Supply chain visibility is a growing priority for chief executives dealing with increasingly complex and brittle logistics networks.
The value of intermediate goods — those used to make other goods — traded internationally has tripled since 2000 as companies have expanded across borders, according to a McKinsey study.
The Covid pandemic demonstrated how fragile some of these international supply chains were, with rapid shifts in demand leading to production bottlenecks and shortages. Yet there is every sign that supply chain disruption is becoming more common, whether due to worsening weather, natural disasters, cyber attacks or supplier failures.
Supply chain visibility, which is the ability to monitor every item as soon as it leaves a warehouse or production line, “is getting more crucial”, according to Markus Mau, president of the European Logistics Association, a federation of national logistics networks. Having this information to hand allows businesses to pre-empt and minimise the impact of future disruption, as well as meet customer demand for cheaper and faster deliveries.
Regulations such as the EU’s Corporate Sustainability Due Diligence Directive and the US’s 2021 Uyghur Forced Labor Prevention Act also mean companies need to know more about how and where their products were made.
GPS trackers and RFID tags have been around for decades, and big logistics companies typically use Transport Management System (TMS) software to track shipments, but these older technologies have their limitations. They tend not to offer visibility across borders and modes of transport, while TMS software can be slow and difficult to integrate with other systems.
At the same time, the logistics sector still relies on manual processes, which are slow and error-prone. Outdated infrastructure and technology silos, both within companies and between companies and their suppliers, prevent managers from proactively minimising risk.
“Traditional supply chain visibility is broken,” says Chitransh Sahai, co-founder of GoComet, a logistics software start-up based in India. It is part of a new crop of supply chain visibility providers that are using emerging technologies such as AI and machine learning to provide customers with accurate data insights and end-to-end visibility.
Many of these companies seek to offer a “control tower” view of the supply chain, amalgamating and making sense of disparate data points on one platform.
“Not only can you see the [estimated arrival time] and the location of all real-time goods, but you can also understand where there are gaps in your network. And then we can provide recommended actions on how to fix those,” says Eric Fullerton, vice-president of product marketing at Chicago-based software provider Project44.
Visibility software helps companies to plan ahead by providing real-time data on inventory levels, order documentation and shipments. This information can be used to reduce lead times (and thus the likelihood of penalties), optimise inventory, reduce waste and predict customer demand.
“Anyone can capture data, only a few of us can actually make sense of that data, clean it, make it high quality, so that actionable predictions come out,” says Anand Medepalli, chief product officer at Paris-based software provider Shippeo.
The software also helps companies to respond quickly to disruption by flagging potential issues and recommending alternative products, suppliers or transport routes. Some employ technologies that can create a digital replica of the supply chain to simulate and plan for different scenarios, such as a port closure, disruptive weather or new tariffs.
Many software providers are using generative AI, which can process larger sets of data than previous forms of machine learning. German software giant SAP has said that generative AI has the potential to explain unclear recommendations made by current AI systems. Digital ledger technologies, such as blockchain, have also emerged as potentially useful tools to trace the raw materials, components and goods that move through supply chains.
Yet while the pandemic triggered an uptake in supply chain tracking technologies, according to a 2024 survey by the Business Continuity Institute, a membership organisation for industry professionals, true end-to-end visibility remains a distant prospect.
Although 60 per cent of companies claimed comprehensive visibility of their direct suppliers, only 30 per cent said they had visibility further down their supply chain, according to McKinsey. “There are no large corporations anywhere on the planet that have total supply chain visibility,” says Ken Lyon, technology consultant at Transport Intelligence, a research institute.
Many companies have been left disappointed by the technologies, partly due to overpromises made by providers. “A lot of vendors saw the opportunity and hype that was around supply chain visibility, especially around Covid. As that was happening, the technology was still maturing, and I think many got a little bit ahead of their skis,” says Fullerton from Project44.
ManMohan Sodhi, a professor of operations and supply chain management at Bayes Business School in London, says that logistics professionals’ perceptions of new technologies are often misguidedly based on their own supply chain needs, rather than what each technology can do.
Many small businesses, particularly outside Europe and the US, do not have the resources or incentives necessary to provide visibility data. Full transparency could mean that the company at the end of a supply chain would use that information to “soak up all of the profits, leaving its suppliers with just the dregs,” says Sodhi.
“Technology is not the bottleneck here. It’s the motivation of the companies in the supply chain,” says Sodhi.
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