Rising consumer expectations on delivery standards have compelled supply chains to react faster and push for digitalization, to ensure transparency across stakeholders and visibility into operations. Though it makes obvious sense to say visibility increases efficiency, the push towards greater operational visibility has remained a difficult task.
One of the primary problems that face supply chains is the siloed approach within logistics verticals, which has traditionally reduced fluidity between operations and hampered efficiency. This leads to fragmented visibility, which was cited as the biggest challenge to operations by 84% of chief supply chain officers (CSCOs) in a survey conducted by IBM.
However, global supply chains are not easily malleable to technology disruptions. The IBM survey found that 87% of CSCOs had extreme difficulty in predicting and managing disruptions and only 36% of the CSCOs had the wherewithal to gauge and manage disruption.
“While visibility can mean different things depending on the organization, the bottom line is that hidden areas within the supply chain create unnecessary instability within service delivery. This, in turn, has a huge impact on customer experience and costs,” said Yamini Vellore, the chief information officer at Blume Global, a supply chain solutions provider.
Vellore explained that inefficiencies could crop up due to factors that are unpredictable and far out of the control of individual companies – like weather conditions, geopolitical risks and unforeseen disruptions or delays in the flow of goods. Frequently fluctuating demand cycles also make it hard for companies to retain and hire drivers and to keep their carrier capacity in order.
“In regard to supply and demand, consumers often want access to retail goods immediately and online goods within a few days, but at the same time there are quality and safety compliances that must be met for raw materials, goods and finished products,” said Vellore. “Misalignment between supply and demand results in too much or too little product, which can lead to unmet consumer expectations.”
Globalization has brought consumers closer to products from across the world. However, that globalization lengthens and complicates supply chains, as they have to work with added unpredictability, making them susceptible to changing regulations and policies across economic blocs.
“In addition to the price of the actual taxes, tariffs across trade routes can lead to congestion at ports as a result of delays and increased customs processing times. This creates additional pressures for ships, trucks and trains that need to wait to load, unload and transfer products,” said Vellore.
Modernizing supply chains could help alleviate and lessen the impact of such challenges. Data analytics, coupled with machine learning algorithms, can enable better agility and precision in operations, creating greater efficiencies and a decrease in costs wherever repetitive manual tasks can be automated. “Predictive and prescriptive analytics also offer real value by helping analyze, model, predict and prepare for future changes in the supply chain. These insights can provide ongoing relief and improvement in areas such as reducing waste, streamlining processes and minimizing costs,” said Vellore.
Predictive analytics will also help companies anticipate consumer trends based on past demand cycles, which can help supply chain managers to chart precise operational schedules and optimize promotion and product releases by gauging market demand. Even in the context of the tariff war, real-time data analytics can help businesses support their sourcing and inventory segments by vaccinating their supply chains from violent shocks like delays at the port due to traffic.
Optimization apart, sensible use of technology can reduce carbon emissions and drive sustainability across the supply chain. “Artificial intelligence and GPS devices can be used to optimize shipping routes on an international, national and local scale, and companies can decrease the distance and time involved in shipping products,” said Vellore. “In addition to optimizing planned routes, advanced analytics can also be used to take account of congestion and update routes in real-time.”
The potential of an orchestrated, collaborative supply chain that addresses environmental and social challenges is profound, with Vellore contending that it is the responsibility of the industry to make the movement of goods sustainable.
“Across industries, leading with purpose, ethics and social responsibility is a model that resonates with businesses – including employees, partners, stakeholders, etc. – as well as with consumers,” said Vellore. “In fact, today’s consumers expect companies to meet a certain set of ethical standards to gain their buy-in. Companies that don’t address sustainability issues are at risk to lose business.”
