The average international supply chain is becoming increasingly difficult to manage. With regulatory changes, distinct local labour and environmental requirements, and the global movement of products and materials, businesses have to navigate the modern supply chain with extreme care and a full commitment to transparency.
From within the context of stricter regulations, global competition, and evolving consumer expectations, businesses routinely encounter the same issues. Around 55% of supply chain professionals commonly encounter disruptions and shortages, often due to a lack of visibility into their own supply chain operations.
Source: Size of the global next-gen supply chain market in 2019 and 2030.
To enhance visibility and improve the efficiency of the supply chain, organisations are increasingly turning to supply chain mapping, traceability, and transparency. These three pillars of visibility allow businesses to more effectively monitor, control, and optimise their supply chain operations.
A supply chain with extensive visibility into their own operations is able to leverage this insight to respond to disruptions, mitigate risks, and reduce the business impacts of potential issues ahead of time. Businesses that are able to achieve visibility receive higher levels of consumer trust, increased agility against potential disruptions, and the ability to better manage risk.
The Growing Demand for Supply Chain Visibility
As supply chains have become more complex, the need for visibility has only become more pressing. By 2026, the supply chain management market is expected to reach $30.91 billion USD, eclipsing the 2020 value of 15.58 billion. The rapid growth of this industry further reflects the rising pressure placed on vendors to achieve an effective level of supply chain management.
Source: Size of the global supply chain management market worldwide from 2020 to 2026.
There are several factors that actively contribute to the need for supply chain visibility:
- Consumer Expectations: Consumers are increasingly aware of the social and ethical implications of international purchases. To combat this, many are looking to partner with companies that are transparent about their supply chain processes, pathways, and habits. An MIT Sloan study suggests that consumers are more likely to buy with companies that are transparent about their supply chain practices. Demonstrating where products come from and verifying that a company is using ethical sourcing and labour practices. Companies like Shein received customer backlash in recent months due to having unethical labour practices, like forcing workers to work for 17-hour shifts. Businesses should always be clear and transparent about their supply chain practices to meet this consumer demand.
- Regulatory Pressures: Over the past few years, several regulatory pushes from governments around the world have called for supply chains to enhance monitoring and establish practices to achieve a higher degree of visibility. Germany’s Supply Chain Due Diligence Act (LkSG), the EU Corporate Sustainability Due Diligence Directive, and the EU’s Regulation on Deforestation.
- Competitive Advantage: When companies have poor supply chain visibility, they are more exposed to the risks that running a supply chain includes. For example, poor visibility into supplier relationships could lead to delays if a supplier is unable to complete an order. With strong supply chain visibility, organisations enjoy enhanced risk management, a higher degree of operational efficiency, and improved customer relations. By implementing traceability systems into a supply chain, businesses can supplement their visibility efforts with data-driven decision-making across the supply chain.
Simply put, businesses that aren’t prepared to adapt to the new demand for visibility risk falling behind. From regulatory pressures to shifting consumer expectations, all roads lead to developing an effective supply chain visibility strategy.
Supply Chain Mapping: Visualising Complex Networks
Supply chain mapping is one of the central strategies that businesses can use to enhance visibility across their supply chain. Supply chain mapping is the process of documenting suppliers, transport links, and connections within a supply chain to produce a structured map of the entire supply chain.
There are several different methods that businesses can use to create a supply chain map, ranging from geographic heat maps and chart visualisations to producing real-time dashboards. Equally, the data that a company stores related to their supply chain can be:
- Structured: In the form of databases.
- Semi-structured: In the form of images.
- Unstructured: In the form of written documents and messages.
Businesses can collect data to create a real-time map of their supply chain with IoT sensors. They can pull data from readings on trucks and within internal storage units to constantly monitor products as they move across the supply chain.
Once an organisation builds a map of their supply chain, they’ll have the visibility needed to spot trends, identify risks, and locate potential areas where they can enhance performance. With a detailed supply chain map, businesses can pinpoint any risk areas or bottlenecks that they should take action to overcome.
As supply chain management technology has improved, there are now several visual tools to make the process of mapping and monitoring the supply chain easier than ever before.
Traceability: From Source to Consumption
Traceability in the supply chain is the ability of a business to document the movement of products and supplies from their sourcing to the final moments of contact a business has with them in the delivery stage. Full traceability means that a business can identify every stage that a product or material goes through, leveraging real-time technology to always know where products are in their journey.
Businesses should strive for full traceability, as this helps them to certify that all stages of their supply chain are ethical and follow the best practices for sustainability. Traceability is also vital for regulatory compliance, product safety, and risk management.
There are several different models of traceability that businesses can use to enhance this aspect of supply chain visibility:
- Product segregation: Product segregation is where non-certified and certified products are never mixed. This is a preferred method of traceability, as all of your final products can be 100% traced back to their origin, as they have never mixed with non-certified products.
- Mass balance: Mass balance is a form of supply chain traceability that compromises on fully traceability and instead mixes certified and non-certified materials. This approach is less favourable in the modern age, as not 100% of the final product can be said to be fully sustainable or ethically sourced.
- Book & claim: Book and claim is a system of enhancing the supposed sustainability of a product by buying environmental credits. The actual flow of your product may not be sustainable, but as a company has bought sustainability credits, they can offset their production to claim a net positive. This is becoming more frowned upon as customers seek more sustainable alternatives.
To enable these systems, businesses can use several underlying technologies like GPS, blockchain monitoring, RFID tags, barcodes, and other traceability software. The key to establishing an effective traceability system is to be consistent across the entire supply chain.
Some businesses that produce physical products may find barcode scanning the most effective way of monitoring the movement of products through different stages of the supply chain. On the other hand, a business that deals extensively with raw materials may find a blockchain system more effective to pinpoint the movement of supplies.
Transparency: Sharing Information Responsibly
Transparency is another central pillar of supply chain visibility. It refers to the overall level to which a company has visibility into its supply chain and the practices of the suppliers it relies on. For example, a company that has a transparent agreement with their suppliers should be able to affirm that they use 100% sustainable sourcing and labour practices.
Transparency also extends to customers, with businesses needing to share their practices with customers via product labels, social media accounts, blockchain platforms, and their company website. For example, 81% of people believe that social media has allowed brands to take on more accountability and enhance transparency through regular communication.
Businesses should aim to establish transparency with all of their suppliers, as this is the only way that they can achieve true visibility into their entire supply chain. For example, a supplier that may be experiencing labour shortages may be unable to complete a shipment. By knowing this ahead of time, an organisation can then draw upon other labour contractors and suppliers to ensure there are no delays to their entire supply chain.
Fostering a transparent supply chain culture is central to building trust with both stakeholders and consumers. The more information that connected parties have about your supply chain and its practices, the more confident they will be to continue working with you. On average, transparency also has positive sales implications for brands, with 53% of customers considering a brand for their next purchase if they are transparent on social media.
Source: Graph to show the impacts of transparency on consumer relationships to a brand.
Of course, transparency only goes as far as relevant information. Much of supply chain movements and tracing is private information, which is not directly shared with customers or stakeholders. Transparency does not create conflict with sensitive information, as this is still kept private to the company itself.
What Is the Relationship Between Mapping, Traceability, and Transparency?
Supply chain mapping, traceability, and transparency do not exist in isolation. On the contrary, each of these three strategies complements the others and helps to enhance the overall visibility.
Here’s why each of these three pillars matters:
- Supply chain mapping: Mapping provides a broad view of the supply chain, which businesses can then leverage to understand how products move through their supply chain and what suppliers are involved.
- Traceability: Traceability in the supply chain helps to ensure that every movement and transaction is closely monitored.
- Transparency: Transparency in the supply chain ensures that a company shares any relevant information with stakeholders and customers, enhancing trust and creating positive relationships.
Together, these aspects come together to create a holistic view of a supply chain. Each pillar provides additional insight that helps to establish full visibility into the supply chain. Alongside with new technologies that underpin each of these pillars, businesses are able to create comprehensive visibility into their supply chains that span across every stage, interaction, and movement.
Final Thoughts: Building a Future-Proof Supply Chain Through Visibility
Companies that invest in supply chain visibility are better prepared to handle the risks that managing a supply chain can pose. With full visibility into the functioning and movement across a supply chain, organisations are better situated to improve efficiency, meet regulatory demands, and adapt to consumer expectations.
Mapping, traceability, and transparency are the cornerstones of enhanced visibility. Focussing on these areas helps to build a comprehensive oversight of the supply chain and allows businesses to future-proof their supply chain.
Prewave is at the forefront of supply chain visibility, helping businesses navigate the complexities of global supply chains with its AI-driven risk management platform. It’s ability to map, determine risk levels, and provide full visibility into every aspect of the modern supply chain makes Prewave the leading choice for supply chain stability.
By adopting Prewave, companies can future-proof their operations and meet the growing demands for transparency, traceability, and sustainability. Reach out to the team at Prewave today for a demo.
