Supply Chain Management (SCM) involves the flow of goods and services in an efficient manner. It encompasses all the steps involved in procuring raw materials through to the finished goods, in a way that is streamlined and provides value to the customer.
Perhaps today more than ever, efficient supply chain management is a crucial part of operations around the world. The COVID-19 pandemic has put greater pressure on businesses to deliver. Export companies have had to revise their entire SCM procedure to account for COVID related delays at all stages of the chain but in particular, companies shipping goods overseas. According to a survey conducted by the Institute for Supply Chain Management in March 2020, nearly 75% of U.S. companies reported supply chain disruptions due to coronavirus-related issues.
Delays at ports around the world are now commonplace and this is putting a strain on domestic freight and distribution. Due to New Zealand retailers having issues with stock due to these delays, SCM is more important than ever in managing expectations and communicating to businesses up and down the supply chain.
The importance of efficient supply chain management
Efficient supply chain management gives you better negotiating power to obtain the best rates and products in the shortest time possible. In turn, this reduces inventory costs and improves the overall planning and efficiency of your operations.
Good SCM also establishes strong communications and relationships with suppliers, helping to avoid shipment delays and minimise logistical issues. Building strong relationships and trust with suppliers is crucial at this time and clear lines of communication are an integral part of efficient SCM.
Delivering on all these areas contributes to the delivery of a high level of customer service, which in turn helps to grow businesses and importantly, to grow revenue.
Leveraging technology to manage the supply chain effectively
The term ‘supply chain management’ first appeared during the 1980s and that could be considered the birth of the modern-day concept of the supply chain. In reality, however, supply chain management dates back far beyond the 1980s. As far back as 1776, Adam Smith was talking about the core principles of the supply chain in his book The Wealth of Nations, so it is safe to say that SCM is a concept that has been around for a long time.
What we can also say with certainty is that supply chain management is changing due to the rapid development of new technologies which facilitate a much more efficient supply chain and in turn, allows for more efficient supply chain management.
To stay competitive globally and remain on the cutting edge of a complex business world, more companies are incorporating technology into their supply chain management systems today. In recent years, consumers have become increasingly demanding, setting their expectations high when it comes to quality and service. At the same time, supply chain managers have come to realise that the latest technology can help them ensure better accountability and visibility, allowing them to maintain tight control and stay ahead of the competition.
While technology is playing a huge part in advancing the delivery of SCM, it is also important to remember the core principles of SCM and continue to deliver in these areas. Therefore, before we talk more about the technologies that are changing SCM, we first want to touch on three important elements of supply chain management that are still highly relevant today:
1. Find dependable suppliers
Now more than ever, choosing the right supplier is an essential part of efficient supply chain management. While cost is often the key determining factor, there are other elements that are important to consider. Reliability is one such element and one that should be weighted equally with cost as supplier reliability issues can impact your ability to meet your responsibilities to your customers which can end up costing you more.
Find a supplier you can trust, carry out your due diligence and crucially at this time, find a supplier who is strong on communication as this will be the foundation to forming a strong and lasting relationship.
2. Invest in your own staff
As well as investing in new technologies to help improve the efficiency of your supply chain management, it is also important to invest in your staff. SCM workers are often required to juggle many balls at any given time and while technology can help, there is no substitute for well-trained staff.
All SCM workers should have a formal training programme which can include on-the-job training, coaching, mentoring, external courses, as well as training on all new technologies.
3. Continuous improvement
As with all areas of business, SCM requires continuous improvement to accrue cost benefits, improve delivery times and enhance customer service. While technology is playing a big part in the continuous development of SCM, people play an integral part in the constant drive for improvement and innovation.
It is important to put in place monitoring and evaluation systems to measure the success of your SCM activity. This will allow you to conduct regular reviews and assess the impacts of changes made to the process.
How technology can enhance your supply chain
Technology is pervasive in today’s supply chains, in areas from processing and tracking transactions to planning, scheduling and management. It enables a truly integrated, visible and efficient supply chain that benefits from collaboration.
Using sensors and ever-improving internet connectivity, forward-thinking companies are collecting data at every checkpoint, from the status of raw materials flow to the condition and location of finished goods.
Machine learning, artificial intelligence (AI) and advanced analytics help drive automation and deliver insights that promote efficiencies — making on-the-fly route changes to accelerate product delivery, for example or swapping out materials to take advantage of better pricing or availability.
3D printing allows firms to localise production of goods closer to customers, allowing for faster turnaround, reduced transportation costs and greater personalisation. Additive manufacturing is also opening doors to easy production of spare parts, enabling companies to slash inventory, cut costs and create supplementary revenue streams.
Monitoring the supply chain
Today’s technology has extensive capability when it comes to keeping a company’s production on track, anticipating and repairing mistakes and making modifications that guarantee a top-quality product. Every link in the supply chain can be monitored simultaneously and automated notification systems are especially valuable for sending a single message to many players through a variety of media channels.
Computerised shipping, tracking and electronic invoicing are also core components of a modern supply chain management system that is designed to keep customers satisfied.
Remotely managing the supply chain
The mobility, flexibility and convenience of wireless devices mean supply chain managers can coordinate processes at every link in the chain, regardless of their physical location. In addition, employees, vendors and other supply chain partners can play active roles in ensuring efficiency—for example, truck drivers can use GPS-equipped devices to immediately report transportation snags that may disrupt processes further along the supply chain.
The development and advancement of chain-related apps and features for smartphones and other mobile devices are adding tremendous portability to supply chain management. With their long-lasting battery life, keyboard capabilities, barcode scanning, high-quality digital cameras and speech recognition features, tablet computers and smartphones provide excellent functionality for warehouse operations.
AI and automation of the supply chain
Robots have long played a role in the supply chain and may be used to move goods and materials throughout a warehouse, during transport and as part of the fulfilment process. But as AI technologies push robots to higher levels of sophistication, machines will be assigned many manual tasks now owned by humans, from picking and packing orders to automating heavy loading tasks.
AI, machine learning and IoT connectivity are helping to significantly improve the precision and mobility of industrial robots while aiding in safety, allowing for a new generation of ‘cobots’ (collaborative robots) that can work alongside humans as opposed to being cordoned off in a separate safety zone.
NEC and supply chain management
Here at NEC, our involvement in the supply chain is mainly related to transportation and more specifically, smart transportation.
NEC’s Transport Management solution is a flexible integration of a number of solutions and can be tailored to suit your requirements. These solutions include:
- Schedule Optimisation System (SOS)
- Accident Reduction System (ARC)
- Driver Profiling System (DPS)
All these solutions have a focus on keeping vehicles on the road, keeping drivers safe and reducing costs. By ensuring vehicles are operating at the highest levels of efficiency, both in terms of the routes they take and the time they are on the road, you can make a real impact on your bottom line.
Talk to one of the team today about the opportunities to improve the efficiency of your supply chain.