Logistics visibility has long been considered to be a key ingredient of the “Holy Grail” of supply chain management. It is essential to see when your inputs will arrive, so you can optimize inventory and get products to your customers on time.
Although logistics visibility is something that manufacturers know they need, only over the past few years has this core competency become attainable for manufacturers of all sizes. Thanks to technological advancements driven by new marketplace and customer pressures, organizations now have the necessary tools for comprehensive inbound and outbound logistics visibility.
Harnessing the power of visibility
The days of using guesswork and gut instinct to predict when a shipment would arrive at its destination are a thing of the past. Today, a manufacturer’s success depends heavily on having visibility into inbound shipments from suppliers and outbound shipments to customers and distributors. Here’s why:
- Inbound logistics visibility is essential to ensure suppliers fulfill purchase orders (POs) on time, even after they ship. Manufacturers use visibility data to track inventory levels, prevent stockouts and overstocks, and optimize production schedules, mitigating the risk of delays and disruptions. With good visibility, organizations can also quickly identify potential supply chain bottlenecks and work to ensure shorter lead times and faster, more reliable order delivery schedules.
- Outbound visibility gives customers the delivery experience that they expect, so they come back for more. Customers expect manufacturers to provide them with accurate delivery estimates so they can plan their own business activities, such as inventory management, forecasting, sales and marketing. With comprehensive logistics visibility, manufacturers can address delivery issues promptly to avoid interruptions to fulfill their customer orders on-time and in-full. This effectively improves customer service and fosters stronger, loyal relationships with customers.
Both inbound and outbound logistics visibility are essential for manufacturers that want to ensure a steady flow of materials, components and finished goods in their supply chains. For example, at Yamaha Motor Corp., USA, which distributes and markets its parent company’s motorized recreational and sporting vehicles in North America, comprehensive logistics visibility serves as a key differentiator in a competitive marketplace.
“Being able to assure a promissory date to our customers or distributors is important, and that’s definitely tied to visibility,” says Jason S. Schweizer, the company’s division manager for its logistics and export sales division, which utilizes SAP Business Network and Shippeo to achieve its supply chain visibility goals. “Visibility — into each of our business segments, the movement of products and the supply chain as a whole — is vital to letting customers know when they’re going to receive our products.”
It’s so critical, in fact, that Yamaha proactively and continually assesses the variables within its supply chain, addressing potential issues and taking action as needed. Issues like port labor strikes or congestion can profoundly impact the company’s networks, which transport and receive goods from many different countries. With SAP Business Network and Shippeo in its corner, the manufacturer keeps close tabs on freight as it moves from its origination point to its final destination.
Having that visibility into inventory movement helps Yamaha prepare to receive shipments and manage potential delays before they become real problems. For example, the company recently changed one specific source lane due to some challenges with Canadian railways. “We've been able to see what's ahead of us in order to avoid certain challenges that might arise here in North America,” Schweizer says. “We now have that visibility earlier on in the process than we’ve historically had, which is a good thing.”
Taking ownership of inbound logistics
Generally, manufacturers control their own outbound freight movements (or, rely on a third-party logistics provider to manage them) and leave much of the inbound cargo transportation in the hands of suppliers. When this is the case, inbound freight is often a risk; but with the right technology, it offers a largely untapped area of opportunity.
While relying on supplier deliveries may seem convenient, this traditional approach ultimately limits transportation visibility for the buyer, hinders cost control, and limits an organization’s control over its own supply chain. Rather than taking it on faith that suppliers will properly handle the freight shipping and transportation process, purchasing organizations are effectively reclaiming control over their incoming freight. Here’s why:
- Improved risk management. By taking more ownership through visibility into the transportation process (both inbound and outbound), businesses can mitigate risks associated with supplier performance and ensure that their products arrive on time and in good condition.
- Better partnerships. Using technology, buying organizations connect and collaborate with their suppliers and logistics services providers, achieving cost savings in the process.
- Enhanced efficiencies. Organizations can work with partners or be self-sufficient to optimize routes, consolidate shipments, reduce transit times, and improve efficiency to boost customer satisfaction by getting products delivered on-time.
The benefits don’t end there. Organizations that gain visibility over inbound and outbound freight can also improve supplier and carrier compliance, operate more sustainably and better adhere to regulatory requirements. For example, organizations can use visibility solutions to:
- Capture and analyze in-transit data as goods move across the supply chain.
- Benchmark progress and make improvements to ensure future loads are handled more efficiently and effectively.
- Track CO2 and emissions data to identify opportunities for improvement and provide information for climate reporting initiatives.
- Connect and collaborate with suppliers to work toward common goals, like developing more sustainable logistics operations.
Building a better supply chain in real time
With good inbound and outbound logistics visibility, manufacturers can reduce risk and build resilience from disruptions in their supply chains. These wins are important in a highly competitive business marketplace where manufacturers continue to battle material, transportation, and overhead cost inflation as part of the interconnected nature of a supply chain.
Logistics visibility also helps manufacturers get out in front of changing customer expectations, particularly when it comes to answering that all-important question: Where is my order?
“Both B2C and B2B buyers expect more and more out of their suppliers and trading partners, who need technology that helps them pinpoint when orders are going to arrive,” says Stanford Huynh, Business Network director at SAP. “It goes hand-in-hand with increasing expectations around deliveries and visibility, both of which continue to evolve and become more complex.”
To learn more about how your organization can improve its inbound and outbound logistics visibility with SAP Business Network, visit www.sap.com/businessnetwork.
