How much is the lack of visibility costing your business?
Lack of end-to-end visibility affects every part of your business and can ultimately lead to massive financial losses. How much is it costing your company?
Visibility = necessity
In today's complex B2B landscape, having a real-time overview of your business is crucial for success and can have significant consequences on the bottom line of any given company.
In our last blog, we investigated the concept of end-to-end visibility, its main components, and the common benefits it can yield for B2B companies. This time, we will dive a little deeper and explore some of the more negative aspects of end-to-end visibility – or the lack of it, actually.
We are going to list the most common causes that result in the lack of visibility, examine the numerous serious consequences it can lead to, and put this all into context by going through concrete example cases.
What is end-to-end visibility – a short recap
Before we dive into the causes and consequences, let's briefly recap what end-to-end visibility actually means. If you have read our previous blog, feel free to skip this section.
End-to-end visibility (or E2E visibility) refers to having a comprehensive and real-time understanding of a business process from its initiation to completion, including all stages, stakeholders, and relevant data. It involves many different areas, such as tracking & traceability, promoting collaboration between different stakeholders, and leveraging integrated technology & IT systems to ensure transparency, operational efficiency, and informed decision-making.
In more simple terms, end-to-end visibility can be thought of as a combination of situational and strategic awareness. It allows every party involved in your business processes to always stay on top of the situation and provides you with reliable information to make well-informed decisions both in the short and long term.
4 common causes for the lack of end-to-end visibility
As end-to-end visibility is connected to every part of your business, it is usually hard to find a single clear cause for the lack of it. In most cases, the lack of end-to-end visibility is in fact a product of various overlapping and interconnected issues within the value chain.
- Disconnected and outdated IT systems
Many companies are utilizing conventional IT tools, such as ERP systems, in their efforts to establish end-to-end visibility over their business. ERPs do have their place in the IT landscape, but it is good to remember they that are mainly built for internal processes and are often challenging to integrate to other systems – especially over company boundaries. When different systems within the value chain do not talk with each other, information silos are created, hindering visibility, and creating inefficiencies. Check out our blog “Focusing on ERP systems in business digitalization can ruin a company” for more information on the role of conventional IT systems in modern digitalization.
- Scattered information
In many cases, companies do have all the necessary information to establish comprehensive visibility over their business, but the data is scattered across numerous different systems, spreadsheets, and even paper documents. Without a unified channel for accessing the required information without continuous manual effort (often referred to as “a single source of truth”), the valuable data loses its potential.
- Poor Data Quality
Poor data quality (inaccurate, incomplete, or outdated data) is another major factor that can negatively affect the level of visibility companies have over their business. The issue is closely related to the disconnected and outdated IT systems and the scatteredness of information. In a situation where data from different systems or spreadsheets is updated at varying intervals or might not contain all related information (e.g. various sub-attributes under a single SKU), it requires a lot of manual work to produce a reliable overview of the current situation. The poor data quality can lead to incorrect insights and decisions, compromising the overall visibility and effectiveness of your operations.
- Insufficient Collaboration
Insufficient collaboration and communication with customers, business partners, and across internal departments results in a fragmented overview of the business, hindering end-to-end visibility and crippling day-to-day operations and long-term strategic development. In the modern B2B landscape, the significance of collaboration cannot be overemphasized.
The consequences (will be dire)
The consequences of not having end-to-end visibility over your business are diverse, far-reaching, and most of all very costly. Much like the causes, also the consequences are usually overlapping and strongly connected to one another.
Heaps of manual work
Lack of visibility leads to time-consuming manual processes and short-sighted workarounds, which in turn result in high labor costs, and frequent errors and delays.
Chaotic Multi-channel Communication
We all know what it’s like when your inbox is filing up with emails and the phone is constantly ringing, demanding your attention. And vice versa – you have probably felt the frustration of not having access to some critical piece of information when you need it and having to channel your inner Sherlock Holmes to find it.
Without a centralized platform for collecting, storing, sharing, and accessing information, day-to-day communication quickly becomes a fragmented multi-channel chaos, leading to miscommunication, duplication of work, and constant delays.
Constant "Reactive Mode"
The lack of end-to-end visibility can produce a vicious cycle that traps companies in a constant state of reacting to issues rather than proactively addressing their root causes. When time is spent on just staying afloat and keeping the daily processes running, there is little room for strategic planning and development.
Difficult Operational Planning and Low Efficiency
Without a clear understanding of the status of your operations, planning daily activities can be very challenging. Without proper planning, processes rarely run optimally, and the overall efficiency suffers as a result.
Lack of strategic development
As stated earlier, being trapped in a constant reactive mode blocks companies from addressing the root causes of issues and strategically developing their business in the long run. And even if you find the time for strategic development, how to execute it without knowing how the different functions of your business are performing and where the bottlenecks are?
The Bigger the Company, the Bigger the Issue
As companies grow in size and complexity, the challenges created by lack of visibility become more pronounced. It is possible to keep things running with continuous manual effort until a certain company size, but once that border is crossed, the issues will start growing exponentially. Manual workarounds and fragmented multi-channel communication become increasingly unsustainable, and the risk for costly mistakes grows rapidly.
As with most things, sooner is better than later, but later is still better than never.
3 real-life examples of challenges caused by lack of end-to-end visibility
Let’s examine some of the challenges caused by the lack of end-to-end visibility through 3 real-life examples. The following scenarios take place in the daily operations of a company that manufactures electrical components for B2B customers.
- Insufficient traceability leads to quality issues and costly recalls
A batch of products is assembled in one of the production facilities of the reporting company. Some components need to be ordered from another warehouse location to complete the products in the set timeline. In the company’s ERP system, all component units under the same SKU seem identical, but in reality, they have varying fire-safety classifications. Unfortunately, this sub-attribute information has been lost when the components were transferred from one warehouse location to another that utilizes a separate ERP instance.
The products are assembled, sold, and shipped to customers. A week later, one of the customers reports an issue with one of the delivered products – it has not performed as intended and caused a machine failure. After an investigation, it is concluded that some of the components used in the faulty product did not meet the required fire-safety classification. The reporting company has no way of knowing in which of the product units in that batch the wrong type of component has been used – they have no option but to recall the entire batch, causing heaps of manual work, significant financial losses, and negative reputation.
- Procurement is struggling, but nobody knows what is causing the issues
The reporting company is relying on a wide network of suppliers to procure all required components used in their finalized products. In the last 9 months, there have been repeating issues in securing components in the required timeline, which has resulted in lost sales opportunities. People in the procurement organization suspect some suppliers and their sub-suppliers are not performing on an adequate level, and that these errors and delays are causing the problems in securing required components in a timely fashion – but nobody knows for sure.
After an extensive investigation of going through data from various systems and excel sheets, and consulting with a manager from the production side, it is noticed that the reliability of one of the main suppliers of C-parts has seen a major decrease in the last year. Shipments from this supplier have been repeatedly delayed and have been missing some of the purchased components on multiple occasions. The process of finding a new substituting supplier is initiated.
- Poor communication causes delays and affects customer satisfaction
A long-time customer places an order for some products. The products are assembled according to the customer’s requirements and shipped on the agreed date. 2 weeks later, the customer sends an inquiry about the status of the order and why it has not been delivered the previous week as agreed. The reporting company checks the status of the order, which indicates it has been delivered to the customer. After multiple emails and phone calls with a third-party logistics provider, it is discovered that a subcontracted transport company has had issues with loading the products, and they are still in one of the warehouses of the reporting company. The subcontractor had notified the main logistics partner with an email, but the information was lost somewhere along the way. A new transportation is organized, and the order is finally delivered to the customer 9 days behind the agreed schedule. Needless to say, they are not too happy about this.
So, how much is the lack of visibility costing your company?
Lack of end-to-end visibility affects every part of your business and ultimately leads to inefficiency, missed opportunities, hindered growth, and most of all, financial losses. The final price tag obviously varies significantly depending on the size and industry of your company, but we can say with certainty that it is a lot of money. And as stated earlier, the longer you wait to tackle the issues, the worse the situation gets.
When faced with the question of investing in a new solution to achieve end-to-end visibility, it becomes a matter of weighing the potential benefits/consequences against the cost of implementation. Let’s say you could achieve true end-to-end visibility over your entire business with 100€ per day – would you pay it?
If you thought “yes”, please fill in your contact details with the button below, and we will gladly show how it can be achieved with Bluugo’s hyperadaptive Tracking Cloud® platform in just 8-12 weeks.
