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What Exactly is Supply Chain Visibility, Anyway?
Simply put, Supply Chain Visibility (SCV) means knowing what's happening with your parts and materials every step of the way, in real-time, from raw goods straight through to finished products. For electronics, where the supply chain is a global multi-tiered system and just one part can halt production, SCV is extremely important to keep everything running smoothly in an emergency.
In fact, a recent survey showed visibility was the top headache for about 22% of supply chain leaders. Basically, lots of folks are flying blind, and they're definitely not enjoying it.
The Consequences of Poor Supply Chain Visibility
Remember when the whole world ran out of semiconductor chips? Here's what happened: automakers assumed COVID-19 would crush car sales, so they canceled chip orders. Meanwhile, people stuck at home went gadget-crazy, snapping up all available chips. By the time automakers realized their mistake, semiconductor factories were maxed out. Ouch. That little miscalculation cost the automotive industry over $210 billion in 2021 alone.
McKinsey & Co. reports supply chain disruptions lasting more than a month occur every 3.7 years on average and cost companies up to 45% of annual profit over 10 years.
If those automakers had visibility into their lower-tier suppliers, they probably wouldn't have been blindsided. Even companies as sophisticated as Infineon Technologies learned the hard way: visibility has become essential.
And it’s not just supply shocks. Lack of visibility affects almost every aspect of electronics manufacturing. Consider product obsolescence, a constant headache in electronics. Without proper visibility, you might not know that a critical component is being phased out until it's too late. Suddenly, you’re scrambling to find an alternative or paying sky-high prices on secondary markets.
Geopolitical risks add another layer of complexity. A surprising number of electronics components depend heavily on specific regions or single suppliers. A flood in Thailand, a trade dispute involving Taiwan, or even minor political shifts can rapidly turn into major disruptions. Without visibility, companies find themselves caught off guard, facing production halts and delayed deliveries.
Even counterfeit components become a bigger risk without proper SCV. When shortages hit, some companies turn to gray-market suppliers, unwittingly opening doors to counterfeit or substandard parts. These fake components can cause catastrophic failures, particularly in critical fields like aerospace, defense, and medical devices.
Bottom line? Not having SCV is like walking through a minefield blindfolded. Eventually, you're going to step on something nasty.
Why Electronic Component Supply Chains Are Especially Fragile
Electronics supply chains are global, multi-tiered networks that are remarkably fragmented webs. Fabricating a typical component involves dozens of suppliers and transits 3-5 countries over 5-6 months. For instance, a smartphone’s supply chain spans from minerals mined in Africa, to wafers fabricated in Taiwan, to test in Vietnam, to chip packaging in Malaysia, to assembly in China, and finally distribution worldwide.
Read More: Supply Chain Resilience - A Matter of Time
Visibility is How You Win The Race
Whenever a disaster or disruption occurs a race starts. The good news is it will take your rivals two weeks on average to respond. Are you ready?
Quickly Handling Chaos
Take Cisco, for example. When a massive earthquake hit Japan in 2011, Cisco used its visibility tools to quickly figure out exactly which of its 300+ suppliers were impacted within just 12 hours! Thanks to their speedy reaction, Cisco avoided a major financial hit. Imagine having that kind of superpower at your fingertips.
Navigating Shortages Like a Pro
Toyota also mastered SCV after the 2011 Japan quake. They proactively mapped out their suppliers and started stockpiling critical components. When the semiconductor shortage hit in 2021, Toyota fared much better than most, because they already knew exactly where their vulnerabilities were and had backup plans in place. This proactive approach minimized disruptions, even when competitors were shutting down factories left and right.
Getting Your Forecasts Right (Finally!)
Guesswork is the enemy of efficiency. Companies that boosted visibility between suppliers and retailers improved their fill rates (that's the measure of how often they had what customers wanted) by as much as 80%. Better visibility means better forecasts, fewer sleepless nights, and happier customers.
Preventing Disaster with Better Visibility
Flex, one of the world's largest electronics manufacturers, implemented a visibility platform called Flex Pulse, aggregating data from thousands of suppliers and parts. When COVID-19 hit, Flex quickly identified at-risk components and rerouted supplies. This kept production lines moving, even amidst global chaos. Without SCV, this would have been nearly impossible, and many more factories would have experienced downtime.
Avoiding Counterfeit Nightmares
Counterfeit parts in defense or medical devices? Yikes, that's scary stuff. Intel tackled this head-on with their Transparent Supply Chain program, digitally tracking every single part to ensure authenticity. No more worrying about dangerous fakes sneaking into critical equipment.
Read More: Supplier Collaboration in HMLV Electronics Manufacturing
Real Talk: Visibility is Harder Than it Sounds
It all sounds awesome, right? But visibility can be tough to achieve. Here's why:
- Ancient Systems: Many companies still use software from the Stone Age. Upgrading isn't just expensive; it's complicated.
- Suppliers Getting Shy: Not every supplier is excited about opening their data to others. Maybe they're worried about competition or simply don't have the tech infrastructure.
- Cybersecurity Jitters: Visibility tools are fantastic, until they get hacked. Security is a legitimate worry, especially in sensitive industries.
But don't panic yet! Cloud platforms, blockchain technology for enhanced security, and industry-wide standards are gradually removing these barriers.
What's Next for SCV?
SCV isn't standing still, there are exciting things happening:
- Sustainability and ESG: Now, visibility includes measuring environmental and ethical impacts. Being green matters, and customers love companies that care.
- AI Predicting the Future: AI-powered supply chains will soon predict disruptions and suggest solutions proactively.
- Blockchain Taking Center Stage: Blockchain is now helping secure supply chains by providing tamper-proof records, greatly reducing risks.
- SCV + e3PL: By combining industry leading supply chain visibility software with electronic component focused 3PL (e3PL) Cofactr is leading the way for electronic hardware manufacturers.
Read More: Supply Chain Resilience (SCR) Simplified
Want to make this easy? Schedule a free, no obligation Cofactr demo to see how we can help you automate price evaluation, component swaps, and much more.