In 2020, we saw COVID-19 trigger dramatic shifts in demand patterns and severe shortages of raw materials that fuel manufacturing. This has resulted in an unprecedented disruption of supply chains, with estimated losses of 4 trillion dollars. Dealing with this crisis, as well as the future ones, requires focusing on the entire supply chain, from the first to the last mile. The objective is to offer an exceptional customer experience while optimizing working capital and controlling operating costs.
As demand continues to shift towards omnichannel and e-commerce, supply chain strategies must proactively recognize any disruptions that threaten to undermine On-Time and Complete Order (OTIF) requirements. What we need is an intelligent supply chain, using visibility technology that can not only predict disruptions, but also trigger actions to mitigate them, such as changing supply requirements, balancing stocks and optimizing product allocation.
The solution requires moving from linear supply chains to digitally integrated supply chain networks. A recent to study found that organizations that embrace digital technology can reduce procurement costs by 50% and increase revenue by 10% through improved visibility and data. These networks are based on tools that provide transparent communication in real time between manufacturing, logistics providers, suppliers and applications for enterprise resource planning (ERP), warehouse management (WMS), management transport (TMS) and order management (OMS). Businesses can integrate traditional silos by feeding data into a “control tower” that generates valuable information for the entire enterprise.
The benefits of digital systems are being felt everywhere. They address the risk of supply chain disruptions such as port congestion, strikes, inclement weather and late shipments – anything that negatively impacts sourcing, production, customer orders and capacity management. A smart supply chain allows businesses to anticipate such disruptions and adjust inventory forecasts, manufacturing plans and transportation routes accordingly.
An additional risk arises from damage to inventory already in the possession of the company. Products that exceed temperature, humidity or vibration thresholds decrease the customer experience. The Internet of Things (IoT) can dramatically reduce these problems by sending signals when goods are near these thresholds, allowing preventative action by the shipper. The result is a dramatic improvement in key performance indicators and customer satisfaction.
Companies moving to a smart and digitally integrated supply chain can realize material and material savings in areas such as brand loyalty, shareholder value, employee satisfaction, product footprint analysis , labor productivity and inventory optimization. But effective stress management can only happen when a cloud-based system sits atop an ecosystem of partners and applications, enabling the business to reach “a source of truth” for Timely performance reports throughout the supply chain.
In the transition to a digital supply chain, companies need to take a number of key steps, including:
- Manage OTIF by assessing stock availability and speed of delivery down to item level.
- Understand what’s important to the business and integrate relevant information into supply chain applications.
- Activate product health alerts with associated information about OMS, WMS and TMS systems regarding temperature, humidity, light and other factors.
- Use artificial intelligence to anticipate global geopolitical events and proactively manage disruption.
- Implement control tower analysis and integrate the entire global trade management effort.
The technology in 2022 will focus on smart supply chain solutions and cloud-based visibility platforms, to form an integrated and collaborative digital supply chain. An integrated network enables supply chains to proactively adapt to disruptions, deliver a positive customer experience, and meet stakeholder expectations.
Keith Pickens is a retail leader and Managing Director of UST.