The amount of inventory in the pipeline has increased dramatically as have landed costs as a result of changes in global supply chains – competition, ongoing business transformation, increased lead times and complexity.
Clearly, reducing these costs is a critical issue for organisations. But simply getting visibility of the supply chain is essential to tackling these issues. Visibility is often seen as the holy grail in supply chain, but it has become increasing difficult to achieve as supply chains have got longer and more complex.
New research from Aberdeen Group, “Supply chain visibility excellence: reduce pipeline inventory and landed cost”, looks at the best and worst performers and comes up with some surprising figures.
Complete and on time delivery at best-in-class companies is 15 percentage points higher than the laggards. There is also a 13 percentage points greater reduction in year-over-year unit landed costs, the study shows.
In particular, it found that best-in-class companies were 1.5 times more likely to treat in-transit inventory as available inventory for safety stock calculations. They were also 46 per cent more likely than all other companies to have online visibility in to accrued supply chain costs.
In addition, they were almost three times as likely as the laggards to use commercial business intelligence or transport management systems for supply chain visibility.
Clearly, those figures alone suggest some avenues for action to improve visibility, but there is another element that Aberdeen highlights – collaboration.
I have argued the case for greater collaboration in the past – now there is another reason to build collaborative relationships.