SCV is a critical aspect of modern-day logistics management. It is the ability to monitor and track the movement of goods and products as they move through the supply chain. It involves collecting data on inventory, shipment, and delivery status to provide real-time information about the location, condition, and status of goods. This data allows businesses to anticipate and respond to disruptions, reduce operational costs, and improve customer satisfaction. However, poor tracking can result in significant hidden costs that harm a company’s bottom line. So, this article will explore the hidden costs of poor supply chain visibility and how to avoid them.
The Hidden Costs of Poor SCV
Poor visibility can result in high hidden costs that can affect a company’s bottom line. Here are some of the hidden costs of poor SCV:
- Delayed Deliveries: Inefficient tracking can result in delayed deliveries, which can lead to lost sales and increased costs. When companies cannot track the movement of goods and products, they cannot anticipate and respond to disruptions, resulting in delayed deliveries. This can lead to lost sales, customer dissatisfaction, and increased transportation costs.
- Increased Inventory Costs: Substandard tracing can result in increased inventory costs. When companies cannot track the movement of goods and products, they tend to keep higher inventory levels to avoid stockouts. And higher inventory levels can increase storage costs, depreciation costs, and inventory obsolescence.
- Higher Transportation Costs: Poor end-to-end visibility can result in higher transportation costs. When companies cannot track the movement of goods and products, they tend to use more expensive transportation modes to ensure timely delivery. For example, companies may use air transportation instead of ocean transportation to avoid delayed deliveries, resulting in higher transportation costs.
- Poor Customer Satisfaction: Poor logistics management can result in poor customer satisfaction. When companies cannot track the movement of goods and products, they cannot provide accurate delivery estimates to customers. This can lead to missed delivery deadlines, customer dissatisfaction, and lost sales.
How to Improve SCV
Improving visibility can help companies avoid the hidden costs of poor business logistics. So, here are some strategies to improve visibility:
- Implement a Supply Chain Management System: Implementing a management system can help companies track the movement of goods and products through the delivery chain. These systems provide real-time information on inventory levels, shipment status, and delivery status, allowing companies to anticipate and respond to disruptions.
- Use RFID Technology: RFID technology can help improve tracking by providing real-time information on the location and condition of goods and products. RFID tags can be attached to products, allowing companies to track their movement through the supply chain.
- Collaborate with Suppliers: Collaborating with suppliers can help improve logistics management. Suppliers can provide real-time information on inventory levels, shipment status, and delivery status, allowing companies to anticipate and respond to disruptions.
- Conduct Regular Audits: Regular audits can help companies identify areas where inventory management can be improved. Audits can help identify bottlenecks in the logistics network, areas where inventory levels can be reduced, and areas where transportation costs can be reduced.
Supply chain visibility is a critical aspect of modern-day logistics management. Poor SCV can result in significant hidden costs that can harm a company’s bottom line. Improved SCV can provide a competitive advantage for businesses, helping them to better meet the needs of their customers and adapt to changing market conditions.
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