The value in visibility

You know the importance of knowing where your shipments are. But how do you know you’re getting everything you can from your supply chain visibility system? Deborah Aarts goes in for a closer look.

“Shippers have a far more voracious appetite for it than they used to.”

So says Mike Ham, vice-president of Shaw Tracking, explaining his customers’ interest in tracking and tracing their cargo.

It’s a symptom of our information-overload culture. With a tremendous amount of data readily available, why wouldn’t you want to know everything you can about your shipments?

It may seem a no-brainer, but it can be hard to build a business case for visibility systems. They aren’t cheap to install and add no immediate benefit to the bottom line. But if you choose a system that suits your operation and use it to its full potential, you may find it’s less a cost centre and more a business booster.

Find out what you want to see
The range of track and trace solutions available is dizzying. Real-time location system (RTLS) nodes, GPS units and other telematic tools can tell you precisely where your cargo is. RFID can let you know its origin, transit history, stops and destination. Even barcodes can be configured to aggregate item information down the chain.

Vendors are coming up with more sophisticated ways to incorporate visibility technology into existing supply chains. These tools play a critical role in modern commerce. But how do you choose one that best complements your business?

John Keogh, senior vice-president of EPCglobal Canada and traceability at GS1 Canada, says you should start by identifying the improvements you want to make.

“When we look at the benefits of applying the technology, there’s probably four pillars of value creation that we slot a lot of things under,” he says.

“First, can it help me to increase revenue? Second, can it help me to reduce cost? Third, can it help me optimize assets? And fourth, can it help me reduce risk?”

If you want to answer all four questions in the affirmative, you’re going to want a solution with plenty of detail and extra functions. But if you simply want to know that your product is where it should be, a basic tracking suite with simple “where and when” reporting might suffice. The key is to balance the level of visibility you need with your ability to achieve it in a cost-effective way.

Find out what else it can do
Even if you find a system that perfectly matches your operation, it is still difficult to measure the value of traceability.

This is where it helps to consider what a system can do beyond reporting on location. Many visibility solutions have extra capabilities that users don’t know exist. Some systems can be configured to monitor the temperature of shipments, for instance. Others can keep track of fuel mileage, facilitate border pre-clearance, trigger alerts for security breaches and aggregate past trip information to plan more efficient routes. Others still provide reporting capabilities that can be tailored to meet government regulations. If your operation is lacking in any of these areas, the solution might already be in place—and already paid for.

You can also use your traceability system as a way to hold your carrier accountable. If shipments arrive consistently late, or sit idle for too long, or are exposed to unsafe temperatures, a good track and trace system will log it, meaning you can confront your carrier with hard, cold stats.

“Carriers recognize that they will be measured, and carriers themselves benefit from it,” says John DeBenedette, vice-president, commercial at INTTRA, a US-based firm that provides a visibility platform for ocean carriers. “They can have a much more meaningful conversation with shippers if they’re both looking at the same reports.”

But the knife can cut both ways. As Ham points out, if you’re going use data to call out your carrier, you’d better be prepared for your carrier to do the same if you’re not keeping your end of the bargain.

These elements make it easier to attach value to track and trace, and will come in handy when it comes time to explain to head office how your new visibility system will save money.

“A CFO or a CEO will say ‘if I put a 20-cent tag on a product, that takes 20 cents out of my profit,’” Keogh says. “But that 20-cent tag probably takes 40, 60 or 80 cents out of costs in a complete supply chain. The end-to-end supply chain part is not fully appreciated.”

If dollars and cents aren’t enough, talk about control. At a time when poor traceability has been responsible for more than one high-profile recall, this could be the most potent argument for investing in visibility. Companies that understand this will be stronger for it, says Bob Neagle, business unit manager at Videojet Technologies Brand Protection Solutions.

“It’s a very powerful tool to be able to look, at an individual product level, at how something moves from your packaging line all the way to the customer.”