Piercing supply chain visibility fog for the next efficiency frontier

We observe that executives trying to obtain an end-to-end view of their company’s supply chain are often faced with a landscape mostly covered in fog – an incomplete, fragmented, and sometimes incongruent picture of what is occurring. Data may reside in disconnected, siloed systems, and many processes, such as external logistics or the current state of suppliers’ and customers’ operations, are opaque.

Imagine a world where supply chain executives could make decisions having full visibility not only within the “four walls” of internal operations but also beyond, including suppliers, partners, and customers. This opens a whole new range of operational efficiencies, for example, cross-department synergies to maximize overall business benefits, proactive decision-making to anticipate demand, and win-win collaboration strategies to secure supplies.

On the other hand, having limited visibility negatively impacts customer service, slows down reaction to market events, and, eventually, deteriorates the bottom line. For example, companies are often given expected delivery dates for inbound inventory when their items are shipped, without visibility or assurances that they will arrive in full on the promised day and time. In the absence of real-time visibility, companies are forced to be reactive rather than proactive. Rather than launching mitigating actions when the risk of a delay or disruption in their supply chain becomes apparent, they are left trying to remedy the situation after it is far too late.

This “flying blind” approach was already problematic in business-as-usual times when operations were less problematic. In times of the unprecedented supply chain disruption we have been experiencing over the past three years – including port closures, severe shrinkage of available air cargo volumes as passenger travel receded, the blockage of the Suez Canal, and the reverberations of the conflict in Ukraine to name but a few – supply chain visibility is critical for business continuity. In this blog post we will show ways and benefits of using cloud technology for supply chain visibility.

Cloud technology for supply chain visibility

Cloud-based visibility solutions are rapidly transforming the capabilities of companies to visualize their supply chains. End-to-end visibility technology aims to bring together (near) real-time data regarding production, inventory levels, purchase orders, and movement of goods throughout an organization’s supply chain into a single, integrated “pilot’s cockpit”, allowing supply chain professionals to make better business decisions.

Cloud-based end-to-end visibility solutions unlock a whole new spectrum of capabilities:

• Descriptive. Descriptive solutions aim to answer the most fundamental visibility question, “Where is all my stuff, and what is currently happening in my supply chain?”. Such solutions pull together data from a variety of sources, such as enterprise resource planning (ERP) systems, transport management systems (TMS), and partner data (which may still be in the form of spreadsheets), into a unified data model that can be visualized. To do this, data must be ingested from previously siloed sources, securely stored, harmonized, and visualized. AWS has a range of technologies that can help with this process, from ingestion services, such as Amazon AppFlow, to storage services, such as Amazon Simple Storage Service (Amazon S3), to tools that help with data manipulation, such as AWS Glue, and visualization tools, such as Amazon QuickSight. As an example, AWS worked with a major apparel retailer to create a solution that ingests data from suppliers across the supply chain, from the cotton farm to the final garment producer, involving hundreds of suppliers and multiple information systems, providing insights relating to sustainability practices and locational risks.
• Predictive. Predictive analytics go beyond the static snapshots above by examining the question, “Where will my stuff be in the future, and what will happen next in my supply chain?”. Estimated time of arrival (ETA) predictions made possible by machine learning (ML) technology and a variety of external data sources, such as traffic and weather data, fall into this category. For example, Aramex, a logistics, courier, and package delivery company, uses machine learning to predict shipment time, increasing the accuracy of delivery predictions by 74% and reducing customer call center volumes by 40%. Key services here from AWS include Amazon SageMaker, which enabled the highly efficient creation and deployment of ML models.
• Prescriptive. Solutions, including prescriptive guidance, go one step further and include recommendations to answer the question, “What do I have to do to reach my business objectives given the constraints of my supply chain?”. Such recommendations range from updating production plans to avoiding unplanned downtime due to material shortages to expediting freight to ensure on-time, in-full (OTIF) compliance. As an example, Accenture’s Intelligent Revenue and Supply Chain (IRAS) platform estimates the quantity of stock-keeping units (SKUs) that need to be ordered to stock key inventories during supply and demand fluctuations. Crucially, here a person is still making the final decisions while the machine recommends the “best” course of action.
• Automated: This final stage, which moves beyond the realm of creating visibility and into that of active management of the supply chain, involves automating the implementation of recommendations. To make this possible, visibility capabilities have to be paired with other systems, including advanced demand planning and inventory management solutions. As an example, one of India’s largest retailers uses AWS services to automate inventory replenishment by integrating with Oracle.

Benefits of supply chain visibility

The benefits of improved supply chain visibility are clear. With improved downstream customer visibility, companies can reduce revenue loss due to stock-outs while improving service levels and helping customers avoid potential late fees. Additionally, fewer customers enquiring about delayed shipments and greater ease of determining where those shipments are located lets companies redirect customer service efforts to higher value–generating activities.

The key benefits of improved upstream visibility are improved efficiency through increased resource utilization and reduced dwell time in logistics. For example, this improved visibility may reduce situations where a truck sits empty at a port for hours because the container it was meant to pick up is not ready yet. Better planning allows companies to optimize inventory levels and reduce safety stock, thereby freeing up working capital as well as physical storage space.

Supply chain professionals’ core goal of matching supply and demand given a set of constraints to meet their business objectives is enabled by visibility. By determining where operations are and are likely to be, supply chain practitioners will make better decisions, resulting in a more agile, robust, and performant supply chain, capabilities that are crucial for the current business environment.

Cloud technology makes such visibility solutions possible. Artificial Intelligence (AI) and ML technologies power analytical, predictive, and prescriptive capabilities. Internet of Things (IoT) integration enables tracking inventory using physical devices. The cloud also provides for greater ease of integration of external data sources.

This includes not only data from a company’s customers and suppliers but also carrier data and data from third-party providers. Data exchange with carriers can be implemented in a number of ways, including application programming interfaces (APIs), electronic data interchange (EDI) feeds, or telematics and mobile data capture.

Third-party data tends to be application-specific and can take many different forms. Companies relying heavily on sea freight look at vessel position or port congestion data. Meanwhile, for applications focusing on trucking, traffic and weather data may be most relevant. AWS has a host of services that can enable the harmonization of these disparate data sources so that companies can take advantage of their whole data ecosystem. For example, AWS Glue DataBrew service is useful for cleaning, preparing, and transforming the data to help downstream analytics applications easily query the data.

Each business’s cloud journey is unique, especially in the context of the supply chain, which is one of the most complex business functions from a data and systems perspective. However, there are a few common steps most businesses can take to improve visibility.

First, creating supply chain visibility through the cloud is not a “rip and replace” activity; it can be implemented alongside existing source systems. Indeed, these are the systems of record that provide the visibility data.

Second, visibility does not need to be obtained across the entire supply chain immediately; areas of focus can be determined. When starting, an area of focus can be determined by the ease of creating operational visibility versus the impact it will have on the business: start small, think big, and move fast.

Third, any cloud journey is not solely a technical journey. It is a business journey involving people, skills, and processes. At AWS and Amazon, we work backwards from the customer problem to determine which processes need reengineering, what new skills or training are needed, and what organization realignment is necessary to reach a “to be” end state. Following this, typical options include developing the skills in-house to create an AWS supply chain visibility solution, using partners (e.g., AWS Professional Services) to help build and maintain a solution, or using AWS partners for more off-the-shelf supply chain visibility products.

Conclusion

In this post, we showed how cloud technologies help improve visibility, enabling different types of business benefits for supply chain practitioners. Examples include operational efficiencies to improve the bottom line of the business and process efficiencies that help supply chain decision-makers outsource more standard decisions to analytics and automation and concentrate on the most value-added tasks.

Of course, technology alone is not a panacea. Establishing true end-to-end visibility also requires companies to think differently about upstream and downstream collaboration. To enable end-to-end visibility companies must invest in their strategic partners and think holistically about using data to create win-win situations. If you wish to explore how you could introduce more visibility into your supply chain and see its benefits in practice, please reach out to your account manager to set up a discovery workshop with the AWS Supply Chain, Transportation, and Logistics business unit.