Who’s Really in Your Supply Chain Network? 

There was a time when a business person’s Rolodex® was considered a treasure. Salesmen, PR agents, and many other professionals recorded names, addresses, phone numbers, and maybe fax numbers on 2 ¼” x 4” cards that were filed alphabetically on the wheel-shaped roll. For readers too young to know about this tool, it was first marketed in 1959 and was an iconic staple in every office. (Smaller versions were used at home.) Only a decade ago, we didn’t have synchronized address books, virtual social networks, and smartphones. You would have memorized most of your close friend’s and family’s phone numbers. (Can you say your home phone number from when you were a kid?) Or you used a Rolodex. 

I can only imagine what sourcing teams, buyers, planners, logistics managers, and other essential functional roles in supply chain operations would do to maintain a contact list of hundreds or thousands of suppliers – let alone visualize them on a map. Maybe push pins on a world map? 

However, thanks to rapid technological advancements and globalization, supply chain networks are becoming more complex and interconnected than ever before. In turn, supply chain risks are increasing, as disruptions or failures in one part of the network can have ripple effects across the entire system. Therefore, supply chain managers must understand the parties involved in their network and how they interact and collaborate. How do you do that in a Rolodex?

A supply chain network is a set of organizations involved in manufacturing and shipping product components, materials & substances, or finished goods. It includes suppliers, manufacturers, distributors, retailers, transportation providers, and intermediaries, such as brokers, agents, or consultants. Each party has its own role, function, and responsibility in the network, contributing to the value creation and delivery process.

However, not all parties in the supply chain network are equally visible or accessible to the supply chain manager. Some parties may be direct partners with contractual or operational relationships with the manager’s organization. Others may be indirect partners connected to the manager’s organization through other parties, such as sub-suppliers, sub-contractors, or third-party logistics providers. Indirect partners may be hidden or unknown to the manager, but they can still affect the performance and reliability of the supply chain network.

Therefore, it is foundational for supply chain managers to identify and map out the parties in their supply chain network and establish effective communication and coordination mechanisms with them. Armed with this information, managers can:

  • Enhance the supply chain network’s visibility and transparency and monitor and track the flow of materials, information, and money across the network.
  • Improve the supply chain network’s efficiency and agility and optimize the use of resources, capacity, and inventory across the network.
  • Reduce the supply chain network’s vulnerability and uncertainty and mitigate the impact of potential disruptions, such as natural disasters, pandemics, cyberattacks, or trade wars.
  • Increase the resilience and sustainability of the supply chain network and ensure the network’s compliance and alignment with environmental, social, and ethical standards and regulations.

In today’s complex global supply chains, visibility has become crucial for success. Organizations increasingly recognize the importance of enhancing visibility across multiple tiers beyond their immediate suppliers. 

Understanding N-Tier Visibility

N-tier or sub-tier visibility is the ability to track and monitor suppliers beyond the immediate tier in the supply chain. It involves gaining insights into their operations, processes, and potential risks. Achieving this level of visibility is essential for mitigating disruptions, improving sustainability practices, and ensuring compliance throughout the supply chain — because most disruptions occur outside your organization or your first-tier supplier base. With the necessary levels of visibility, here are the benefits a company can achieve:

Risk Mitigation: Enhancing the visibility of sub-tier suppliers helps identify and mitigate various risks, such as quality issues, ethical concerns, or compliance violations. By proactively addressing these risks, organizations can minimize their potential impact on the supply chain.

Resilience and Responsiveness: N-tier visibility enables organizations to respond more effectively to unexpected disruptions, such as natural disasters or geopolitical events. Timely information about supplier activities facilitates agile decision-making and allows for alternate sourcing options.

Sustainability and Social Responsibility: Visibility into n-tier suppliers allows organizations to assess their sustainability practices, including environmental impact, labor conditions, and adherence to ethical standards. Organizations can drive positive change throughout the supply chain by monitoring and collaborating with suppliers, and comply with forced labor directives now in place. 

Enhancing sub-tier visibility is a critical aspect of effective supply chain management. By implementing these best practices, companies can unlock hidden potential, mitigate risks, and improve sustainability practices. Sub-tier visibility facilitates better decision-making, promotes collaboration, and strengthens the overall resilience and competitiveness of the supply chain.

In today’s interconnected world, a resilient supply chain is a competitive advantage, and nth-tier visibility is vital in achieving that resilience. To reach this level, companies must leverage technology that helps identify, screen, and qualify suppliers and other providers. The benefits are numerous, but the top priority is greater control and visibility over the entire supply chain.

Gary M Barraco is AVP of Product Marketing at e2open.