Supply Chain - Digital Transformation

If supply chain companies are going to evolve to meet the demands of the market, digital transformation has to be central to that evolution. 

Now, more than ever, supply chains are being pushed to grow as a result of the needs of customers. And, no matter how well run a supply chain is, by itself it simply can’t meet those needs. Not without the aid of technology. In turn, there’s no greater way to technologically integrate and streamline an operation than digital transformation.

The numbers bear this out. A McKinsey study showed,

That, on average, companies that aggressively digitize their supply chains can expect to boost annual growth of earnings before interest and taxes by 3.2 percent—the largest increase from digitizing any business area—and annual revenue growth by 2.3 percent.

If they digitally integrate properly, supply chains should see improvements in the following areas, just to name a few:

  • Speed
  • Efficiency
  • Decision-making
  • Communication

This week’s article by Morai Logistics underscores the importance of digital transformation for supply chains. Pointing to some of the most relevant areas of improvement digital tools will bring and how.

Speed

There are a multitude of reasons why digitization should improve the speed of a supply chain. Automation by itself should greatly enhance supply chain speed by conducting repetitive tasks like data collection without human error. Additionally, machine learning can greatly help with predictions that are central to supply chains running smoothly. 

These predictions can involve data within a company, such as the health of machinery so that it can be fixed or replaced before it disrupts operations. The predictions can also involve external data such as market demands, so inventory can be stocked accordingly or weather patterns, so the supply chain can adapt to them.    

Efficiency

Efficiency often goes and hand-in-hand with speed, with the added bonus of leading to more profitability due to less waste. Thus, for many of the same reasons speed is improved, efficiency is too—automation and machine learning. However, in addition to those reasons, digital integration drives efficiency also because it can bring with it artificial intelligence (AI) and robotics. 

AI, much in the vein of automation, can handle tasks that would otherwise be mundane, freeing up the workforce for more important matters. Robotics is useful in several domains, particularly warehouse management, as they can deal with the handling of the inventory. 

Decision-making

In order for a supply chain to perform optimally, the decisions that underpin it have to be precise yet flexible, accounting for customer demands and adaptable to any circumstance. The collection of data, the generation of analytics, and the subsequent insights they give can be integral to understanding a supply chain. 

Moreover, the earlier mentioned machine learning can go a long way in making decisions more informed. As they give suggestions to help with inventory management, scheduling, market fluctuations, and so on.

Communication

As a result of the incredible size of modern day supply chains—often stretching from one side of the globe to the other—it’s critical that communication along them is excellent. Any gap can lead to a breakdown in the entire chain. One digital option to overcome this issue is blockchain technology.

Blockchain provides a database with an immutable and transparent digital record of the movement of products along supply chains. Where, in turn, each new piece of data has to be validated by every player in the supply chain. Consequently, there is a continual mutually agreed upon data trail of what is happening each step of the way. 

Cybersecurity and Supply Chain Risks

As supply chains get increasingly digitized, the risks of supply chains being undermined by cyber attacks also increases, making cybersecurity vital to supply chain health.

Digital transformation is something that is crucial for supply chains going forward. If they are to keep up with the market demands that are placed upon them, they need the efficiency, productivity, and precision digital tools bring with them. However, with the considerable upside of digitization also comes risks.

Supply Chain Digital recently released an article outlining just how significant a challenge cybersecurity has become for supply chains, stating,

Research from Ponemon Institute indicates that cybersecurity is a growing supply-chain challenge, with 56% of organisations reporting to have had a breach that was caused by one of their third-party vendors.

That means more than half of those in the supply chain industry have dealt with cyber attacks already. That is a hugely concerning number and all the more reason for companies to make cybersecurity a priority. With that said, in order for companies to have optimal cybersecurity, they need to pinpoint the areas that present the greatest risk.

This week’s article by Morai Logistics highlights some of the most significant cybersecurity threats supply chains face today.

Software

A vast majority of companies use software for their supply chain operations that aren’t their own. That means they have to rely on software provided to them by a third party. As a result, there are many avenues through which they can be compromised. The software itself has to be diligently vetted to make sure that it can’t cause harm, but the threat doesn’t end there.

Each software update can bring with it a renewed risk. What’s more, often these updates are automatic, making it impossible to assess them before they’re already up and running. Finally, software issues can even arise from someone from a third party being brought in to run diagnostics, and it’s hard to know what they’re bringing in as they plug their laptops into a company’s supply chain network.

Hardware

Much in the same way as software, hardware is rarely built in its entirety in-house. It’s far more likely that companies will use hardware that isn’t their own, opening themselves up to cyber vulnerability. Each device or piece of equipment has the potential to be used to steal data or seize control of the system it’s being operated on. Thus, just like with software, third party providers  have to be stringently reviewed.

Network Services

The network service a company uses to host its digital traffic, if public, has the potential to have bad actors on it. Actors who can hijack company data. In turn, the company’s operations can be severely compromised. However, the solution to this is straightforward: the use of private networks.

Other Threats

The list of other potential threats is extensive. Cloud computing, the internet of thing (IoT), and third party vendors are all areas from which cyber attacks can arise. It’s worth touching upon the first two.

The risk of using a cloud for shared data storage is that it’s an easy target for hackers. What’s more, many devices’ default setting is to link their data to a cloud, providing an easily overlooked vulnerability. Similarly, the IoT can be a cybersecurity risk. A security camera, for example, when connected to the internet can be accessed remotely by malicious actors. Who, in turn, can spark a considerable privacy breach.

The simple fix for these issues and others is to take a safety-first approach. Rather than rushing to adopt new technologies, softwares, and devices, companies need to carefully access each of them. Only after thorough inspections, safety protocols, and when safeguards are put in place, should these new elements be adopted.

Supply Chain Management - Top 5 Cost-Saving Tips

Of the many ways companies can boost their profitability, simply reducing the costs of their supply chain remains one of the most overlooked.

Companies, on average, are spending more than they need to on their supply chains. The numbers bear this out. Benchmarking Success audits businesses to see how they are doing on average compared to industry bests. With that data, the Logistics Bureau found that,

They have audited almost 1,000 enterprises in different sectors to find that whereas supply chains accounted on average for around 9.8% of sales, the overall rating for best in class for supply chains as a portion of sales was just 5.7%.

With that in mind, clearly the industry as a whole should be doing a lot better in reducing supply chain expenses. While there are innumerable ways to go about this, below are 5 of the most important:

  • Strategy
  • Knowing the customer
  • Using 3PLs
  • Automation
  • Forecasting

This week’s article by Morai Logistics examines the 5 best ways to reduce supply chain costs.

Strategy

Strategy is the basis on which an efficient supply chain is built. It is the framework that holds it in place as it commences. As such, if companies don’t sufficiently plan out their supply chain strategy, there’s a high probability of excess in its expenses. A strategy needs to be precise, flexible to differing situations and customer demands, easy to understand, and involve every facet of the supply chain.

Knowing the Customer

It’s crucial to know your customer and personalize the supply chain to them. Otherwise, the potential for waste greatly increases. After all, you can have the most meticulous and well-run supply chain in a vacuum. However, when that supply chain has to adapt to your customer’s needs, it functions poorly. Or, it manages to adapt to customer needs, but that adds unnecessary expenses to chain. It’s crucial to avoid that by having a well functioning supply chain that has room to cater to the customer.

Use a 3PL

Conversely, rather than handling the supply chain planning within your company, you can hire a 3PL provider. 3PLs specialize at making supply chains as systematic and well-run as possible. As a result, as a company you only have to make a fixed payment, no unexpected costs, and the rest will be handled by the 3PL provider.

Automation

Automation allows for many operations and processes along a supply chain to be made more efficient, saving time and manpower—both areas where a lot of money can be sunk. Thus, as a company you can see boosts in productivity at most points along your supply chains. Automation can be applied to warehouses, inventory, data collection, transport, and more.

Forecasting

Uncertainty in demand can lead to a great deal of waste and inefficiency. If market demands are higher than companies expect, then their supplies can be lacking. On the other hand, if companies have plenty of inventory but the demand isn’t there, that inventory is wasted. By having accurate forecasting, companies have the ability to align their supplies with the demands of the market, leading to minimal waste in the supply chain.

Supply Chain - Customer Service and Technologies that Will Deliver it

Despite all the talk about blockchain technology, one of the preeminent challenges supply chains still face is customer service, and there are several technologies that could be the key to addressing it.

Customer service is an ongoing priority in the supply chain industry. Customers, now more than ever, need a seamless experience across a supply chain. Customers want their orders delivered faster. They want them delivered more accurately. They demand transparency throughout the process. Moreover, they expect an ability to track their deliveries. And, in turn, they expect inventory to meet their demand. More than anything, customers expect an experience modified to their individual needs.

A 2018 Logility and APICS survey on supply chain priorities revealed that,

30% highlighted the need to respond to customer mandates for faster, more accurate and unique fulfillment as a top business priority moving forward

The industry is well aware of the importance of customer service and is making it a top priority to solve. For companies to address this issue, however, they’ll need to adopt the precision, productivity, and granularity technology brings.

This week’s article by Morai Logistics details the difficulties customer service presents supply chains and how various technologies can solve them.

Artificial Intelligence (AI)

The term “AI” is so prominent in so many industries that are dealing with or relying on technology that it’s something of a buzzword at this point. But, there is a reason for this, it is providing unprecedented benefits to companies the world over. The supply chain industry is no exception. Through AI, companies will be able to optimize their chains from start to finish. Gaining access to analytics and forecasting that will be crucial to getting the most out of their operations. Thus, the faster and more accurate deliveries customers want can be achieved.

Automation

Automation achieves many of the same results AI does. By being able to automate many of the processes in a supply chain, it becomes more efficient. Operations in warehouses, involving data collection, and transportation, should all be automated. In turn, supply chains can become more transparent and reliable, on top of being faster and more cost-effective.

Mobile Applications

In the short-to-medium term, mobile applications might be the most useful technology this article covers.

A 2018 report highlighted by eMarketer stated,

Mobile devices and apps (27.9%) were cited as the technology that would deliver the most innovation benefits in five years.

Their are several reasons for this. Key among them is convenience. Everyone carries mobiles. As such, accessing these supply chain applications is simple, any time, any place. These applications enable supply chain managers the ability to get real-time updates and closely monitor their inventory and operations. Consequently, this brings a degree of granularity to the customer experience unlike what was achievable before. Supply chain managers can continually monitor the various activities that make up their chain and customize them to fit their clients’ needs.

Inventory and Warehouse Management Softwares

Softwares that allow for the management of inventory and warehouses are tremendous tools for optimal customer service. They provide visibility, control, and tracking of inventory. Moreover, they assist in meeting customer demands, by tracking inventory levels and making sure they are in the desired range. Finally, like all the other technologies covered here, they improve the accuracy, speed, and reliability of deliveries.

Supply Chain Management - Globalization

Alongside the many opportunities globalization presents for the supply chain industry are potential pitfalls, as such, preparing for them is crucial to the industry’s health.

Globalization has had many positive effects on supply chains. From greater market growth due to an increase in demand, to greater connectivity due the rise of the internet. With that said, the many positives have come with corresponding risks.

Milosz Majta, outlines this in his Forbes article,

Just as there are benefits and costs of globalization, there are similar pros and cons of a global supply chain. In particular, companies need to manage the related risks.

This means that those managing supply chains need to be able to mitigate for these risks if they want to see the upsides of globalization. After all, globalization is like any other major develop in market demand and pressure, resulting in both opportunities and threats. Crucially, the ability for companies to sufficiently overcome these threats is greater than ever. This in no small part being due to advances in machine learning, artificial intelligence (AI), and automation.

This week’s article by Morai Logistics highlights the obstacles that supply chains face as a consequence of globalization and what they can do to solve them.

Harmful External Factors

When managing a supply chain on a global scale, damaging external factors are more likely to come into play. These factors can look like political instability in countries, natural disasters, wars, etc. Ultimately what any of these factors amount to is a potential breakdown in supply chains. If a country’s government is in turmoil, its ports could be affected. If war breaks out, certain supply chain routes may no longer be safe. The same applies to a dangerous weather event. All these factors become more likely due to the scale and variability globalization brings with it.

This a risk that can’t always be mitigated for by its very nature—it’s external. The best a company can do is to have contingency strategies in place for each potential event. Even then, its strategy will ultimately be reactive. In turn, this threat does present an argument for regionalization. As regionalization reduces the problems of scale and instability.

Uncertainty

Market demands and trends become harder to prepare for the more actors that can influence a supply chain that are at play. With globalization comes the largest number of actors possible. In turn comes a staggering influx of data which gets increasingly hard to process, analyze, and make predictions off. Thus, supply chain companies have the potential to be floundering in the dark.

Here is where technological advancements become crucial in combatting globalization threats. By being able to automize data entry and collection, as well as process that data via AIs, this threat is greatly minimized. Once data collection becomes an automated procedure, keeping track of data becomes simple. And, with that data, an AI can make predictions and forecasts that make better sense of the market.

Complexity

More links in a supply chain mean more points of possible weakness within it. With globalization, supply chains are longer, involve more stops, take more time, and include multiple lines of communication. Consequently, this greater complexity requires greater oversight, as even one weak link can vitiate the whole chain.

This byproduct of globalization can be addressed in large part through the technologies mentioned previously. The increasing complexity in supply chains can be simplified by automating processes along it. Moreover, the reliability of a supply chain can be increased by the forecasting of AIs. Finally, the oversight needed along each link in the chain can be better achieved through blockchain technology.

Copy of Copy of Copy of Copy of How Supply Chain Orchestration Improves the Customer ExperienceClearly blockchain technology has major benefits for supply chains, but even with that being the case, there are some significant obstacles it still has to overcome.

Blockchain is growing rapidly. According to TechJury, the blockchain market is set to have made 20 billion dollars by 2024. More pertinently, 53% of respondents to a 2018 Statista study said they’re using blockchain for their company’s supply chain. As such, the futures of supply chains and blockchains are very much intertwined. Yet, like with any new technology that has to grow at an immense pace in order to keep up with market demands, blockchain remains on unsteady ground.

This week’s article by Morai Logistics explores the most prominent hurdles blockchains have yet to overcome in the world of supply chains.

Novelty

The very fact that blockchains are such a new technology is their baseline barrier to any market. This includes the supply chain industry. Simply understanding the technology, how to talk about it, and how to use it to its fullest potential all have to be a part of an education process.

CoinDesk highlighted this in an article addressing blockchain limitations,

Blockchain technology involves an entirely new vocabulary. It has made cryptography more mainstream, but the highly specialized industry is chock-full of jargon.

Without acclimating each segment along supply chains to blockchain technology, it is unlikely be adopted by them. This is harder than it might seem. These segments are often disparate and will have different degrees of understanding and resistance—from those in warehouses to those driving trucks.

Security

Despite being known for the transparency they provide, blockchains aren’t foolproof when it comes down to data security.  This is particularly true when a blockchain isn’t large. Part of the strength of the technology is the size of its network. If, for example, there only a few actors along a chain, it’s more likely that that blockchain will be susceptible to poor/bad data. Large scale adoption is crucial to overcome this.

Additionally, not all blockchain platforms are made equal. Technological advancements in machine learning and automation are not always used in supply chains. This means the data that is entered in the blockchain is more likely to suffer from human error. Blockchain needs to be part of a larger evolutionary process by supply chains, not adopted in a vacuum.

Efficiency

Building off the previous point, blockchains are not only less secure but, in turn, less efficient without a holistic approach to their implementation. This means there needs to be integration of blockchain data into the supply chain platform being used. Moreover, without some kind of automated operation to make sure the data is clean, secure, and reliable, it can be a slow form of record keeping—human data entry being more time-consuming.

Maturity

In many ways, the topic of maturity is just all the issues raised in this article combined. All of them come together to make potentially the biggest obstacle that blockchains need to clear. Blockchain is a technology for the future. In the present, it is very new, hurt by that newness, and stymied by efficiency and security concerns.

Kasey Panetta of Gartner writes,

Confusing future blockchain technology with the present-day generation. Current blockchain platform technology is limited in scope, and falls short of meeting the requirements of a global-scale distribution platform that can enable the programmable economy.

Thus, one of the things blockchains require the most is simply time. However, that isn’t something they are receiving. As such, it is up to the countless blockchain projects in the world of supply chains to not rely on what they will be able to do down the line but rather respond to present-day pressures.

How Supply Chain Orchestration Improves the Customer Experience

3PLs have become a dominant force in handling the logistics and supply chain networks of large companies around the world, but where are 3PLs headed next?

According to Allied Market Research the 3PL market was valued at $869 billion in 2017. Furthermore, it will come close to doubling that by 2025. In roughly a 40-year span it has gone from being a insignificant industry in the 1970’s to becoming a ubiquitous presence vis-a-vie the supply chain process. With that being the case, it’s become apparent that 3PL is very much an adaptable industry. One that caters to the demands of modern day market pressures. As well as one that is set to navigate future demands.

However, for that to be the case, 3PLs have to identify what those future demands placed upon it will be. More importantly, be willing to act upon those demands, even if those actions come with a degree of risk. As logistics and technology researcher, Haley O’Donnell wrote:

3PLs tend to be risk-averse, which deters technology investment. Gaps in data leave 3PLs in a reactionary mode.

In this article, Morai Logistics covers where 3PLs have been and can continue to be successful, as well as areas of potential future success.

Areas of Continued Success

The rise of globalization has been taking place for decades. And 3PLs have done a remarkable job at rising right alongside it. As the world has become more interconnected, the number of multinational businesses have grown. Their influence has spread. Consequently, the demand for the movement of their goods as a result of those connections has grown exponentially. 3PLs have helped businesses meet that demand. And that demand isn’t slowing down any time soon. Despite some pushback in certain parts of the world, for the most part globalization is still increasing as an economic force.

In turn, the boom in the e-commerce industry in these past couple of decades has meant its heavy reliance on dependable supply chain processes. This has resulted in 3PLs playing a supplementary role that has seen it soar alongside e-commerce. Again, just like with globalization, e-commerce is set for continued growth in the years to come. With it being projected to grow in revenue by over a $100 million in the next four years in the U.S. alone.

Areas of Future Success

Going forward the expectations for improved transparency, responsivity, efficiency, communication, and predictive accuracy are only going to grow with the development of technology that can meet those expectations. Innovations in all kinds of technologies are coming thick and fast:

  • Blockchain technology
  • Automation
  • Machine learning
  • Transport management software
  • Mobile applications
  • Big data

Each area of innovation is varied and addresses multiple market demands. We’ll touch on several here. Firstly, blockchain technology provides transparency, security, and ensures quality as it allows for real-time feedback along the supply chain network. TradeLens, having just launched in the last year, is set to be the biggest blockchain-enabled trading platform going forward.

Equally, automation can bring down costs and increase productivity as logistical hurdles like manual data entry are replaced. Moreover, machine learning makes precise predictions about supply chain routes possible, so that risks can be anticipated, avoided, and solved for.

On top of that, transport management systems will drive down the cost and time along supply chains. With technologies such as voice commands greatly helping with communication along each stage of the transportation process. At the same time, mobile applications from which orders can be made, processed, and tracked, providing flexibility and ease for clients and 3PLS alike, unlike ever before, are being rolled out. Finally, big data will see 3PLs have the ability to prognosticate potentialities that enhance performance as a result. Addressing a plethora of the expectations mentioned earlier.

Thus, the future of 3PLs involve much of what’s seen them flourish already, as well as plenty that is novel. If the 3PL industry wants to remain a big player in the supply chain market, it has to continue to adapt. Not languish in the face of potential risk.

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.

Morai-logistics-regionalization-catalyst-supply-chain-efficiency

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.

morai-logistics-private-equity-executives-struggle-to-understand-supply-chain-management-value

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.