morai-logistics-how-a-supply-chain-excellence-strategy-helps-organizations-grow

A recent halt in market growth for retail leader Adidas, reminds organizations about the importance to assess their supply chain excellence strategies.

According to Supply Chain DiveSupply Chain DiveSupply Chain Dive, Adidas will see a stunt in market growth this year for their North American. They’re facing ‘supply chain shortages’ as a result of unanticipated demand. This hurdle is reportedly due to the organizations complete reliance on outsourced manufacturing. However, it asks us to question whether a the right supply chain excellence model is being followed.

To grow in an ever changing global market, organizations must strive to implement a long term supply chain excellence strategy. The concept of supply chain excellence, has been re-examined  many times over the years. The need for continuous re-examination is in response to a variety of factors such as technology, globalization and consumer demand. Some experts believe that achieving supply chain excellence is an ongoing journey rather than a final destination. Instead of presenting a single definition to explain supply chain excellence, let’s discuss how supply chains help organizations, like Adidas, succeed.

The impact of global markets

According to global statistics, ‘1.8 billion people purchased goods online’ in 2018’; this valued at 2.8 trillion U.S dollars. Market forecasts predict to see this grow over the next couple of years, with projections of ‘up to 4.8 trillion U.S. dollars by 2021’. These statistics show an increase in consumer demand, an outcome that is commonly linked to ecommerce and anywhere, anytime platforms.

However, what happens when retailers remove the ability for consumers to physically shop in a store? There is an increase in expectation for fast delivery services. ForbesForbesForbes states that

The constant demands for faster and more efficient delivery put a strain on even the mightiest of supply chains.

This means that organizations must continue to meet consumer expectations. In February, Morai Logistics discussed the emergence of a demand-chain model and the benefits it provides supply chains. It helps meet consumers need for instant gratification by localizing production to create opportunity for efficient and immediacy. Therefore, it improves customer experience and optimizes order fulfillment in order to keep up with demand.

When an organizations supply chain is not fully optimized, there are a variety of challenges that can impact growth. And, as evident from the above example with Adidas, it can also impact organizations of many different sizes. Why do supply chains have such an impact on the success of an organization?

Recommendations for supply chain growth

In response to an increase in consumer demand, on both production and delivery, supply chains are integral to a company’s success. In fact, half of businesses whos have ‘poor supply chain performance’ are found to ‘fail or close down’. This usually happens within the first 5 years of the business opening. How do companies prevent this risk from happening?

According to ForbesForbesForbes, there is no denying the need for companies to ensure their supply chains are ready to meet consumer demand. They provide the following recommendations to help ‘optimize supply chains’:

  • Look at the end-to-end experience
  • Improve visibility by creating cross-functional teams
  • Learn how to take the right data and turn it into insightful information
  • Integrated supply chain excellence  throughout the entire organization

The above recommendations will help ensure organizations are focusing on the right areas to improve their supply chain. To compete with the increase in consumer demand, organizations must ensure their supply chains strategies consider all of the above mentioned factors.

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In response to growing customer expectations, supply chains are looking at regionalization as a way to be more efficient.

At the beginning of this year, Morai Logistics presented 4 supply chain and logistics trends to watch for 2019. Included in this list were the current capacity crunch, transportation regulation mandates and direct-to-consumer fulfillment that result from an increase in consumer expectations. To expand their distribution capacity, supply chains have tried localizing production through a strategy called demand-chain. Yet, the continued growth of the market is so pervasive, that the industry must continue to innovate.

According to Supply Chain Management Review, globalization has pushed supply chains to think smaller when it comes to tackling the big picture. Rather than disperse manufacturing across the globe, research indicates that regionalization is a more viable option. Organizations benefit from mobilizing products closer to the consumer, and also help remove barriers associated with efficiency and delivery.

This article by Morai Logistics explores the concept of regionalization, or post-globalization, and its current impact on the supply chain industry. It also aims to outline the benefits organizations gain from implementing this type of organizational restructuring.

Regionalization at a Glance

As mentioned above, regionalization has been found to be a product of globalization. It’s a form of organizational restructuring that aims to address ‘visibility and velocity’. The idea here is to propose a greater emphasis on meeting the growing expectations of consumers that are influenced by globalization. It also moves us to ask the question, can regionalization actually act as a catalyst for supply chain efficiency?

Research defines regionalization as involving…

The reorganization and division of manufacturing into smaller segments and more localized economies.

Global supply chains are very complex and can lead organizations down a path with greater risk and vulnerability. However, a consistent factor that has been a positive contributor to both globalization and regionalization is technology. How industries learn to leverage and apply manufacturing technology, enables organizations to create regional supply chains.

In order to lead in a fairly competitive industry, supply chains must become more strategic. According to Global Supply Chain Ecosystems writer, Mark Millar,

World class organisations no longer perceive the supply chain as merely tactical support for business as usual, but take a holistic position that their supply chain is what drives the business.

This has never been more applicable than when it relates to regional supply chains. As customer expectations continue to grow, there are considerable advantages to having production closer to home. Let’s explore some of the top advantages that regionalization provides organizations.

Benefits of Regionalization

To meet the growing needs of consumers, organizations must ensure their supply chains are efficient and agile. That means working technologies to create efficient, cost-effective solutions. As mentioned above, technology plays an integral role in enabling supply chains to become innovative at their approach to moving product.

When an organization breaks down a complex supply chain into smaller regional locations, they are able to streamline processes with ease. In addition, they achieve the following benefits:

  • Create visibility across supply chains
  • Increase the velocity and agility of supply chains
  • Improve response rates to ‘market changes’
  • Deliver consumer expectations and demand

In conclusion, supply chains must continue to evolve their structure in order to compete and meet the needs of today’s consumers. While the impacts of globalization remain, there is a need to respond to change in a more efficient and agile manner. Regionalization is a beneficial way for supply chains to utilize their existing networks of manufacturers, by separating them into smaller sites. This will ultimately help organizations bring product home to their customers, while differentiating the business and improving performance.

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When it comes to driving business growth, research reveals that private equity executives struggle to understand supply chain managers’ value.

Across North America, organizations and companies depend on supply chains for a wide range of core functions. However, the Global Supply Chain Institute (GSCI) found that private equity executives had a different opinion. In a 2018 survey that included the opinions of 50 executives, supply chain functions were ranked as ‘relatively unimportant’. In addition, only 16% stated that they implemented a ‘multi-year strategies for achieving supply chain excellence’.

According to Investopedia, a supply chain is defined as,

Network between a company and its suppliers to produce and distribute a specific product to the final buyer.

In addition to transporting goods from point A to point B, supply chains also help companies ‘reduce cost’ and ‘remain competitive’. Therefore, why would a company consider a supply chain to be unimportant?

This article by Morai Logistics reinforces the critical role supply chains play in the growth of an organization. It also discusses the implications that may occur when an optimized supply chain isn’t integrated.

Supply Chains and Business Growth

When we make a purchase on a digital platform for instance, we usually can expect our item to arrive within 3 to 5 business days. However, there are many moving pieces that occur behind the scenes of an organization’s efforts to deliver products efficiently and on-time. The ability for customers to receive products is reliant on supply chains. This network delivers an end-to-end experience built on collaborative efforts between suppliers, manufacturers and third party logistics (3PL) providers.

According to Logistics Bureau,

The success of your business links inextricably to the performance of your supply chain.

In an article on supply chain management leadership, Forbes states that traditionally a supply chain would be used as a ‘reactive tool’. However, as they have evolved, they are now an important strategic initiative that spreads ‘value throughout the organization’.

The integration of a robust supply chain can benefit an organization in many ways, including the following:

  • Greater visibility
  • Enable an organization to cut costs
  • Influence ‘shareholder value
  • Increase customer satisfaction

There is no denying that a supply chain is an important vehicle when it comes to driving an organizations success. Let’s look at the hardships that may occur if a supply chain management strategy isn’t implemented.

Failure to Implement Supply Chains

As mentioned earlier, a survey conducted by Global Supply Chain Institute (GSCI), indicated an interesting disconnect. There were a considerable amount of companies that didn’t understand the function, purpose and benefit of a supply chain. A lack of awareness and failure to implement supply chain strategy, was also found to lead to poor performance. This ultimately resulted in a ‘performance gap’, which would impact the organization’s bottom line. In addition, it would also cause the organization to lack competitive advantage against other players in the industry.

The importance of implementing a supply chain goes beyond transporting product. It enables organizations to place their customers and bottom line, as a top priority. It also introduces efficiencies into the selling and exchange of goods. This reduces costs, keeps customers satisfied and generates revenue. It’s important that employees in leadership roles and across an entire organization, recognize the significant role a supply chain has in growing their organization.

Morai-Logistics-How-Mitigation-Strategies-Help-Global-Retailers-Offset-Supply-Chain-Shortages

Organizations within the retail industry should implement mitigation strategies into their supply chain to offset potential risks such as supply shortages.

In a press release published by Air Cargo News, global retail leader, Adidas, ‘turns to airfreight to mitigate supply chain shortages’. Reports from the first quarter showed that product shortages had impacted revenue. This caused the company to seek alternatives to their supply chain. In the case of Adidas, their chief financial officer stated that using airfreight will help ensure supply in the second quarter.

Omni-channel solutions are implemented by supply chains to help improve efficiencies and lower cost. By using a tactic that involves support from a variety of modes of transportation, supply chains are able to offer optimized solutions. However, the switch to airfreight made by Adidas is a mitigation strategy used to offset supply shortages. In addition to such shortages, there is a myriad of other consequences that may result from a lack of proper planning.

To combat an ever-changing global market place, research from the Global Journal of Flexible Systems Management, consider mitigation strategies to be highly important. When a retail company fails to set appropriate strategies to mitigate upstream barriers, there can be significant consequences to the bottom line. This article by Morai Logistics aims to identify four important components to an effective mitigation strategy.

Risk of Supply Shortage

The retail industry contributes significantly to the overall profit of the global economy. According to Statista, by 2020,  the global retail market will reach ‘28 trillion U.S. dollars’. Mitigation strategies become important when supply shortages begin to impact generated revenue. Research identifies a variety of barriers that can implicate the supply of a product, including:

  • Poor infrastructure
  • Shortage of skilled labour
  • Lower productivity of workers
  • Relationship management issues
  • Supply material defects

All of these barriers can cause major consequences to the bottom line. Therefore, creating appropriate mitigation strategies should be a top priority. They may not always be consistent depending on the risk(s) that directly impact a business or organization. Let’s explore two strategies that help mitigate risks within the retail and apparel industry.

Planning Efficiency

Research conducted on the impact of ‘supply-side’ barriers in global apparel supply chain’, identify planning to be an important strategy. This strategy specifically targets impacts from problems association with product planning.

Technology is playing a helpful role in enabling organizations and supply chains to design and create predictive tools. Morai Logistics has discussed the benefits of predictive analytics in foreseeing possible patterns in barriers that may arise. This is helpful when tactfully looking at dips in supply. In order to maintain transparency with customers and avoid harmful impacts from poor customer service, planning efficiency is important.

On-time delivery

Customer satisfaction should be a main focus when identifying and creating mitigation strategies. Customers are the main contributor to revenue into the business. Today’s global retail marketplace is reliant on both bricks and mortar and online shopping customers. On-time delivery has become an important focus for organizations looking for a competitive advantage. Therefore, making a commitment to meet lead-times will help maintain and improve customer satisfaction.

Supply chains must consider risk in order to take a proactive approach to avoiding consequences that may arise due to supply barriers. By outlining and implementing mitigation strategies, an organization can improve efficiencies, commit to on-time delivery and ensure complete customer satisfaction.

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Supply chains and third party logistics (3PLs) must offer optimized solutions to meet consumer demand throughout the Easter holiday.

In 2018, Easter was celebrated by 84% of Americans. This fun and festive April holiday, is a time for children, family and friends, to enjoy traditional gatherings and exciting Easter egg hunts.

This holiday is also a ‘time of generosity’. The most popular gift of 2018 was chocolate, sweets and candy. Statistics on planned consumer spending shows that last year, USD$2.6 billion was spent on candy. Food generated the most revenue at USD$5.7 billion, followed by gifts at $2.9 billion. That’s a large output of candy, food and gifts to deliver for such a short holiday season.

However, consumers want more than on-time delivery. They want something personal. More and more consumers notice stores providing the same options. Therefore, what differentiates these companies? Customer experience (CX).

While consumer demand is at an all-time high all year round, holiday seasons usually generates an incredible peak. To deliver positive CX, retail companies rely on their supply chains.

Customer Experience (CX)

The definition of a great customer experience has changed over the years in response to technology. It’s so easy for customers to buy what they want, as much as they want and whenever they want. According to Hubspot, good customer experience is,

The impression you leave with your customer, resulting in how they think of your brand, across every stage of the customer journey.

They further recognize that ‘multiple touchpoints’ impact the overall CX for a customer. From a supply chain standpoint, CX focuses not only on direct customers, but the customers they serve as well. That’s why consumer demand across any industry impacts the supply chain.

Retail companies, who serve the Easter market in particular, are recognizing how important personalization services are. Rather than send a generic bunny bear to your eight year old niece, wouldn’t it be more meaningful to personalize it with their name?

According to findings on customer experience (CX),

This requires digital supply chain capabilities — from the e-commerce site on the front end to supplier coordination for fulfilling orders to real-time logistics for tracking the goods.

In addition to personalization, other factors such as speed, on-time delivery, and visibility also create positive CX.

Impact on Supply Chains

Consumer demand is an ongoing barrier that retail companies and their supply chains face throughout the year. For any holiday season, the window to retain and capture new and loyal customers is shorter. Yet, customer expectation is high.

Retail companies face their own set of barriers, which impact their supply chains. When it comes to delivering CX to their customers during peak seasons, such as holidays, FedEx notes the following challenges:

  • Increased product variation with multiple vendors
  • Quality control
  • Fraud prevention
  • Inventory visibility
  • Customer expectation

Supply chains and third party logistics (3PLs) providers play an important role in delivering positive customer experience. They enable their customers to deliver product with speed, agility and efficiency. When large outputs are required during high seasons, such as holidays, 3PLs can be the difference between loss and retention. They host a network of omni-channel services that include air, ground, rail and ocean shipping. Large product loads are also transported in a safe, efficient and time sensitive manner.

Innovative technologies are integrating into processes and operations within manufacturing, warehousing and on-the-road deployment. Machine learning, artificial intelligence, and robotics help create streamlined and automated processes. In addition, this also shows a reduction in errors, delays, while ensuring on-time delivery and safe handling. This helps improve transparency, inventory control and traceability, which enables their customers to deliver a positive customer experience.

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Research on technology in supply chains shows a positive relationship between virtual reality and enhanced efficiency and visibility.

By 2020, virtual reality (VR) is estimated to be valued at USD $70 million. VR has enabled many industries to take an innovative approach to engaging customers. Since the e-commerce boom, retailers have found engaging customers both in-store and online very challenging. From an e-commerce perspective, VR helps companies create realistic shopping experiences. However, v-commerce also provides both the ‘interactive experience of bricks and mortar’ and the ‘convenience of e-commerce’.

While this technology has received a lot of recognition in the retail industry, it has also gained considerable attention in supply chain and logistics. For many years visibility and efficiency have been top challenges for supply chains. Also, the customer expectations on transparency and fast-delivery is at an ultimate high. How could an interactive technology tool like VR, add value to warehousing, shippers or suppliers?

This article by Morai Logistics looks at the ways VR is shaping the way supply chain operate to address current challenges faced in the industry.

Supply Chain Challenges

Moving goods from point A to point B sounds like a straightforward transaction. When a customer buys product and requests it to be shipped online or in-store, it’s processed through a warehouse and is then delivered directly to the customer. Although the shipment life cycle should be this simple, the end to end process is far more complex.

The ‘king consumer’ was listed as the number four top challenge facing supply chains this year. According to supplychain247,

High consumer expectations about delivery and shipping of packages will continue to challenge retailers, carriers and logistics service providers, forcing fundamental changes to warehouse design and location and driving up wages and competition for all types of supply chain labor.

This increase in consumer expectations has indeed caused considerable pressure on the supply chain and logistics industry. E-commerce has provided customers with easy click-and-go purchasing, and has also increased their expectation for faster product delivery. Furthermore, customers want greater transparency on when and where their orders are throughout the shipment life cycle. There is an incredible emphasis on ‘ever-faster delivery’ services as well.

Imagine exceeding customer expectations better than a competitor? That would give businesses incredible competitive advantage. Utilizing technology to create engaging customer-facing experiences has been consistent over the years. However, integrating VR into supply chains is different.

Virtual Supply Chains

To understand how technology can optimize a supply chain, it’s important to understand the basic concept behind the technology. Virtual reality is ‘an artificial, computer-generated, three-dimensional environment’. There are a variety of electronic equipment that work together to create this ‘sensory stimuli’. These items may include specialized:

  • Goggles
  • Head-mounted displays
  • 3-D images

The adoption of VR equipment is on the rise, with ‘mid- to high-end headset sales forecasted to reach USD $52.3 million by 2020. Using this sensory equipment takes the user on a journey outside of their physical space. However, how can this help supply chains achieve greater efficiency and agility?

Research on the benefits of VR in supply chains focuses on delivery, predictive modeling and performance. For instance, according to Forbes, using VR can also provide managers with real time insight into ‘any site at any time’. Below is a list of more benefits that VR provides supply chains.

  • Access on-site facilities at any time in the event of natural disasters or unexpected occurrences
  • Optimize delivery management and package inventory
  • Offer enhanced safety throughout the delivery journey
  • Ensure accuracy when delivering products to customers

Therefore, implementing virtual reality into supply chains is effective in improving efficiency, transparency and speed. It not only enables companies to execute seamless delivery processes, but it also shifts the focus toward the customer.

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In response to growing demands, experts consider cloud logistics as an optmization tool for the transportation supply chain industry in 2019.

Technology is the source of continuous global economic and social change. In addition to improving our every day lives, it also enables industries to advance and optimize communications, operations, production and servicing. For the supply chain and logistics industry, technology continues to shape the way products are distributed across the globe. It has also pushed leaders to explore digital maturity and leverage different platforms to help compete with demanding markets.

According to PwC, cloud technology addresses setbacks associated with scalability, flexibility and efficiency across an organization.  As with any new internet based technology, uncertainties include ‘unclear development costs and data security’. Regardless of these risks, Cloud logistics is expected to make a significant impact on the transportation supply chain industry in 2019.

This article by Morai Logistics looks into the way cloud logistics is shaping the supply chain and logistics industry. A specific focus will discuss the role of transportation management systems in advancing operations.

Cloud Logistics in Supply Chains

There are a few reasons why cloud logistics has become an innovative move for supply chains. Connected logistics not only drives revenue, but it also improves the way processes are managed. Cloud technology has experienced incredible growth across a variety of industries. Forbes found that,

The Worldwide Public Cloud Services Market is projected to grow by 17.3 3% in 2019 to total $206.2 billion”.

Furthermore, by 2023, the ‘global connected logistics market’ will reach ‘$73,846.1 million. In response to increased consumer demand, leveraging cloud technology helps organizations do business better. Oracle, a global leader in computer technology, creates cloud logistics solutions to help logistics organizations achieve the following:

  • Streamline transportation networks
  • Optimize warehouse operations
  • Push out efficient fulfillment strategies
  • Simplify business

The advancement of cloud technology also enables transportation supply chains to remove manual and inefficient steps throughout the end-to-end experience. Therefore, the end goal is to optimize the supply chain to create solutions that help meet increased consumer demand. In addition, cloud logistics also helps organizations automate processes, which improves productivity.

Current Barriers to Cloud Integration

According to a global survey on enterprise risk, there are a variety of reasons shaping the way organizations feel about cloud computing. Six risks were found to be “somewhat of a challenge” to over 50% of respondents.

  • 54% reported Governance
  • 51% reported Lack of resources/expertise
  • 53% reported managing cloud spend
  • 51% reported security
  • 52% reported compliance

The above risks are quite common when integrating new technology into supply chain operations and processes. In past articles, Morai Logistics has discussed the importance of developing a labour force with the advanced skills to support technological advancements. Cost is also a factor many supply chain organizations look at when implementing new solutions. Thus, integrating cloud logistics is also an optimal cost savings tools. Its core function is to help streamline transportation, operations and production processes.

Forward Thinking

In response to an increase in consumer demand and expectation, the supply chain and logistics industry must seek innovative solutions to remain competitive. Technology shapes the way organizations do business and interact with customers. Therefore, it’s beneficial to implement optimization tools that are aligned with consumer behaviour. Despite the raised challenges, cloud logistics is an optimization tool that can help supply chains achieve efficiency, visibility and scalability.

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As technology continues to grow at an unprecedented pace, organizations must optimize their supply chains to compete with the ‘Amazon Effect’.

The ‘Amazon Effect’ is a significant global movement that is shaping the way consumers buy and businesses sell. The term is linked to leading organization, Amazon, and the innovative and connected approach they take on selling goods worldwide. However, the disruption caused by this technological shift also impacts many industries, including supply chain and logistics.

According to Forbes Insights, the ‘Amazon Effect’ is one of four forces that will transform ‘logistics, supply chain and transportation’. The impact on supply chain stems from the rapid increase in consumer demand and output produced by online shopping. This requires the industry to take an innovative approach to the entire end-to-end journey of delivering a product to consumer fast and efficiently.

Technology has played an integral role in enabling supply chains to keep up with an ever changing global market place. In addition, an innovative and expert talent pool is also necessary to lead this industry into the future. However, there are hurdles and growing pains that come with any large scale change. This article by Morai Logistics discusses how the ‘Amazon Effect’ is shaping the supply chain and logistics industry. It also touches on effective strategies for change supply chains should implement to ensure organizations stay competitive and on top.

The Amazon Effect

The Internet and emerging technology platforms create endless opportunities for people to search and shop online. Last year, in 2018, ‘global e-retail sales’ generated USD 2.8 trillion. This number is forecasted to reach up to USD 4.8 trillion by 2021. In terms of the number of people expected to purchase product, there will be 2.14 billion global digital buyers by 2021. How do these figures relate to the ‘Amazon effect’?

According to Forbes, there has been a significant reduction in mall traffic over the years as a result of the convenience of online shopping. The article further emphasizes that purchasing products has also become ‘faster, easier and infinitely more convenient’. The ‘Amazon effect’ is a global phenomenon that is describes by Investopedia as,

The “Amazon effect” refers to the impact created by the online, e-commerce or digital marketplace on the traditional brick and mortar business model due to the change in shopping patterns, customer expectations and a new competitive landscape.

This causes an increase in pressure on retail companies to take a more innovative approach to selling at both the in-store and online level. However, there is also an incredible amount of demand on supply chains to meet these growing demands and expectations.

Supply Chain Impact

At the most basic level, supply chains enable the delivery of a good from point A to point B. From a retail perspective, this relationship is usually between a business and a customer. Between the fine lines, there is a cohesive interaction between manufacturers, shippers and possibly third party logistics providers (3PLs). However, what happens when a large increase in output occurs? According to Supply Chain and Demand Executive, supply chains that are ‘ill-equipped to administer efficient, high-volume production strategies’ suffer.

Strategies for Change

As online shoppers continue to seek companies that offer convenience and speed, supply chains must also integrate technologies that optimize their processes. Looking forward, supply chains must also evolve with external markets in order to remain competitive with the ‘Amazon effect’. In addition, there should be a focus on agility, efficiency, visibility, and end-to-end traceability. While the ‘Amazon effect’ is a disruptor, it also pushes organizations to think about the future and understand where the market is headed. By being aware of the growing expectations of customers, both retail and supply chains can thrive.

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With 43% of supply chains using smart sensors, the industry must continue to integrate IoT tools to ensure efficiency and agility.

Last week, Morai Logistics presented the benefits of implementing smart manufacturing into supply chains. The integration of technology into factory level operations, ‘helps to create opportunities that improve efficiencies, productivity and operations on the ground floor’. By smartening up manufacturing, supply chains can ensure a high level of visibility across the shipment lifecycle. In addition, there is less reliance on manual shipment processes and more focus on automation.

If we trace smart manufacturing back to its root technology, we will find the Internet of Things (IoT). Industry experts have been integrating IoT theories and technologies into a variety of ‘machine to machine (M2M) communication’. Smart sensors, or instance is a new technology that is ‘supporting supply chain innovation and the smart factory’.

The global market share of smart sensors will grow to USD $21.5 billion by this year and USD $39 billion by 2022. Their advanced ability to uncover insightful information from data position smart sensors as a valuable technology tool to supply chains. In fact, 83% of supply chain leaders believe sensors, robotics and inventory optimization tools, are beneficial for competitive differentiation.

This week Morai Logistics will discuss how IoT technologies such as smart sensors, help the supply chain and logistics industry become more efficient and agile.

Smart Thinking with Smart Sensing

It was forecasted that by this year, the global IoT market will generate over USD $1.7 trillion. Statistic also show that the number of connected devices will be 20.35 billion. The Internet and technology continue to create opportunities for greater connection and communication. In order for supply chains to keep up with demand, supply chains must adopt and implement these tools.

There are many factors to consider when developing a comprehensive smart supply chain. The advancement toward smart manufacturing helps the industry develop efficiencies in operations and productivity. Furthermore, the use of smart technologies and tools is a huge part of smartening up the journey of products throughout the shipment life cycle.

Smart sensors, for instance, has the ability to harness complex data sets and translate them into actionable and insightful information. Sensors have been used to execute traditional operations, which included tracking orders and maintaining inventory. However, there are notable differences in new smart sensors. According to Deloitte,

Smart sensors are advanced platforms with onboard technologies such as microprocessors, storage, diagnostics, and connectivity tools that transform traditional feedback signals into true digital insights.

It’s an innovative way of extracting data to enable supply chains to make smarter decisions. Statistics show that 43% of supply chain leaders stated their companies ‘use sensor technology’. Furthermore, experts say that smart sensors enable ‘always-on supply chains’. By integrating smart technologies such as sensors, supply chains can benefit in many ways.

Benefits of Smart Sensors

To keep up with an upward movement in consumer demand and expectation, supply chains must look at current barriers. Common focus has been on improving visibility, productivity and operational efficiencies. Research shows that the integration of IoT technologies help in the following areas:

  • Efficiency
  • Responsiveness
  • Business Interuption

Smart sensors aid in collecting data and using it to help organizations with improved decision making. Furthermore, this enables management to reduce certain interferences that may include ‘missed handoffs, cold chain exceptions or theft’. The benefit of integrating smart sensors also includes ‘informed scenario-based contingency planning’. In addition, supply chains can improve their agility, ensure customer satisfaction and dodge unnecessary costs.

Smart-Manufacturing-A-Solution-To-Supply-Chain-Optimization

Smart manufacturing is a new advancement in supply chains that will help optimize the customer experience and meet consumer demands.

Joined forces of the Internet and digital technologies have provided the world with easier and faster ways to buy products and services. The Global ecommerce market has seen an incredible increase in market value over the last 5 years as a result. Statistics show that in 2014, the global ecommerce market generated USD $1.3 trillion in sales. Last year this amount increased to US$2.8 trillion. By 2021, sales are forecasted to increase by 276.9%, which will generate an estimated USD $4.9 trillion.

Although these figures are positive from a global wealth standpoint, they also translate into an impressive level of output from a supply chain perspective. An increase in sales means an increase in expectations, which also can cause many industries to feel constant pressure to keep up with customer demands. Therefore, supply chains must think of ways to leverage digital tools to help.

From autonomous trucking to machine learning, technology has provided endless opportunities for organizations to remain competitive. However, we often hear of these digital tools from a data and insight or a predictive analytic perspective. Smart manufacturing is a concept making headway in the supply chain and logistics industry because of the many benefits it can help the shipment life cycle. It helps to create opportunities that improve efficiencies, productivity and operations on the ground floor. This week, Morai Logistics looks into the innovative characteristics of smart factories and discusses expert opinions on how supply chains will benefit.

Smart Manufacturing 101

From mobile to wearable technology, there are a variety of gadgets that are classified as ‘smart’ devices. When applying this term to supply chains, one could assume this describes automation of processes and operations. There are a variety of definitions that have been created to define smart manufacturing, or smart factories as some experts have coined. According to Deloitte,

A smart factory is a leap forward from more traditional automation to a fully connected and flexible system — one that can use a constant stream of data from connected operations and production systems to learn and adapt to new demands.

This digital phenomenon is one of the many examples of how digital maturity extends throughout the entire shipment life cycle.

Why does manufacturing need to be ‘smart’?

As mentioned above,supply chains  are under pressure to remain agile, efficient and offer affordable services in today’s competitive market. Especially with outsourcing becoming more and more mainstream, differentiation is integral. Therefore, it’s important to look at the different ways smart digital tools can help.

According to Industry Week, there are five top challenges facing supply chain manufacturing. We’ve narrowed down the top three that relate to smart manufacturing. They include:

  • Lack of inventory visibility
  • Poor productivity
  • Reliance on manual shipment processes

Smart manufacturing can help solve these challenges by creating a streamlined and consolidated process based on a singular operating platform. Furthermore, the sharing of insights and data will create ‘instant decision-making’ opportunities and will help supply chains overcome challenges of changing markets.

As with any digital transformation, the process of moving to a smart way of manufacturing is progressive. Supply chains must jump over a few hurdles including a change in workforce culture, leveraging useful data and the most common, security. However, there are considerable reasons this will improve the way supply chains run. Let’s take a look at the benefits smart manufacturing provides supply chains.

What are the benefits of Smart Manufacturing?

Finally, to keep up with increased demands, supply chains must devise optimized solutions to produce necessary output efficiently and with agility. Furthermore, it’s important that supply chains recognize the improvement in productivity, in addition to instant decision making. According to their extensive research on the implementation of smart technologies, Oracle also attests that ‘smart factories increase output, quality, and consistency’.

Smart digital tools such as cloud computing and the Internet of Things (IoT), can help supply chains improve the following areas:

  • Data automation
  • Improved visibility and ‘product-quality’
  • ‘Cost reduction’
  • Real-time data
  • ‘Enhance productivity’

Therefore, the move toward smart manufacturing is a solution for meeting the needs of booming global markets. This will also help supply chains digitally mature from a central area and improve efficiency, agility and productivity.