The biggest challenge for logistics companies is visibility

In the past four years, we have seen an unprecedented change being driven in the supply chain and warehouse industry. Global events like the pandemic shifted people’s shopping habits to online, causing excess demand for suppliers, coupled with geopolitical issues and conflicts that have meant supply chains are no longer built for efficiency, but rather for resilience.

The modern warehouse is a hub for consistent, around-the-clock action with goods moving in and out at an ever-increasing speed. Inconsistencies and gaps in the level of goods in the warehouse can lead to dissatisfied customers and staff attrition if they are sent on a wild goose chase to look for an item that’s not in the right location. Due to the number of challenges relating to demand forecasting, supplier relationship management, production efficiency, inventory management and technology integration, there is a need for seamless collaboration among different systems.

The role of visibility in supply chains

The warehouse management system (WMS) is typically seen as the single source of truth in the warehouse, but often goods can be misplaced, or available stock has been counted wrong, often through manual processes or because the space in the warehouse has not been optimally utilized. This, in turn, leads to gaps in visibility within the warehouse and can often lead to inaccurate information being available to operators.

Moreover, in the modern business environment, competition is tighter, and having accurate information available can make or break a business. Therefore, visibility plays a crucial role in achieving resilience within operations.

Visibility refers to the ability to track and monitor the movement of goods, information and resources across various stages in real-time. It is about gaining a comprehensive view that extends from suppliers to end customers. This in turn will give businesses a competitive edge. However, only six per cent of logistics companies can claim full visibility over their operations.

To achieve full visibility of warehouse operations, businesses need to be able to track and monitor each stage of goods moving in and out in real-time. This helps to build resiliency into operations, by providing insights, enabling proactive decision making and fostering collaboration among supply chain partners. Achieving this provides a holistic view, allowing organizations to identify bottlenecks, optimize processes and enhance overall efficiency. In logistics and warehousing, the ability to track inventory in real-time, monitor shipments and manage warehouse operations with precision is a testament to the power of visibility.

Identifying blind spots

The visibility gap affects the entire supply chain, and we often find the warehouse becomes the focal point when visibility falters. Warehouses are ultimately busy hubs of activity where people, processes, machinery and customers share the same space.

They are often susceptible to visibility issues, especially concerning accurate inventory tracking, stock levels and potential discrepancies between recorded and actual stock. The complexity of warehouse operations underscores the importance of enhanced visibility solutions to address these challenges and ensure a seamless flow of information throughout the supply chain.

One of the fundamental challenges in addressing these blind spots lies in understanding what data needs to be collected. In modern business, vast amounts of data are generated daily from different sources, making it complex to identify and gather the most relevant and valuable information.

Acquiring data is just the first step in identifying blind spots. The real value of data lies in translating it into insights and actionable strategies to help move the business forward.

Understanding the visibility gap

Modern logistics operations are intricate and involve a vast number of stakeholders from transportation providers to distribution, which means gaining and maintaining full visibility is challenging. Many businesses also operate with fragmented and legacy systems where data lives in silos and across different platforms. Usually, these different systems don’t talk to each other, which leads to difficulties in tracking and monitoring operations in real-time. To obtain full visibility, businesses need to ensure a seamless flow of data.

The root cause of the visibility gap is related to data. Several factors cause the fragmentation of data, but three main reasons are:

1. Fragmented systems: Many organizations operate with disjointed systems, creating data silos that hinder the seamless flow of information across the supply chain.
2. Inefficient communication and human error: When critical information isn’t shared promptly or accurately, it creates gaps in visibility and exacerbates operational challenges. Similarly, human error can cause issues through something simple such as a misplaced box in the wrong pallet location or entering it incorrectly in the WMS.
3. Legacy technologies: Outdated or incompatible technologies can impact the real-time exchange of data. Legacy systems often lack the capabilities needed to keep up with the dynamic nature of modern supply chains.

Implications of the visibility gap

Now that we understand where the visibility gap comes in, we need to understand its implications for the business. As outlined, visibility is the fundamental pillar for achieving and maintaining operational effectiveness. Lack of visibility can lead to many risks and inefficiencies.

These inefficiencies have real-world business implications that include, but are not limited to:

1. Increased operating costs: Without a clear view of the supply chain, businesses may face increased operational costs due to inefficiencies, excess inventory and disruptions. This, in turn, affects the overall profitability of the organization.
2. Customer dissatisfaction: In today’s consumer-driven market, customers expect timely and accurate deliveries. The visibility gap can result in delayed shipments or stockouts, leading to dissatisfied customers and potential damage to a company’s reputation.
3. Risk exposure: Lack of visibility makes it challenging to identify and mitigate risks effectively. Whether it’s geopolitical issues, natural disasters, or disruptions in the supply chain, organizations with limited visibility are more susceptible to unforeseen challenges.

Closing the visibility gap

In warehouse management, an average of 6,500 hours are dedicated annually to seemingly straightforward tasks such as cycle counts and stock checking. Even though the number of hours is staggering, it isn’t enough. Data is only gathered in partial fragments at any one time and due to the dynamic nature of warehouses or the supply chain, the fragmented data snapshots become outdated quickly. This usually leads to many businesses thinking that their accuracy is better than it is in reality.

But how do companies close the visibility gap? Below are some recommendations for closing this gap in the supply chain.

1. Real-time data: Gathering real-time data allows businesses to gain a holistic view of all their operations and ensure that the data matches the WMS to quickly point out any discrepancies in the system. Organizations must invest in integrated systems that provide instant updates on inventory levels, order status and shipment tracking.
2. Advanced analytics and predictive monitoring: Leverage advanced analytics and predictive modelling to anticipate demand fluctuations, optimize inventory levels and identify potential bottlenecks in the warehouse. By utilizing AI-powered solutions for analytics, businesses can generate more insights and visibility with more data. This is particularly important as it allows businesses to make the decisions on operations as they are, not how they thought they were.
3. Invest in technology infrastructure: Allocate resources to upgrade and integrate technology infrastructure within the warehouse. This includes implementing WMS, Internet of Things (IoT) devices and cloud-based solutions to streamline operations and enhance real-time visibility.
4. Prioritize collaboration: Foster collaboration with suppliers, manufacturers and distributors. Implement shared platforms and standardized data exchange protocols to ensure seamless communication and information flow throughout the supply chain.
5. Employee training and change management: Recognize the importance of employee training to optimize the use of new technologies. Implement change management strategies to ensure a smooth transition and acceptance of new processes, minimizing resistance and maximizing efficiency gains.
6. Continuous improvement: Establish a culture of continuous improvement within the warehouse. Regularly assess and refine processes based on data analytics and feedback loops, ensuring adaptability to evolving market conditions.

The visibility gap poses challenges to businesses in a complex environment. Supply chain professionals need to embrace innovations that allow them to close this visibility gap through a continuous stream of real-time data.

To overcome the challenges of data collection and address warehouse complexities, businesses need to look into deploying advanced technologies that allow them to enhance operational efficiency. Similarly, there is a need to also emphasize end-to-end visibility and data accuracy that will ensure continuity and resilience, while also serving as a strategic tool for proactive decision-making.

Oana Jinga, chief commercial and product officer and co-founder at Dexory.