A customer calls and asks when their order will be ready. To answer, you first need to know when the raw material will arrive, and no one has that information.
The supplier is called, a response is given a few hours later, and an estimated date is provided. This cycle repeats with every order, wasting a significant amount of time.
In this article, we discussed how to increase visibility in the supply chain, delivery date tracking, delay alerts, and its impact on planning.
Table of Contents
What does visibility mean?
Supply chain visibility is knowing where placed orders are and when they will arrive.
True visibility can be spoken of when this information can be read from the system without calling the supplier.
The value of visibility lies in reducing uncertainty. Uncertainty forces you to add a safety margin at every stage.
Every added safety margin ties up capital and increases costs.
Records are kept in the supply module and work integrated with purchase orders.
Delivery date record
The foundation of visibility is having a due date on every purchase order line.
Two different dates must be tracked: the date we request and the date committed by the supplier.
The difference between these two indicates whether the planning is realistic.
In orders placed without a supplier commitment, the date is just a guess and planning should not be based on it.
Date changes must also be recorded; how many times a date was postponed is crucial performance data.
Order statuses
Order statuses are a simple framework showing where the order is in the chain.
Typical statuses are: approved, sent to supplier, in production, shipped, received.
The number of statuses should be kept moderate; making every single step a separate status multiplies the update burden.
It must also be clarified who will perform the status updates.
Statuses that are not updated quickly render the system unreliable, and everyone resorts to making phone calls again.
Delay alerts
The real benefit of visibility is catching the problem before the delivery date.
Alerts should be set up for orders whose due dates are approaching and whose status has still not progressed.
This alert serves as a reminder that confirmation is needed and prevents surprises.
Orders with past due dates should be gathered in a separate and priority list.
For critical materials, the alert lead time should be kept longer; finding alternatives takes time.
Supplier communication
Visibility cannot be established unilaterally. The supplier needs to share information.
The regularity and predictability of this sharing indicate the quality of the relationship.
Weekly due date confirmation is an adequate routine for most businesses.
A supplier who notifies about a delay in advance is more valuable than one who delays and fails to inform.
This behavior should be included in performance evaluations; supplier evaluation see the article.
Partial deliveries
Receiving a portion of orders is a common situation in the supply chain.
In this case, the order should not be closed; the remaining quantity should be tracked as open.
A new due date must be obtained for the remaining quantity; balances left unspecified are forgotten.
Partial deliveries also affect planning; the question of whether production can be done with the incoming quantity must be evaluated.
Suppliers making continuous partial deliveries may be experiencing capacity issues and should be evaluated separately.
Impact on planning
As visibility increases, planning becomes more realistic and safety margins can be reduced.
Reliable due date information ensures that the production plan is established according to material arrival.
This also reduces idle production capacity and shortens delivery times.
Stock levels can also be reduced; as uncertainty decreases, the need for safety stock diminishes.
Material planning raw material requirements discussed in the article.
Reflection on the customer
The most concrete benefit of supply visibility is keeping promises made to the customer.
Giving a realistic delivery date is always better than giving an optimistic date and being delayed.
When delay is inevitable, giving early notice significantly reduces complaints.
This information can only be transmitted on time if there is visibility on the supply side.
Customer communication delivery time and customer communication discussed in the article.
Measurement and improvement
The impact of the visibility effort can be measured with a few indicators.
On-time delivery rate is the most fundamental indicator and directly reflects supplier performance.
The number of delivery date changes shows how much the planning has been shaken.
The duration of material-induced production stoppages reveals the ultimate impact.
Monitoring these indicators periodically ensures the verification of improvement.
Points to consider
Failure to update status information is the most common cause of failure in visibility projects.
Therefore, the number of statuses should be kept low and the responsibility for updating must be clear.
Accepting dates received from suppliers without questioning is also risky; past performance must be taken into account.
If alerts come too frequently, they lead to being ignored and render the system dysfunctional.
Visibility is not a software feature, but a matter of recording discipline; technology only makes it easier.
Steps to increase visibility
It is not necessary to start a visibility effort with a massive project; a few small steps make a noticeable difference in a short time.
The first step is to make entering a due date mandatory for every order line. This single rule makes it possible to sort open orders by date.
The second step is to keep the supplier commitment in a separate field. Thus, the date we request and the date actually promised do not get mixed up.
The third step is to establish a weekly confirmation routine. A quick check for orders whose delivery date is approaching prevents most surprises.
The fourth step is to collect delayed orders in a separate list. When this list becomes a screen checked every morning, follow-up works naturally.
The final step is measurement; when the on-time delivery rate starts to be monitored, improvement also becomes verifiable.
Frequently asked questions
Can the supplier update the status?
We evaluate the scope of the supplier portal during the setup phase; initially, updates usually remain within the internal team.
How many statuses is it appropriate to define?
Four or five statuses are sufficient for most businesses; any more makes the update burden unsustainable.
Can import orders also be tracked?
They can be tracked; customs and shipping stages can be defined as additional statuses.
How are open orders reported?
Lists sorted by delivery date are generated; open order tracking see the article.
Supply visibility is a system that reduces both inventory costs and lead times by decreasing uncertainty.
Keep requested and promised dates separate; the gap between the two reveals the realism of planning.
Keep the number of statuses low; an unupdated status field makes the entire system unreliable.
Set up alerts before the due date; once a delay is discovered on the delivery day, there is nothing left to do.
Record due date changes as well; how many times a date has been postponed tells you more about a supplier than their price.
By consulting the EQLEM team you can set up your supply tracking.