Supply Chain Management (SCM) has undergone significant changes and advancements over the last decade. Amazon has completely transformed consumer expectations with regard to shipping, for example, while new technologies such as RFID tagging and process automation software and tools have overhauled how today’s supply chains operate.
How are the leaders in SCM adapting to these changes and what strategies are they implementing to drive success and growth?
We spoke with several professionals and influencers throughout the industry to learn their thoughts and put together this rundown, complete with some recommended strategies and tips.
Supply chain success depends on the client or end consumer receiving their order on time and in good condition, but this goes beyond just parcel shipping – even with regard to e-commerce. According to Jason Traff, President & Co-founder of Shipwell, freight shipping is one of the most important links in a supply chain, and full visibility is essential for success:
If your supply chain contains freight shipping, which most do, it’ll be one of the most important links in that chain. Many businesses, large and small, have a massive challenge when it comes to their freight operations. Relying on outdated tools, using spreadsheets, and having a manual processes will slow you down and make you less competitive. But having real-time connections, workflow automation, and actionable analytics pulled in real time can make a massive difference.
Not only will you be able to act faster, but you’ll be able to analyze problems before they happen:
- Are you spending too much to ship freight?
- Are your on-time pickups and deliveries suffering from a mismanaged warehouse or distribution center?
Reliable data can help you understand areas of improvement that will have a butterfly effect all the way down to ensuring customers get their products on time.
Consumer expectations about shipping have shifted radically over the past several years, and two- and same-day shipping has become standardized. This puts significant added pressure on supply chains with regard to fulfillment and shipping.
[ Related Article: The True Cost of Same-Day Shipping ]
Therefore, carrier relationships are key. As Traff explains:
Having full visibility is essential to being able to compete in an age when all of your customers have used Amazon. Knowing where your shipments are at any time, having robust freight analytics, and ensuring effective communication between your carriers, any 3PLs you work with, and your customers is key. Something that many businesses we work with come to us for is the challenge of managing carrier relationships. These are the truck drivers hauling your precious freight so having good, open, honest communication with them goes a long way to make sure you’re successful.
At Shipwell, Traff has seen a significant shift in e-commerce, where freight shipping is becoming more common as consumers become more comfortable with (and are actually) purchasing larger items online:
For many of these e-commerce freight customers, they’ve needed an integrated platform to keep up with their customer’s expectations of an easy, online shopping experience. So we partnered with and integrated into Shopify to make it easy for customers to get instant freight rates during checkout and to allow merchants to manage everything seamlessly on their end. This process has also helped e-commerce companies that are using freight shipping to fulfill their inbound shipping from suppliers, too.
From automation to robotics, technology is having a strong impact on supply chain management strategies for today and for the future. Data management is at the heart of this transformation, particularly with replacing inventory with information, according to Professor Michael J. Gravier, Ph.D., C.T.L., and Associate Professor of Marketing and Global Supply Chain Management at Bryant University:
Almost all the up and coming technologies for managing supply chains focusing on gathering, processing, sharing, and otherwise using information as a replacement for inventory, everything from RFID tags to ERP software to “cloud” data and 3D printing.
[ Download Infographic: 7 Technologies in Supply Chains ]
3D printing may be the ultimate example of using information to replace inventory. Almost all of the new supply chain tech in the news relates to improving supply chain integration, which means perfectly matching available inputs (supply) with customer needs (demand).
- Artificial intelligence, algorithms and big data to better understand customer behavior
- Blockchain for supply chain transparency
- Drones for working in warehouses
- Cloud computing for analytics
- Deep insights and regulatory compliance
- Edge computing for gathering and processing data closer to customers (RFID tags would be part of edge computing)
- 3D printing to make only what’s needed, when needed, and where needed
As Professor Gravier explains, data management using these technologies can significantly impact success:
Many highly successful companies like Amazon and Walmart have succeeded because they owned the entire data process, and they are investing heavily in the integration component, such as Walmart vertically integrating chicken and dairy farms and Amazon investing in web services. The future will be the sharing of information and supply chain integration across companies.
[ Related Article: Guide to RFID for Shipping and Fulfillment ]
Data management technologies are constantly being developed and improved to drive greater success in supply chain management for e-commerce and other businesses. One more recently launched example is the PerceptIn Intelligent Viewer Tracking Module (PIVTM), an Internet-of-Things (IoT) intelligence module for generating in-store customer data for mobile vendors and retailers.
Technology is also influencing the supply chain with regard to business processes. As Marketing Coordinator at Tradogram, a provider of cloud-based procurement software solutions, Kyle Strong has seen how technology and tools can make or break a processes within a supply chain:
With the advent of things like blockchain, augmented and artificial intelligence (AI), and robotic process automation (RPA), a great deal of strain is being placed on supply chain management to adjust their processes – a task which seems nearly impossible for larger organizations. Now more than ever, it’s important for supply chain executives to be strengthening their ties with online service providers and consultants to ensure that the tools they adopt will meet the requirements of their businesses.
E-commerce companies large and small are looking very closely at their supply chain processes to maximize efficiency and optimize processes. Vertical integration of supply chain management has proved to be a productive approach, particularly for unique and new products that do not have an established supply chain.
This was the case for Fracture, a rapidly growing and innovative e-commerce company that prints images on glass. They had to handle a lot of the manufacturing and distribution of their product for this very same reason, and they also knew that a vertically integrated supply chain was the only way to provide the customer experience they sought.
According to Fracture’s Founder & CEO Abhi Lokesh:
One of the biggest things we did to make our SCM strategy effective was vertically integrate as much of our supply chain as possible.
Being a vertically integrated operation isn’t easy by any means – especially when we started 10 years ago. However, the up-front investment has really paid off as we’ve been able to be far more agile and flexible as we’ve grown. If we see opportunities to be more efficient – save time, spend less money, etc. – we can act on our ideas immediately and test, iterate, and optimize the process ourselves instead of having to depend on the speed of third-party partners.
Thanks to our vertically integrated operations, we consider our SCM strategy to be one of our strongest competitive advantages.
[ Related Article: Effective Fulfillment – Reducing Costs and Improving Supply Chain Performance ]
Fracture also allowed their Customer Support team to play a very active role in building Fracture’s supply chain management strategy, from manufacturing to fulfillment. This enabled and empowered them to react more quickly to customer needs and questions. The customer support and manufacturing and fulfillment teams still work closely on a daily basis and communicates constantly.
Jeremy Rose from CertaHosting, agrees:
An agile supply chain is focused on the needs of the customers and has a diversified offering and the required quantity of supplies, and is always responsive or able to respond to market demands.
In order to effectively manage supply chains, it is necessary to integrate business processes of the participants in the chain. The effectiveness of the supply chain depends on the integration of inventories, locations, production, transportation and information, with the main goal of eliminating unnecessary expenses. A coordinated supply chain management is the key to successful business, while putting emphasis on the importance of the role of procurement and logistics in the supply chain.
Charlie Wilgus, General Manager for manufacturing and supply chain practice at the executive search firm Lucas Group supports the idea of end-to-end integration, particularly with systems and applications as well as leadership alignment (S&OP):
Systems and applications have to be integrated so that there’s no degradation when data is converted. A good example is when functions don’t collaborate. Finance is planning from one dataset, Sales is planning from another, and Marketing plans from a third set of data. The result is a very poor forecast that Supply Chain has to execute against. Ultimately, this results in poor service and a lot of incremental cost to try to fulfill the demand. A solid supply chain strategy should support the overall business strategy. Once you know these key success factors, you can have a sound leadership discussion around the supply chain strategy. The discussions must deliver a simple but compelling story that can be told throughout the organization from the top down.
[ Related Article: Successful Trends in Supply Chain Management ]
When building out a vertically integrated supply chain, Abhi Lokesh (of Fracture) has some helpful tips:
- Proactively think about growth and plan for scale. Ensure that whatever systems or processes you’ve implemented for SCM can scale with your company and that they don’t get overwhelmed too quickly. On the flip side, ensure that you don’t bloat your SCM with processes and procedures that cause inefficiencies and ultimately provide a poor customer experience.
- Gauge your strengths. Being a vertically integrated operation isn’t for every company. It’s an intense operation with a lot of moving parts. If that’s not your thing – recognize it and embrace it. There is a growing field of SCM companies that specialize in acting as an outsourced provider of SCM services.
- Leverage innovative third party vendors to optimize your process. For example, Fracture uses 71lbs to help manage late delivery and lost and damaged refunds to ensure that our shipping couriers are getting our orders to our customers on time. If our couriers are late in delivering orders or lose/damage orders, the 71lbs team works on our behalf to file and fight those claims.
An integrated supply chain requires good cash management to keep it operating smoothly and at peak production. Taulia’s VP of Marketing, Matthew Stammers says that cash management can strongly impact the competitiveness of the supply chain:
Companies that are creating winning strategies are those that not only optimize the production and movement of goods in supply chains but also optimize the movement and allocation of cash. These companies recognize that their supply chain is a critical factor in ensuring overall competitiveness and that funding of supply chains through timely payments and access to cash helps ensure trust, builds a sense of partnership and ultimately creates innovation and business growth.
The ever-increasing rise of technology allows companies to leverage these new technologies to transform the way cash is managed and optimized through supply chains. Companies that understand and take hold of these new technologies are the ones that are building a position of stronger liquidity, trust and collaboration across their supply chain and therefore their overall competitive strength.
Taulia is a broker of working capital solutions that make it easy for businesses to free up cash, accelerate payments, and improve supply chain health.
[ Related Article: Best Supply Chains from Companies Around the World ]
DLT Labs is a Supply Chain Management company attempting to support customers with improved invoicing and payment reconciliation to help with supply chain cash management. According to Chairman & CEO Loudon Owen:
Invoicing and payment reconciliation is arguably one of the most challenging components in supply chain management. We are working with multinationals to deploy our revolutionary payment product, which uses distributed ledger technology to immediately eliminate invoice disputes along the supply chain. Assets are tracked using blockchain and smart contracts enable automated payments throughout the process, which is easy to implement and works seamlessly with legacy systems.
The key is to have a platform that enables invoice reconciliation by building trust and transparency among all parties, including consumers, who want to avoid supporting unethical supply chains (such as those with conflict minerals). Whether it is payment products or one of our blockchain products for asset track or verification, distributed ledger technology is enabling a massive disruption of the supply chain.