by Brian Sheehan Brian Sheehan

Best-in-class supply chains around the world are constantly innovating and improving their management processes. This perpetual refinement of complex activities has brought them their success and status, while promoting new trends in supply chain management that others can implement with their own supply chains.

 

Evolution to Digital Supply Networks

The supply chains of the past were more linear, progressing from design to plan, source, make, and finally, deliver. Yet technological advancements and a more collaborative approach have pushed many supply chains of today to evolve into a more dynamic system of interconnected partners, called a digital supply network (DSN). Information from several different sources is integrated within the DSN, informing and driving production and distribution within the supply chain.

This ecosystem is more optimal, and leads to a more efficient and cost-effective supply chain. A DSN leverages the old linear supply chain approach with more accurate data and greater support from multiple partners to make it more successful. Systems become more productive, processes are streamlined, and the result is reduced waste and therefore, cost. A more informed supply chain process is better equipped to adjust to changing situations within the supply chain.

 

Automation Streamlines the Supply Chain

The development of driverless cars as a viable method of transportation will certainly affect the supply chain in years to come. Automation itself is a highly sought after aspect of best-in-class supply chains, because it minimizes mistakes from human error, improves efficiency and speed, and reduces overhead costs for payroll and benefits. When forklift operators and truck drivers are replaced with computers, the automation they create will reduce the need for logistics personnel. This is a great thing for the continued refinement of supply chain management, but means diminishing career opportunities in logistics for young graduates.

Although this change isn’t likely to happen for several years, it is imminent as investments into driverless vehicles has continued to increase. In fact, Apple just confirmed that they are developing the autonomous systems for driverless cars, and an ARC survey found that approximately 15 percent of warehouse executives listed the procurement of autonomous mobile robots as an investment priority for the next three years. Now, robots with arms are not able to outshine humans in lifting items from shelves yet—that’s a highly complicated technical problem—but they soon will, causing warehouse jobs to vanish rapidly.

 

Logistics Transformed by E-commerce

Amazon Prime, Prime Now and other same-day delivery trends have taken e-commerce by storm, transforming logistics for some retailers almost overnight and shaking up processes industry wide. Due to shipping catastrophes like the holiday meltdown of 2013, retailers and shippers have both made significant adjustments and now engage in detailed planning to ensure such a meltdown doesn’t reoccur. Of course, due to circumstances beyond their control, there will always be late packages, but progress has been clear, as evidenced by the success of the 2014, 2015 and 2016 holiday shopping seasons.

Not surprisingly, e-commerce has affected how brick-and-mortar retailers invest in logistics and omnichannel projects, in order to compete. A market study on omnichannel fulfillment from the ARC Advisory Group forecasts continued investment growth in these technologies: “E-commerce growth is fueling the rise in omni-channel fulfillment. Findings… suggest that e-commerce revenues have increased 51 percent over the last five years, and are expected to grow 42 percent in the next five years. This continued growth will make it more important for organizations to fulfill orders through the most efficient channel, regardless of where the orders originate.”

E-commerce sales currently account for 8.5 percent of total retail sales in the U.S., according to the Census Bureau. What happens when that percentage increases three-fold, as it eventually and inevitably will? Shippers also need to make changes in order to be capable of delivering all of those packages, and luckily, they are already getting started. Drones, driverless vehicles, advanced algorithms and other innovations are already being developed by large PLs alongside other crowdsourcing solutions.

 

Collaborative Planning Forecasting and Replenishment

A collaborative approach to supply chain management is proving more and more successful, which is why it is a top trend industry wide. Collaborative Planning Forecasting and Replenishment (CPFR) brings multiple parties together, combining their knowledge and skill to better plan and implement order fulfillment. This could entail synchronizing on specific forecasts, planning promotional campaigns, and determining effective processes for production and replenishment.

By structuring collaboration between trading partners throughout the supply chain, CPFR helps an operation achieve a more balanced alignment of supply and demand while eliminating or minimizing fractures in process. This method of trading and interchanging data between supply chain partners is better for consumer fulfillment, improves inventory management and reduces costs. To engage in CPFR, trading partners need only to agree to share information with each other and work together to deliver products to meet the true market demand.

 

Using Technology to Improve Order Fulfillment

Technological advancements have probably made the deepest impact on the supply chain management and product distribution processes, by improving efficiency, automation, and workflows. Driverless vehicles are just the start!

For example, Radio Frequency Identification (RFID) offers a new and improved method of data exchange within the supply chain. This technology communicates identification and tracking data between the terminal and an object (product or person) by way of electromagnetic waves. An RFID is a chip that stores a product’s basic information, allowing the terminal to easily identify and track it along the supply chain. This chip can be stuck onto or inserted into the product. Supply chains that incorporate this technology can enjoy far more efficiency and reduced costs, since an RFID can track just about anything at any point in the distribution process. The result is minimized errors and a streamlined, fully track-able supply chain.

The options for new technologies that improve supply chain management are growing all of the time! SKU forecasting efforts are significantly improved with statistical machine-learning algorithms, which integrate different demand signals in order to more accurately forecast SKU levels. Cloud-based analytics provide managers with access to important data at their fingertips, and real-time connectivity allows instant communication throughout the supply chain between both humans and digital distribution networks.

 

These trends are really only a drop in the bucket of the new technologies, processes and ideas that are transforming today’s supply chains into systems that will be successful far into the future.