Businesses with complex, global supply chains are desperate for greater visibility, and as trading partners continue to adopt digital solutions, that visibility is now within arm’s reach.
But today, supply chain visibility goes beyond being able to decipher where a shipment is at any point in time. David Cahn, director of product marketing at supply chain management firm Elemica, said the definition of “visibility” now expands beyond order tracking and into areas like payments tracking, supplier management and even visibility into the future via predictive data analytics.
But heightened supply chain visibility, especially for companies within process industries, can remain stubbornly elusive, for a laundry list of reasons.
“That visibility between trading partners is challenging because they all use different, disparate types of systems,” Cahn recently told PYMNTS in an interview.
Take the physical movement of goods, for example. One supplier may use several different logistics providers, across rail, road and water, to move goods. Each of those logistics providers uses a different system to track those goods.
“It’s not like Amazon, where an order is sent to FedEx or UPS, which own all of their trucks,” Cahn said. The hurdle here, he explained, is being able to take information from the supplier, the freight carrier, the trucker and so on, and to not only collect it into a single portal, but to piece that information together in the right sequences.
But it gets more complicated.
Other data sets beyond physical location have to be taken into account in order for a company and its supplier to understand when and how a shipment will arrive. Today, that could include anything from weather patterns to geopolitical activity.
“They all impact the shipment. You have all of these different kinds of risks that must be mitigated and managed so companies can react,” the executive said. “You have disparate systems that need to be correlated and sequenced together, and at the same time, you have different risks throughout the supply chain that need to be managed affectively.”
But wait – it gets even more complicated.
As supply chains globalize, the ability to gain visibility into the movement of money between parties is also becoming an increasingly important concern for trading partners, while FX risk mitigation is similarly shielding that transparency.
“We’ve run surveys with our customer base and their suppliers,” said Cahn. “Even if they know where materials are, where is their payment?”
Indeed, research released by SWIFT last month found that 64 percent of corporate treasurers say real-time payment tracking across borders is a top priority today. That need is pushing businesses to integrate technologies into their supply chain management systems to match payments, invoices and POs, for instance, for automated reconciliation. However, Cahn noted that, at least when it comes to Elemica’s offerings, there is room for growth in terms of the ability to actually integrate payments processing into overall supply chain management tools.
The potential for heightened transparency of payments across the supply chain can similarly provide an air of predictability to cash flow, just as transparency of the movement of goods can help predict delivery and supplier performance, said Cahn.
“If you were a supplier for me, and you were consistently on time, provided the right quality and were overall a good supplier, I may be able to negotiate earlier payment terms,” he explained. Instead of net 45, a business may agree to pay more quickly, meaning the buyer can capture an earlier payment discount while the supplier can accelerate the order-to-cash cycle. This scenario is only possible when technologies that support automated, streamlined data management are in play, however.
“The manual process of receiving an invoice into an accounts payable system and approving it for payment is, many times, longer than the discount period,” the executive noted. “So, by automating that function and integrating it into the payables system, you can shorten that cycle – you can pay faster and take advantage of more discounts.”
Such automation can similarly reduce invoice processing and reconciliation errors, too, he added.
Technologies like machine learning and other tools with predictive capabilities can certainly heighten transparency across the supply chain. But considering how many parties are involved in global trade, from buyers to suppliers to banks to logistics players, supply chain visibility isn’t about digitizing processes, it’s about ensuring everyone can get connected.
In that way, Cahn said, he sees potential for other sophisticated technologies, like machine learning and blockchain. Elemica recently launched its Pulse solution, which deploys machine learning to consolidate data across supply chain players into a single place, categorize and sequence it, and provide transparency and predictability to supply chain processes, such as the order-to-pay cycle and order delivery.
According to Cahn, it’s a solution that is part of a broader industry effort to deploy cutting-edge technologies to address the multitude of barriers to supply chain visibility.
“It’s not that machine learning is new, it’s that it’s relatively new to the supply chain,” he said. “It requires a lot of correlation between trading partners and the data beyond an organization’s own four walls. Pulse is a business-to-business integration, rather than an integration within the four walls of a single organization.”
While Elemica isn’t deploying blockchain in its solutions just yet, Cahn said it’s not necessarily off the table.
“I don’t think it’s overhyped,” he stated. “It’s the concept of connecting networks together, and that’s something we’ve been doing for years. What’s interesting about blockchain is the different types of connections to networks that’s happening. You have Internet of Things, sensor devices, different modes of input into a network around supply chain material movement, weather patterns, geolocation information from carriers and currency fluctuations from banks.”
In a survey released by Capgemini and GT Nexus, 94 percent of respondents said supply chain visibility tools are a key driver of the overall technological evolution of the supply chain. Whether it’s blockchain or another type of technology that collects, streamlines, sequences and analyzes this data to deliver that visibility, solutions have to be agile enough to perform these tasks across business partners. That capability, said Cahn, will yield benefits for all players in the supply chain.