The goal of supply chain management is getting customers their goods in the fastest, most efficient way possible.
But in the age of information and swift technological advancements, the purchasing, logistics, sourcing, and operation-related aspects of supply chain management are ever-changing, requiring companies to embrace technologies that create flexible and adaptable supply chains.
A flexible supply chain can be measured by the pace at which a company’s supply chain model responds to fluctuations in business demand and environment. It is a transformative strategy that directly relates to a business’s production and distribution.
With consumer expectations such as next- or same-day delivery, these modern standards put excessive pressure on a business’s supply chain process. For companies to meet these new demands, they likely need to adopt new technologies, and in some cases, entirely new operational processes.
Aging technologies and inefficient processes lead to a breakdown in communication, lack of responsiveness, ordering mistakes and errors that are detrimental to a company’s bottom line. A flexible supply chain model can reduce risk to product availability, customer service levels, and non-value-adding activities — ultimately saving time and money.
Traditional supply chains were based on linear operations, a system that is executed on a consecutive series of steps and regulations, and one that makes it more difficult for companies to adapt to a modern agile supply chain strategy.
Businesses aren’t just feeling economic pressure to adapt their supply chain models, they’re also facing the ethical dilemma created by increasing environmental concerns that conflict with shorter product life cycles.
The pressure of consumer demands creates shorter product life cycles and forecasting uncertainty.
Today, companies can miss major sales opportunities if they run out of stock, or if they overproduce, they face the repercussions of waste. Short product life cycles have increased uncertainties and left little wiggle room for supply chain sustainability. With a more agile supply chain strategy, sustainability is achievable through a circular supply chain concept.
What if your company has an abundance of overproduced, damaged or end-of-life products? Do you throw them away? Most companies do. But circular supply chains aim to minimize waste through reducing and repurposing. One example is reusable packaging for the transportation of or the actual product end-state packaging, i.e., going from plastic to glass or using reusable shipping assets like racks or cartons. Solutions like reusable packaging management can be implemented to manage these types of reusable transportation assets.
The circular supply chain also aids businesses in meeting government standards. As countries like China have begun to refuse industrial waste, and government regulations on waste disposal have been implemented, more pressure is mounting for companies to repurpose their products. Environmental challenges in supply chain management can be addressed through strategically restructuring supply chains around circularity. Flexible supply chain models offer the ability to easily adjust to new supply chain approaches, like circular concepts. The agility it creates allows for an efficient response to demand or supply chain disruptions like a natural disaster or disease outbreak without severely impacting your operations.
Responding to the highs and lows of business demands in the modern supply chain requires businesses to be interconnected on a global level. Climate change undoubtedly affects the supply of finite resources and materials. The rise of sea levels and an increase of extreme weather events will also put more pressure on global trade, according to the World Trade Organization (WTO). As the threat of climate change grows, businesses will have to reevaluate the amount and type of energy and materials they use during production and distribution, requiring worldwide collaboration.
Outside influences, like public perception and government regulations, are two potent sources of pressure for companies to be more eco-friendly and flexible, but employees, investors, and NGOs are starting to have similar expectations. Companies have begun to use eco-friendly warehouses, where they can track the amount of resources they are using with an energy management system, which monitors the usage of gas, water, and electricity, identifying opportunities for conservation. Along with energy tracking, other technologies are allowing businesses to have a more sustainable and flexible supply chain, such as CO2 calculators and enterprise cloud computing.
A significant amount of supply chain costs are spent on fuel and freight for transportation. Consumer demands require fast and flexible deliveries, while freight and fuel costs remain high. In order to keep up with increasing demand, distribution centers are becoming more concentrated in metropolitan areas. Last-mile delivery is frequently the most challenging part of the shipping process for distribution centers. By now, most people know that drones and automated vehicles are the future of logistics, but implementing them is not widespread.
The transportation industry is also using innovative solutions to capture logistics data and information. Advancements in transportation monitoring now allow businesses to track the exact location of their product and calculate estimated times of arrival. This data allows shippers to detect and respond to expectations and analyze trends and patterns in their distribution process that may be interfering with delivery such as dock hold-ups and infrastructure blockages.
Intelligent business predictions are becoming a competitive advantage for companies. Technologies like artificial intelligence collect enormous amounts of real-time and historical data which can be applied to AI algorithms and business techniques. Location awareness and AI can, “predict which products are most cost-efficient to stock in a certain warehouse based on its proximity to certain areas,” wrote Yasaman Kazemi in the article “How The Modern Supply Chain Is Evolving” from Forbes.
Creating a flexible supply chain is nearly impossible without the use of technology. And implementing new technologies need not be time-consuming or expensive. Achieve step-changes with modular, scalable, cloud-based solutions. Strategic freight procurement, self-service dock scheduling, minimal wait times, and the formation of strong relationships with carriers are ways to contribute to a flexible supply chain.
In today’s global economy, flexible supply chains now go hand-in-hand with sustainability. As environmental concerns and technological advances continue to grow, supply will be required to adapt accordingly. If you are interested in ways you can move toward a more agile supply chain, contact Alpega North America to learn more about our cloud-based transportation management solutions.