How to Improve Supply Chain Visibility
- Monitor Industry Trends and Market Shifts
One sensible approach for any company seeking supply chain improvements is to keep close tabs on what’s happening within its industry and marketplace. Though that may seem obvious, factors can change suddenly, and understanding how these shifts will impact supply or demand is not always simple to determine.
Collecting and analyzing the right data and insights is the first step to effectively monitoring industry trends and market changes. Historical data can be helpful in identifying patterns or trends of the past, but they are just one piece of the puzzle. Considering quick or unexpected changes in economic conditions, geopolitical situations, weather forecasts, or competitors’ moves that can disrupt supply chains is also important. Companies that work closely with their suppliers and customers can help ensure that they have a good read on critical factors, such as supplier capacity, constraints farther upstream, and market demand.
AI tools come with the ability to analyze massive volumes of data across a variety of interconnected sources for both the demand and supply side. For example, demand data can factor in hard numbers such as sales figures, pricing data, and marketing campaign conversions with sentiment analysis from social media mentions, consumer reviews, and influences from shifting political or cultural opinions. AI-powered insights can synthesize all this data in real-time for a more accurate assessment of demand. Similarly, supply chain management systems with AI tools can combine the flow of raw materials and goods across the end-to-end network of supply with incoming logistical data, weather patterns, and regional trade policies.
- Strengthen Supplier Relationships
Organizations should be judicious about contracting with reputable partners capable of nimble problem solving to ensure the smooth flow of raw materials, parts, or goods when situations suddenly shift. Indeed, good supplier relationships can be the x factor that elevates supply chain management from a tactical function to a strategic advantage. Companies that focus on building and maintaining strong, trusted, mutually beneficial relationships with their supply chain partners are usually better equipped at responding to changing conditions while taking advantage of emerging opportunities.
The building blocks of solid supplier relationships include clear and regular communications, explicit expectations, mutual trust and consideration, and frequent reviews of performance and marketplace conditions. The more in sync a company is with its key suppliers, the more effective it will be at getting ahead of issues and benefiting from new business opportunities. A solid supplier relationship is not necessarily one that is without conflict or trouble; what makes these partnerships work is the parties’ willingness to collaborate, whether times are good or bad. Of course, it’s also important to know when to end a supplier relationship that’s no longer serving its purpose. Regular supplier assessments and reviews of new supplier options are prudent. AI tools can create sentiment analysis using survey data and public reviews to drive supplier analysis forward.
- Diversify Sourcing Strategies
Breakdowns in supply chains have become a fact of life for many companies. Port congestion, supplier performance issues, and geopolitical turmoil are just a few situations that can bring a company’s operations to a crawl or even a screeching halt.
One way to mitigate these supply chain risks is to diversify supplier sourcing. This may mean contracting with additional suppliers when a primary supplier underperform, diversifying the supply base geographically, or seeking out more local suppliers to limit the logistics issues that can gum up the works.
Multisourcing—or contracting with multiple suppliers—ensures that a company is not relying on a sole source for a specific need and, therefore, is putting itself at risk of a single point of failure should supplier issues arise. Nearshoring is the practice of sourcing raw materials, parts, or finished products closer in proximity to the company. Although offshoring has long offered the benefit of lower costs, some of those labor arbitrage benefits have decreased over the years. In many cases, such savings may now be outweighed by the risks of relying on a supplier halfway around the globe. Keeping sourcing nearby typically means shorter lead and logistics times, lower shipping costs, and potentially fewer supply chain security and safety issues. It may also afford the opportunity to engage in more frequent management oversight of quality-control issues.