With the arrival of the pandemic, the supply chains worldwide went through a resiliency test. It came as a surprise to all that while the disruptions caused by factors like natural disasters were mainly regional, global-scale disruptions were experienced during the times of pandemic which we were not ready for at all.
Research states that out of Fortune 500 companies, 95% experienced unsettling consequences due to the pandemic. In the current scenario, the definition of resilience has been demanding a change with a focus on geographical diversification, better transparency in processes, and increased capacity to move anything ranging from raw material to finished products.
If you are a business owner looking to better your supply chain management and are willing to leverage technological solutions for the same, this article is for you.
This article elaborates on the challenges that supply chains face and how incorporating technology can increase efficiency and prepare us for unforeseen situations.
Major challenges faced by supply chain
A decent amount of research has been continuously taking place, the findings of which reflect upon the importance of the role of Information Technology in solving major concerns of the supply chain.
The major concerns faced by supply chains across different industries are:
- Shortage of manpower and raw material
When life went into a bubble during the pandemic times, a lot of people experienced layoffs in 2020-2021. However, now, leaders across the world are having a hard time finding suitable people to delegate work and appoint to important positions in procurement and supply chain operations.
In the present time, all commodities be it human or material can become difficult to find and is very expensive which has made overall management difficult and calls for the need of using technology-based solutions for the supply chain management.
- The rise in transportation and logistics costs
Almost 80% of ocean trade is dependent on ocean freight. The shipping costs are skyrocketing after the pandemic. In the early phase of the pandemic, many businesses were shut and the demand for shipping sailing had decreased. But with the demands picking up now, it is very difficult for the ports to fix the backlog and get containers in and out to reduce delays.
It has become difficult for companies to move freights at high capacity because of the immense rise in transportation costs via any medium be it air or sea. In this case, efficient logistics and transportation tech solutions can play a significant role in easing this challenge of the supply chain worldwide.
- Delays due to overcrowded ports
The last two years have witnessed long waiting times for ships that reach the ports. In 2021, there was an episode of more than 50 ships waiting outside a Los Angeles port for unloading. Such gridlocks are responsible for causing delays.
The domestic supply gets affected due to such overcrowding which leads to the greater time taken for importing – exporting goods. While overcrowded ports are not really a novel issue, the situation is worse these days and there have been discussions about incorporating tech solutions to handle this problem.
- Inability to forecast demand precisely
Accurate forecasting of demand is not an easy task. Even if data has been collected by business, the ever-prevalent fluctuations send the entire planning down the drain.
While spreadsheets make a good option for startups being a low-cost alternative. But they have their own limitations like the inability to integrate with business systems, weak security, and lack of a holistic view, etc.
Also, using manual methods to review items in our warehouses, spotting outliers, etc. are highly time taking processes.
Technological solutions can play an important role in bringing an updated and error-free perspective into place regarding demand status at any given time.
Role of digitization in supply chain management
Digitization can play an important role in all aspects of the management of supply chains. The technological intervention has the ability to reduce risks and errors and enhance overall efficiency in the supply chain processes.
Here is what digital solutions can do for supply chain management
- Flexibility in operations
A digital model is instrumental in creating a centralized process offering better control to management and allowing them to decrease operational costs as different labor was being used to manage tasks at different locations. Centralized processes will also lead to a better quality of work and higher productivity.
- Better inventory management
Digital tools for inventory management can provide much-needed visibility into the inventory status so that management can take timely decisions about when they need additional stock.
Businesses can set alerts to automatically inform suppliers when a particular item’s stock has reached a certain level. This automation will always keep you updated with stock effortlessly while maintaining a good relationship with your suppliers.
- Ability to manage change
Unprecedented situations can arrive in anyone’s life and if one of your suppliers fails to send over supplies due to any given reason, you can quickly find new ones using a digital solution.
Tech solutions like Supply Chain Insights help in finding alternate suppliers by using a ranking method. This ranking is done on the basis of how proactively a business delivers supplies to its clients and how relevant they can be for your particular business.
- Better collaboration for teams
Lack of collaboration and clarity in the teams is one of the major reasons for obstacles in supply chain management. Technology can play a role in data centralization and keeping the entire team on the same page at all times.
The ability to look at the key elements clearly at any point helps people take the needed action at the right time regarding individual warehouses before matters escalate for worse.
Also, interdepartmental communication and collaboration are facilitated by technology which proves to be the key to productivity. It helps in the timely identification of risks as well as receiving inputs from all team members across the supply chain.
Latest technologies impactful for supply chain management
It’s time to ditch the paperwork and excel sheets for technological solutions like IoT, Blockchain, AI, etc. to help in process efficiency and transparency in supply chains.
Here are a set of technologies that can help in solving many supply chain management issues.
IoT can play a significant role in supply chain management and logistics by facilitating transparency and cost-effectiveness.
Basically, IoT becomes the medium of providing useful information by using devices that are interconnected and provide real-time information like images, humidity, temperature, and GPS status of the goods in the warehouses or during transportation. This data is stored and used for monitoring the supply chain at any time.
Let’s take the example of temperature-intensive cold storage goods. If any change in the temperature of these goods is detected by the sensors, immediate action can be taken by the control app to the actuators to adjust the temperature and inform the supply chain operators about the same.
- Artificial intelligence
A great amount of data accompanies every supply chain network which when analysed properly can provide useful insights for the business. Companies can use a combination of AI, machine learning and predictive analysis for automation in the operations of warehouses, optimize the delivery times, manage the inventory effectively and ultimately lead to better customer satisfaction and increased revenue.
AI, as a key technology in Supply chain management can provide insights at a microscopic level by processing large chunks of data with zero human intervention.
Robots have been playing an important role in supply chain technology for a long time. They have been used to move goods in warehouses. The incorporation of AI in Robotics has led to the refinement of the work done by robots from manual tasks to automated processes.
Large scale deployments are possible by leveraging this combination of capabilities of humans and robots.
Blockchain technology, which is instrumental in keeping a record of all the transaction happenings throughout the chain without providing the opportunity to tamper this information, can play a great role in tracking the origin of any good in the supply chain and instil more transparency and trust in the entire process.
Blockchain can provide clear visibility into the custody chain of goods. This way, management can trace and track if the regulatory practices are being followed while moving the goods. They can spot suppliers at risk or any fraudulent practices before any damage is done.
The ever-changing technological landscape and increasing customer expectations have made businesses think about their business strategies and processes. Incorporating technology in the Supply Chain realm can give a boost to productivity, and flexibility as well as bring greater resilience in systems to fight uncalled-for emergencies.
If you are struggling on getting started with Digital transformation in supply chain management, you can get in touch with a stable technical partner offering digital transformation consultancy in Canada.
Nishant Verma, Managing Director of Iotasol, Canada is an entrepreneur and a technical architect. He holds extensive experience in helping businesses across North America by enhancing profitability, streamlining company processes as well as developing innovative IT solutions for them. His main goal is to help SMEs scale through digital transformation and bring positive change for entrepreneurs by converting their business idea into intuitive business solutions. He has been instrumental in opening growth avenues for businesses by creating an impactful online presence for them.