Supply Chain and Logistics has undergone a major transformation in the past decade. Gone are the days when its management was a purely operational function. Today, the heads of supply chain have every reason to be in boardrooms—their decisions have strategic implications for the entire business and may well be the reason customers choose to interact (or not!) with an organisation.

In the “Age of Amazon,” customer expectations are high. The demand for quick, even same-day, delivery at the lowest possible cost is fast becoming the norm.

Combine this with newer regions opening up for trade, greater access to semi-urban and rural areas, and stringent regulations from local agencies and national governments, and you can see that the supply chain industry is in the midst of disruption—and technology is going to play a major role in shaping this disruption. 

Gartner survey, named “Improve the Supply Chain With Advanced Analytics and AI “, spoke to supply chain leaders and found that 96% of respondents use predictive analytics, 85% use prescriptive analytics, and 64% use artificial intelligence. These technologies and their applications allow supply chain leaders to gather essential insights into the workings of the various processes within their supply chains and empower them to provide smarter recommendations to business users. This has a twofold advantage—it augments and automates decision making and increases the productivity of human resources. 

Five trends that are going to influence how future supply chains are designed and operated:

  • Artificial intelligence

  • IoT

  • Blockchain

  • Advanced analytics

  • Custom applications

1. Artificial intelligence and machine learning

AI and natural language capabilities are currently at the forefront of emerging solutions for supply chain partners. Three areas where they could be game-changers are:

  • In-demand forecasting

  • Production planning

  • Predictive maintenance

Machine learning takes historical shipment data and converts it into a forecast. These forecasts can gauge seasonal fluctuations in demand, and provide predictions at a product, store, or facility level, for any time frame ranging from daily to monthly and even beyond. Warehousing and transportation will particularly benefit from AI and machine learning, as their capacity to improve order deliveries and service increases with automation. For instance, using AI, a company can determine optimal routes for fulfilling orders promptly.

Knowing future demands allows businesses to plan production and predictive maintenance to a far more reliable degree than was possible before. Lead times can be drastically shortened so that customers receive their deliveries quickly. Using predictive analytics, businesses can know in advance when and if a component in the system needs repairs and create alternate production schedules to compensate for it.

2. Internet of Things

The more devices can talk to each other, the more communication can flow between them, and the more efficiently the entire network can operate.

The use of advanced robotics combined with big data gives companies a comprehensive and accurate view of the real-time status of their supply chain networks, partners, and shipments. Since IoT connectivity brings in data, it allows processes across the entire supply chain to be highly optimised. Many companies already use sensors to keep track of their containers or shipments, which gives them the ability to quickly respond to issues on the ground, and forecast and even prevent problems from arising in the future.

  • IoT allows continuous monitoring of critical equipment so that the state of every asset in the supply chain is known

  • It improves inventory practices, allowing managers to check inventory levels at any time and prevent stockouts

  • It allows transparent marketing to the extent that brands can even let their customers know where their products are sourced from and how they are acting ethically and responsibly

From optimising asset utilisation to improving overall supply chain performance, IoT can greatly increase the reliability of supply networks.

3. Blockchain

A supply chain can only be considered robust when all the parties in the network are known and trusted. However, the reality may be very different. There might be too many players to keep track of, varying levels of accepted standards involved, and it might be simply impossible to maintain a central repository of the thousands—if not millions—of records generated with every transaction.

The adoption of blockchain technology in supply chains can counter these challenges. All the entities in the blockchain network can know where any transaction originated from. This could entail anything from recording the source of raw materials to payments made to vendors to copyrights of assets. Since it’s not possible to erase a transaction within a blockchain, the only way a change can be made to it is by adding a new record, thus increasing the transparency of every transaction and ensuring the security of the entire operation. 

The shared ledger holds the same version of truth for everyone—all the players benefit from it, as the ledger is updated and validated instantaneously, as soon as a transaction occurs and is added. Blockchain can thus address issues in the areas of counterfeiting, enhance traceability, and provide more effective security. 

4. Advanced analytics

Advanced analytics gives companies the ability to work with processes in real time, or near real time. This has direct relevance in areas like dynamic pricing and replenishment. What in-depth analytics allows business leaders to do is extrapolate data from existing conditions and imagine future scenarios, thus allowing them to design more profitable processes and create highly efficient supply chains.

Due to the stringent quality standards fast becoming the norm in the functioning of supply chain networks, the ability to track products, optimise transportation, and even analyse returns on products and routes are important reasons for integrating advanced analytics into supply chain management platforms.

The biggest advantage of using analytics is that it forms a cohesive link between planning and execution, making supply chains both agile and highly responsive. It allows managers to set standardised processes and benchmarks, utilise assets to their optimum levels, and eliminate waste. What this translates into for supply chain leaders is that locked capital is freed up, cash flow increases, and margins are improved.

5. Custom applications

A one-size-fits-all software might meet the basic needs of any business. But organisations need unique solutions to cater to the specific requirements of their business and their internal departments.

Custom applications can be personalised to suit the unique requirements of individual parties in the supply chain. They enable both senior-level decision makers and on-the-ground executives to gain greater power with:

  • Real-time visibility: Anyone can find out where shipments are, at any point in time, with the app

  • Flexibility on the move: It allows managers to take data and insights with them, wherever they go, cutting down the delay involved in heading back to one’s desk to place an order or call people to provide updates

  • Dynamic tracking: Any potential hurdles can be identified in advance, and a mitigation plan set in place immediately

  • Increased opportunities for collaboration: Applications break down the limitations posed by geographical barriers, and enable a smooth flow of communication, wiping out the previously existing disconnect between different operators, and improves the cross-functioning of teams within an organization

  • Hands-free operation on the warehouse floor: Employees can ditch pen and paper because they introduce manual errors, make processes more time-consuming and don’t connect the dots between data originating from different entities

Are you ready to lead the next generation of supply chains?

The trade world is becoming increasingly open, and also increasingly complex. Customers have easy access to many options when it comes to deciding what to buy, where to buy it, and at what price, which is increasing competition. This calls for companies and their supply chains to be faster, and more flexible, efficient, and secure.

By leveraging these technologies, supply chain leaders can ensure that their businesses don’t just survive, but actually thrive in this highly chaotic environment, while also meeting and exceeding customer expectations.

What other technologies, do you think, can shape the future of supply chain management? Let me know I would be interested in your feedback.

David Rogers
Head of APAC Logistics forum

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