibility? Part 1: Operational Visibility

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What “visibility” truly is has plagued the supply chain industry for decades — and while it’s something that the industry talks about a lot (even though nobody really seems to understand what it is) our definition of “visibility” has pretty much devolved to Justice Stewart’s infamous “I’ll know it when I see it.”

That being said, it’s much easier to talk about the operational, financial, and strategic aspects of visibility in the supply chain. So that’s exactly what we’ll do. In this post, the first of our three-part series on Supply Chain Visibility, we’ll focus on the operational aspects of visibility in the supply chain.

 

Operational Visibility in the Supply Chain

Where is my shipment? When will it arrive? Is it being handled properly? Is it in good condition? Is my carrier doing as promised? Will I be notified if an abnormal event occurs? How do I know the information I’m receiving is accurate and timely? If you’ve dealt with logistics in any way shape or form, you’ve probably had to ask these questions. And frankly, in order to have visibility into the areas you can’t control, the best option is to affix a tracking device onto your shipments.

There are many different options for devices to track your shipments including RFID, WiFi, Bluetooth, Cellular, and Satellite devices. Let’s take a deeper dive into each tracking solution.

RFID tag

RFID

RFID tags are cheap, about $0.25 or less, but the RFID reading infrastructure can be prohibitively expensive. Every facility that you try to wire up will cost hundreds of thousands of dollars, if not more. The facilities that you do wire up must be under your control, which is a contributing factor as to why the technology never really took off, even after Walmart mandated it.

Satellite

Satellite on the other hand costs hundreds of dollars per device, and there’s also a monthly satellite fee on top of that. It’s a great way to track shipments but it’s only economically feasible for high value goods that you need to see all the time. This is why it’s taken off in reefer tracking.

 

 

Cellular

Cellular tracking is somewhere in the middle between RFID and satellite. It’s still a little expensive, around $50-$100 per device (sometimes more), and you also have to pay a monthly cellular fee – just like you do for your cell phone.

Bluetooth + WiFi

Bluetooth and WiFi devices are the emerging tech in shipment tracking. Bluetooth is relatively low cost, at around $10 per device. However, it still requires some infrastructure, think of the Tile devices that some people use to find their car keys or tv remote. The infrastructure required isn’t too expensive but it still requires additional manpower (which ends up adding a lot of cost — we’ve even seen people walk around with BLE scanners).

WiFi on the other hand costs even less, potentially as little as $5 per device, and may not require any additional infrastructure. We’re a little biased, considering that we’ve built our whole company around this, but we’re all about saving you money. And when you don’t have to spend anything on infrastructure, that helps.

IoT Alternatives

There are also some built in tracking solutions to trucks (ELD/GPS-enabled telematics), airplanes (ADS-B/ACARS), and ships (AIS). These solutions will allow you to track the shipping mechanism’s location but environmental and tampering data doesn’t usually exist for those devices. There are various data aggregators that will give you access to the data, for a fee.

 

 

Every option has benefits as well as downfalls and each company must decide for themselves which is the best and if the unit economics make sense.

 

What next?

Once you have decided on a device to track and relay information about your shipments, you need to decide what kind of additional information is important to you. There are all sorts of sensors out there that can be included in the tracking devices. Sensors can track temperature, humidity, acceleration, vibration, shock, etc. There’s even a sensor on the market to help determine if the container you are shipping goods in overseas has been opened or tampered with during transport.

There are many ways you can apply the knowledge you are gaining from the data once you start capturing it (although we highly recommend you decide on a use case before choosing an asset tracking provider).

Example use cases

1) Inventory optimization/synchronization

Once you are tracking a statistically significant number of your shipments you can start optimizing your inventory. You can answer questions like “Where in my supply chain do I have the longest dwell times?” and “Are certain distribution centers performing better?” When you see where inventory is being built up in your supply network and how long it is sitting at each node, you can then determine if you have enough inventory in your end to end supply network to satisfy demand for a specific period of time. This allows you to hold off on manufacturing additional unnecessary inventory, therefore reducing waste and loss.

As a manufacturer, seeing into the retail supply chain and your raw materials supply chain is incredibly valuable as it allows for synchronization from where the raw materials were sourced to the final point of retail. As you build up inventory, you can see how your retailers are consuming it so you end up building up just the right amount. A truly synchronized supply chain has enough inventory to keep high levels of customer service (low out-of-stock) while keeping low levels of in-transit inventory. You’ll be able to determine when raw materials will arrive at your manufacturing center and reduce the risk of disruption due to delays. Synchronization leads to low leads times, which in turn decreases working capital costs and increases efficiency. Being able to trace end-to-end allows for this.

2) Loss (time + shrinkage)

When considering loss, keep in mind that loss can be anything from lost or stolen goods, lost time, and wasted working capital. By tracking your shipments you will be able to determine exactly where the black holes in your supply network are, determine if goods are being lost or stolen, and see where you are losing time.

There are enormous implications for food safety when tracking perishable shipments. Remember that big romaine lettuce e-coli outbreak and recall? That all could have been prevented if it was easier to determine exactly where the unsafe lettuce originated. Now let’s look at other perishables like refrigerated steaks. Often the high temperate threshold will only make the food unsafe if the environment has that temperature for a certain period of time. The current solution of temperature tape, which will show the highest temperature reached, does not show for how long the environment was at the temperature. Using an asset tracker or temperature logger will allow you to prevent throwing out pallets of steak when they are in fact, safe. On the other hand, say the temperature did reach unsafe temperatures for an extended period time. Within a pallet there are many cases of steak. You will be able to determine if all the cases need to be destroyed, or if just the outer cases are unsafe and the inner cases never reached the unsafe temperature because they were insulated from the heat by the outer cases.

3) Customer service

It’s incredibly frustrating to hear that your customers received damaged product, and that eventually increases your insurance costs. By tracking shipments you will be able to see exactly where damage occurred whether it’s because the environment was too hot, too humid, or your shipment was jostled and experienced a high level of shock. You can also show carriers precisely where damage or out of bounds (bounds that you previously specified) events occurred, if your carriers are performing as promised, and which carriers, trade lanes, warehouses etc. pose the highest risk to your shipments.

You can increase the efficiency of your operations (and increase customer service level) by utilizing predictive ETA’s. Now it will be easy to ensure slot availability for trucks, manage delays before they become problematic, and ultimately keep your customers happy by giving them insight into when their shipments are arriving.

4) Quality control

The last use case I will leave you with today is quality control. Being able to monitor the environment of a shipment throughout it’s lifecycle allows you not to remove it from the supply chain for testing. If you can remove a day of checks, that’s one less day that inventory is on your books. Some companies that provide asset tracking devices will allow you to set alerts for anomalous or out of bounds events, so you know exactly when and where each shipment had some sort of a problem.

 

Takeaways

The most important thing to take away from this blog post is that if you can measure it, you can manage it. Being able to measure your supply chain and it’s performance will help you make better decisions and allocate funds and resources in the best ways possible.

If you want to see how ODYN can help increase your operational visibility, we’ve recently reduced our Quickstart package to just $499 — get started today! Or if you want to get in touch with our sales team, schedule a meeting here or contact us on our contact page.

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