Most enterprises lack end-to-end visibility in the supply chain to effectively reduce costs and risks.
In a recent EY webcast, COVID-19: why real-time visibility is a game changer for supply chains, we discussed how leading organizations are starting to pivot and shift from response to recovery. However, this is easier said than done when enterprises continue to lack true end-to-end supply chain visibility. In fact, in a recent EY survey, supply chain executives said end-to-end visibility is the number one factor in creating a successful supply chain. Yet, only 6% of respondents are very confident in their systems and capabilities for end-to-end supply chain visibility. There’s a significant gap between the importance of supply chain visibility and the actual capabilities of most enterprises.
Several points from the webcast are worth highlighting:
1. The imperative of end-to-end visibility
“Hitting a moving target, especially when you cannot see it, is incredibly difficult,” said Jerry Gootee, EY Global and EY Americas Advanced Manufacturing Leader. Visibility allows enterprises to identify disruptions up and down the supply chain, and synchronize supply and demand both at the point of sale and at the required time of delivery.
During the pandemic, Gootee said, companies have been focused on safety and working closely with suppliers and production managers across their manufacturing footprints. Those with end-to-end visibility can perform what-if analyses and simulations to optimize production and use of materials. Gootee mentioned that with improved visibility, EY consultants are seeing some supply chains deliver 20% to 25% cost savings and reductions in inventory while improving overall service levels.
Visibility also helps leading companies reduce risks and costs throughout the supply chain. These companies can conduct scenario planning on how disruption will affect their suppliers – all the way through “tier N” suppliers (suppliers’ suppliers) – and proactively determine alternative sources and cost-effective approaches. EY webcast polling data (figure 1) suggests that reduced risks and costs are the number one reason (48%) for improving supply chain visibility. “This is one of the biggest issues we’re facing,” Gootee added. “Clearly, risk assessment and monitoring of suppliers, including tier N suppliers, is one of the key benefits of visibility. It’s critical to de-risking your supply chain.”