The demands for global supply chain visibility have never been greater than they are today. After decades of discussing global visibility over 80% of supply chain executives say that visibility is still their greatest problem. The impact of poor global supply chain visibility on an organization manifests itself inefficient operations (excess costs), mismatch of inventory (the Goldilocks effect: too much, too little, rarely just right), poor financial insights and performance.
The question is why is visibility such a problem? Why after so much time, so much effort, and so much investment is this still the problem it is?
The explanation for the problem is easy. The way I see, it there are 2 fundamental elements to the problem:
- Silos of Activity
- Silos of Data
Solving the problem of global supply chain visibility is really difficult to achieve - obviously.
Silos of Supply Chain Activity are a fact of the physical world - and they aren’t going away!
The first problem, silos of activity, is not going to be resolved. It is a fact of the global supply chain. The activities of the global supply chain are managed by different actors - vendors, carriers, consolidators, freight forwarders, customs brokers, and warehouses. Each of these actors provides a physical product or service for the importer. If the actor is large enough they will perform multiple services. To aggravate the situation each actor has its own information systems (some automated, often manual).
However, regardless of the size of the global supply chain actors, it is rare that they provide the importer with all the services that they require for product acquisition to final delivery. This means that importers have more than one actor that they need to deal with. Each actor operates in its own silo and has only a piece of the total supply chain picture.
To complicate matters, it is quite common that large organizations have more than one operational company or division. Each operational company or division is its own silo. And, each company or division has its own set of actors that it interacts with.
And finally, within each organization, there are silos of operation activity - purchasing, sales, transportation. Trade compliance, warehousing, and finance. Internal silos are often supported by multiple point solutions - augmenting an overarching ERP solution.
This heterogeneous global supply chain environment works, for better or worse. But, it is virtually impossible for them to achieve global visibility across the broader global business. And the cost to the organization is substantial even though it is out of view and unknowable.
Silos of Data are breaking down, and they still exist!
Up until recently, the digital world mirrored the physical world. Data was siloed with the various actors that performed the activities. It was virtually impossible to capture cross-functional data and turn it into meaningful information.
Over the past decade all that has been changing. With the explosion of the internet, cloud storage, and software as a service (SaaS) solutions, data is being captured, contextualized, and translated so that it can be presented to users in a much more meaningful way. The silos of data are breaking down and users are able to get a much more cohesive view of their supply chain activity.
Data Aggregators: 3PLs and Freight Forwarders as Visibility Providers
There have been great strides in aggregating global supply chain data and providing levels of visibility heretofore unachievable. The transportation industry (3PLs, Freight Forwarders, Carriers) has been investing very heavily in technology to allow them to capture the information within their networks and provide it to their clients in a way not possible only a few years ago.
Today, carriers like Maersk, Evergreen, MSC are providing end to end visibility of their containers. Freight Forwarders and 3PLs like Expeditors, CH Robinson, Kuehne and Nagel are going even further and providing visibility into shipments from origin to the place of final delivery. These freight forwarders and 3PLs and also enhancing the information with dashboards that provide alerts, standard KPIs, and management metrics and provide their shippers with deeper levels of understanding - but not the complete global supply chain perspective that delivers the ultimate value.
Given where we have been with global shipment visibility these capabilities are quite an advance.
So what’s the problem?
3PLS only solve part of the problem - and that’s a problem
While 3PLs and Freight Forwarders are providing much greater global shipment visibility than ever before, they still maintain information in silos disconnected from an enterprise approach. It is true that the large 3PLs will provide the ability to act as the network aggregator and collect the supply chain data from other 3PLs and Freight Forwarders, but that comes with a huge cost. Only the behemoth organizations can afford to get this type of support.
So, the problem continues to exist because the shipper’s global transportation information sits in multiple systems that don’t communicate with each other. The information that is provided is pretty generic and doesn’t always reflect the needs of the shipper.
Solving the Global Visibility problem - a Global TMS
Getting enterprise global visibility requires a global TMS. But it’s not just any TMS. Besides doing all the things that a global TMS does, like freight contracting, booking, invoice validation, and freight auditing it must be able to support real-time capturing, translating, and visualizing of a shipment (and product), across the global supply chain over the life of its journey. That means being able to capture, interpret, and report the status of all the internationally procured product from its origin through to final delivery - at every stage of its journey.
The global TMS solution needs to make both the physical and financial elements visible to the user when and how they need to see it.
From a physical perspective it means seeing all products in every container and tracking the containers at suppliers, consolidators, ports of departure and transshipment ports of arrival, in customs, and through to final destination. It means:
- being able to get accurate status messages in near real-time
- receiving timely alerts when things go wrong
- interpreting the status messages and seeing changes in critical dates
- providing stakeholders access to the information that they need
- having access to KPIs and performance metrics.
From a financial perspective, it means being able to relate all product, transportation, customs, and intermediary handling costs to the product level. It means being able to easily audit and validate all invoices related to the purchase and import of the products so that accounting and finance have an accurate and true view of costs down at the product level.
Global TMS - the Solution for Global Visibility
To achieve this level of global supply chain visibility demands a total enterprise view of the global supply chain in real time at the shipment and product level. It requires a solution that aggregates all the supply chain information and presents a comprehensive end-to-end view of products from all siloed actors in a meaningful and actionable way for the intended user.
The solution has to effectively eliminate the silos. The only possibility of achieving this is with a comprehensive global TMS solution. Anything less and the global supply chain visibility problem will still exist.