Supplier Visibility is More Important Now Than Ever

Although 2020 is behind us, the year left a myriad of obstacles in its wake. As automakers adapted to the pandemic challenges brought on by suppliers, like a shortage of semiconductor chips, production was stunted. The increased demand by consumer electronics for these chips left automakers lacking one small but crucial component to vehicle production.

Gartner reported that 89% of supply chain leaders have experienced a supplier risk event in the past five years. Managing supplier risk starts with supply chain visibility, a key element of a future-ready supply chain. Organizations lacking visibility will find themselves operating complex supply chain networks in the dark.

Research from Dun & Bradstreet researchers found that at least 51,000 companies worldwide, 163 of which are in the Fortune 1000, have one or more tier 1 suppliers in the Chinese provinces most impacted by the Coronavirus. While at least 5 million — and 938 in the Fortune 1000 — have one or more “tier 2″ suppliers. The subsequent supply chain disruptions are still continuing today, showing how intricately linked the global business network is.

The Need for Supplier Visibility

There is a significant gap between understanding the importance of end-to-end supply chain visibility and capabilities being leveraged today. While disruptions are commonplace in supply chain management, the impacts of COVID-19 are bound to be long-lasting by affecting both supply and demand.

Many still don’t fully understand the potential vulnerability a lack of visibility into supplier relationships presents. As of 2018, only 42% of companies had capabilities to see disruptions to their supplier base immediately and had predefined strategic action to recover.

The lack of an organized approach to managing suppliers and the inability to aggregate supplier data from multiple systems and sources makes it troublesome to mitigate potential risk. This challenge is further exacerbated by the global density of networks, a lack of data analytics and shorter product life cycles.

While the need for supply network mapping is great, many companies have not done so due to the amount of labor and time required. For organizations that do manage to manually map their entire supply base, it’s often a one-time exercise that quickly goes obsolete as suppliers go through acquisitions and divestitures, add or subtract products, open or close manufacturing sites and so on.

For a supply chain to be resilient, organizations need real-time supplier visibility to manage supplier relationships and proactively mitigate potential risks and disruptions.

What is Supplier Visibility?

Supplier visibility focuses on understanding who your suppliers are beyond Tier 1 and mapping the relationships between them, which is a challenge for most organizations today. Without visibility across your entire supply network, you can’t effectively source to keep up with new demand and minimize supply chain risks, including financial, trade compliance, cybersecurity and natural disasters.

The Need for Insights into the Right Data

To create meaningful intelligence, organizations need a database that aggregates data across multiple systems for real-time analysis. Ultimately creating a foundation for real-time, proactive and intelligent supplier relationship management.

The growing complexity of parts, potential risks components, suppliers and purchase orders, intelligent supply chain management will require a digital approach for actionable mitigation. To succeed in the next age of supply chain management, organizations must fortify their operations by truly integrating supplier visibility and management with digital transformation.