Why Supply Chain Visibility Is Imperative for Businesses

In recent years, the term “supply chain visibility” has been gaining significant traction in industry discourse and high-level discussions surrounding manufacturing, compliance, and risk. 

But what is supply chain visibility?

The concept is relatively straightforward: it typically refers to a business’s ability to access, track, and monitor critical data on components and products within its supply chain. But as the term has gathered an increasing level of currency and import, that finite definition has begun expanding in both scope and meaning. Comprehensive supply chain visibility today sheds light on more than just parts. It encompasses detailed information on everything from individual sites and geographical regions to evolving regulations and supplier networks, including exhaustive dossiers that help manufacturers quantify risk. 

Why Supply Chain Visibility Has Emerged As A Priority

The rising prominence of supply chain visibility is hardly an incidental phenomenon. It began during the turmoil and turbulence of the COVID-19 pandemic, when lockdowns, increased trade restrictions, and major fluctuations in supply and demand left manufacturers scrambling to adapt to the large-scale disruptions that rocked their supply chains. But even as that tumultuous era has passed, businesses in the 2020s must contend with a landscape of growing complexity and escalatory threats. These perils include unstable geopolitical concerns, multiplying international regulations, and new sustainability objectives at the corporate and governmental levels. 

And those only represent a small portion of the many variables businesses and their sourcing teams must now account for. All these risks—some longstanding, others completely novel—help explain why supply chain visibility is now being prioritized at many firms that previously paid little thought to it. 

Environmental Compliance Requirements Are Increasing

While regulations have long been an important aspect of supply chains, their scale, degree of enforcement, and consequences for noncompliance are increasing. A cursory survey of major regulations that have entered into force or expanded in scope over the past 12 months alone usefully captures the growing complexity of the global regulatory landscape. 

The European Union’s Batteries Regulation, which was entered into force in August 2023, imposed a suite of new obligations on battery manufacturers, importers, and distributors. These legally binding guidelines will be implemented in the EU’s member states through the remainder of the decade and beyond. On the domestic front, the EPA has finalized several new rules furthering its regulatory actions against per-and polyfluoroalkyl substances (PFAS). The new laws include the introduction of expansive new reporting requirements for covered manufacturers and importers, as well as a significant new use rule (SNUR) severely restricting the use of 329 PFAS not currently being produced by manufacturers. 

Forced Labor Concerns Add Additional Pressures

Of arguably greatest importance, though, is recent developments surrounding the Uyghur Forced Labor Prevention Act (UFLPA). Passed in 2021 and made effective the following June, the UFLPA is the U.S. government’s import restriction legislation against companies manufacturing or distributing goods made using forced labor in the People’s Republic of China and the Xinjiang Uyghur Autonomous Region (XUAR). 

The regulation’s UFLPA Entity List, which initially prohibited the importation of goods into the U.S. from 20 Chinese companies, now covers 30 PRC-based entities encompassing a range of major industries. And the federal government is going beyond just expanding the law’s list of banned manufacturers, too. According to recent figures, Customs and Border Protection, the agency responsible for UFLPA enforcement, has significantly ramped up the frequency and volume of its detainments. In February and March 2024 alone, over $600 million of imported goods were subjected to the UFLPA review process. Affected industries include electronics, textiles, and manufacturing materials, with around 8,000 shipments detained to date and over 3,000 seized by CBP. 

Supply chain visibility is one of the most valuable mechanisms a business can deploy when working to achieve regulatory compliance. Strong visibility allows companies to see extensive data on the raw materials in their parts, the risk profiles of their suppliers, and the compliance status of components sourced from all over the globe. Organizations that possess the powerful, actionable tools that make this level of access and observation possible are able to stay ahead of evolving regulatory measures and position themselves to rapidly adapt if and when their products fall out of compliance. 

How Supply Chain Visibility Effectively Mitigates Disruptions 

Disruptions are endemic to and inextricable from global supply chains. When there are so many interdependencies between original equipment manufacturers (OEMs), suppliers, and vast subtier networks, localized disturbances and minor snafus can reverberate across stakeholders, adversely impacting orders, lead times, and the steady flow of product. 

The geography of disruptions and the costs associated with them, however, is hardly static. While financial repercussions stemming from supply chain disruptions have fallen considerably from the dizzying heights reached during the chaotic peak of the pandemic, they still cost larger companies an average of over $80 million a year. There is broad consensus among experts, meanwhile, that supply chains will likely never return to the stability and continuity of the comparatively halcyon pre-pandemic era. A recent Deloitte survey found that nearly 80% of supply chain executives experienced an adverse supply chain event over the preceding 12 months. The firm also found that little more than a fifth of those respondents believed their organizations possessed a high level of resilience against such disruptions. 

Amid a global landscape besieged by geopolitical tensions, natural disasters, and large-scale armed conflict, we are now entrenched in an era of heightened supply chain vulnerabilities. In order to sufficiently gauge these vulnerabilities and effectively mitigate them, companies must avail themselves of supply chain visibility. There are millions of data points connected to a business’s supply chain. The organizations that are able to obtain and leverage those data points can swiftly detect impending supply shocks and carry out contingency measures to minimize their impact. 

The best visibility tools turn supply chain developments whose implications are uncertain, even oblique, into clear, meaningful insights. These platforms can show a company how a typhoon in East Asia affects the availability of its critical components; whether new U.S. trade sanctions are impacting sub-tier suppliers; or if a worsening shipping lane bottleneck will spike transportation costs for key parts. Organizations that possess deep, all-encompassing visibility are able to hold supply chain disruptions under an x-ray and see exactly where the cracks, fissures, and fractures are for their business’s operations. 

Obsolescence Data and Lifecycle Forecasting 

For businesses working in the electronics industry, obsolescence has long served as a clear, persistent feature of the risk landscape. Hundreds of thousands of electronic components reach end-of-life every year—including everything from resistors and capacitors to microcontrollers and rectifiers. Manufacturers must navigate this minefield of discontinued parts on an annual basis. 

Obsolescence introduces several significant obstacles to professionals operating in the electronics sphere. When a key part reaches EOL, engineers are forced to make modifications to their bill of materials, or else carry out larger, more resource-intensive redesigns of products. Once these changes are finalized, the torch is handed off to commodity managers and strategic sourcing specialists. These professionals are tasked with scouring the supply chain for the replacement part and ensuring its procurement in a consistent, timely, and cost-effective manner. 

These individual responsibilities are made all the more urgent by a systemic, seemingly intractable challenge in the industry: the shrinking life cycle of components. Individual semiconductors, for example, were once projected to last up to 30 years. Today, their life cycle is, on average, roughly a decade. (This figure varies dramatically depending on the nature of application; while parts graded for use in the military and aerospace industries may have significantly longer life cycles, those used in the consumer sector can reach EOL in just a few years.) 

While there are myriad reasons for the contraction of component life cycles over the past few decades, the most prominent among them is the surging appetite for newer generations of devices. This growing demand leads to a greater frequency of product launches—think Apple’s showstopping events, or even new model rollouts for auto manufacturers—which pushes those products’ predecessors, and many of their components, into obsolescence. Suffice it to say, these diminishing life cycles and the accompanying rise in EOL notices create more work for engineers and procurement professionals, who must conceive and implement replacement strategies as seamlessly as possible. 

The full spectrum of supply chain visibility features vital information that these key stakeholders can use—including product change notifications (PCNs), EOL notices, and even advanced life cycle forecasting. While suppliers may provide component life cycle projections on their websites or via other sources, they hardly serve as unbiased, neutral assessments. Leading-edge life cycle forecasting incorporates a wealth of historical data, key indicators of market demand, and up-to-date information on market availability to produce accurate forecasts for how long manufacturers have before they need to replace specific parts. 

Forecasting tools help businesses go beyond just looking into the supply chain. They allow companies to actually predict it, anticipating the sites and locations where product changes and obsolescence developments are imminent and giving their teams the foresight and flexibility to take adaptive measures and future-proof their processes accordingly. 

Challenges and Solutions to Achieving Supply Chain Visibility 

For even the most sophisticated, early-adopting enterprises, achieving in-depth supply chain visibility can be a monumental endeavor. Companies need to carry out supply chain mapping of vast, labyrinthine supplier networks, including drilling down multiple tiers deep; cultivate relationships with suppliers that privilege and prioritize transparency and the continuous exchange of information; and execute the taxing, laborious work of understanding how the full sweep of environmental regulations and trade restrictions are distributed across their supply chains. 

Fortunately, organizations today don’t have to embark on this massive undertaking alone. Supply chain visibility solutions—including industry-leading software tools—are built to do all this heavy lifting. The result is the surfacing of millions of meaningful data points companies can use to gain insight into suppliers and better conceptualize risk. These include part-to-site mapping for products on an EMS, FAB, or even assembly level, impact reports on Tier 1 and sub-tier suppliers, country of origin dependencies, event monitoring, and more. 

These platforms are versatile, multipronged tools that enable users to analyze their supply chains in real time with a level of precision and granularity that lets them proactively manage risks and vulnerabilities that threaten their product continuity.

In addition to mapping all your components to their original manufacturers—hardly a modest feat of data-gathering—the software can pull together deep reservoirs of information on suppliers. These dossiers include data on production facilities, financial records, key customers, and aggregate risk levels. The most advanced solutions can serve as a compass for businesses navigating the treacherous and ever-shifting regulatory landscape, too, giving them the ability to set their BOMs against dozens of national and global regulations and see which of their parts are noncompliant. 

When their array of interconnected functionalities are considered as a whole, supply chain visibility software essentially works to reverse-engineer the supply chain, breaking it down to constituent parts that are legible, clean, and simple. The result, in almost all cases, are customers in possession of a whole new way of reading risk, empowering them to identify threats, vulnerabilities, and looming disruptions and implement targeted strategies that minimize costs and maximize control.