5 Supply Chain Trends to Watch for in 2020

With 2019 coming to an end, it’s important to know what the new year will bring the world of supply chains—here are 5 supply chain predictions for 2020.

The year’s almost over. 2019 saw significant changes for supply chains all across the globe. Technological advancements continued coming in thick and fast. Additionally, several preexisting innovation picked up steam. Going forward, many of 2019’s develops are set to continue into 2020. On the other hand, several supply chain changes that come next year could be entirely novel. It’s impossible to know for sure, but there are certainly some indications one way or the other.

This article by Morai Logistics highlights 5 of the most prominent supply chain trends to be mindful of in 2020.

Going Green

More than ever companies will need to make their supply chains green. That means bringing down their carbon emissions and waste. Not only will this be critical for pleasing consumers but also in avoiding sanctions by governments. Furthermore, having a more sustainable supply chain means reducing inefficiencies, further reducing costs.

An Industry Week article further expounds on the value of a green supply chain,

Transportation is the second largest source of greenhouse emissions after electricity generation, Lapide noted. He said companies need to develop energy efficient transportation operations, greatly enhance their reverse logistics capabilities, move toward green product design and take a holistic view of supply chain compliance as they become aware that their image in the marketplace depends not just on their own operations but their whole supply chain.

Focus on Integration

With technology becoming an ever-increasing factor for supply chains, integration is going to continue to be crucial going forward. In fact, even more so than before. As the number of supply chain innovations grow, it’ll become even more important to consolidate them. In turn, as data continues to be an increasingly valuable commodity for smart supply chains, integration will ensure it’s all collected and stored in the same space.

Blockchain’s Gradual Increase in Significance

Blockchain technology hasn’t quite arrived with the impact some predicted. Quite clearly it’s a promising technology, but it needs time. 2020 won’t necessarily be its breakout year, but it should be another year where it makes steady gains. There will be particular focus on TradeLens. It being the most comprehensive and highly adopted blockchain platform in the field of shipping and logistics. Ultimately, the demand for visibility and transparency in supply chains is only going to grow more pronounced. As such, blockchain isn’t going anywhere.

Automation and its Consequences

Automation is only going to become more prominent with each passing year. With that said, that move towards a less human supply chain might have costs in the short term that will become apparent over the course of the year. After all, digitization which is a prerequisite for automation, is extremely expensive and takes time to adjust to.

Trade Ready’s post explains why digitization can be detrimental to companies in the short term,

While many companies are moving to an increasingly digital workflow to reduce costs, in my opinion going digital is itself a big cost as investing in technology would be. While it will be beneficial at some point, investing in infrastructure and training humans will help to increase the productivity of supply chain and eliminate the additional cost of maintenance.

Smarter Warehouse Management with IoT

The internet of things (IoT) is integral to the earlier mentioned integration. When it comes down to smart warehouse management, having devices continually connected to the internet and giving constant feedback is vital. They allow warehouse managers to know the state of their inventory and track the performance of their operations.

TradeGecko emphasizes the importance IoT is set to have in integrating and boosting the productivity in warehouses,

That being the case, supply chain technology will likely become not only more integrated with other such tools, but will also become more specialized, as well. Supply chain teams that adopt this highly-integrated and specialized technology moving forward, then, will almost certainly spur a massive growth in productivity throughout their processes.

The 7 Greatest Obstacles Supply Chains Face Today

As supply chains continue to get larger, they also continue to get more complex and complicated, leading to a number of challenges that they have to overcome.

Today’s supply chains are facing a whole host of new demands and hurdles. Supply chains are larger than ever. Not only that, they’re more sophisticated than ever before as well. While both of these things have a number of upsides, numerous obstacles arise as a result of them. Growth and progress come with difficulty, after all.

Blume Global highlights some of the ways modern supply chains have to evolve to the new demands placed upon them,

The modern supply chain must evolve to meet new demands and supply chain challenges, and supply chain managers need to plan ahead to keep everything flowing smoothly. A combination of consumer expectations, more routes to market, international complexities and other factors creates significant challenges throughout the supply chain network.

This article by Morai Logistics covers the 7 biggest challenges supply chains are currently facing.

Technology

With the rapid advancements in technology pertaining to supply chains, not integrating them is a considerable liability. Whether it be artificial intelligence, machine learning, automation, or some other innovation, they are all critical to running an optimal supply chain. More broadly speaking, that’s why digital transformation is such a fundamental part of the modern day supply chain.

Cybersecurity

With that being said, taking your supply chain digital also brings about further risk. It opens up your operations to the threat of hacking and other cybersecurity vulnerabilities. These can slow down down, disrupt, or halt the running of a supply chain. Thus, it’s of the utmost importance that, when digitizing, companies also secure their new technologies. This includes vetting their partners and vendors.

Forecasting

Given the previously mentioned increased size and complexity of the modern day supply chain, forecasting is more important than ever. As such, companies have to be as precise as possible with their supplies to meet customer demands.

The Houston Chronicle explains,

Proper forecasting helps ensure you have enough supply on hand to satisfy demand. An overestimation of demand leads to bloated inventory and high costs. Underestimating demand means many valued customers won’t get the products they want.

Overseeing Inventory

Tying into forecasting, is the need for the management of inventory. In order to have the adequate amount of supplies on hand to satisfy demand, companies need to be able to closely track their inventory. With that being the case, having proper count, visibility, and quality assurance of inventory is critical in today’s market. In order to meet these requirements, companies need to invest in the proper inventory management software and technology.

Market Expansion

Companies looking to grow will have a harder time than ever in today’s market. A company that expands its supply chain to new regions has to contend with a variety of issues. This includes new policies, cultural impediments, governmental incentives and disincentives, political instability, weather, and more. Without covering all these bases, a company is destined for failure.

Customer Service

Due to the all technological advancements mentioned earlier, customers are more particular in their demands than ever before. They want their orders delivered faster, with greater care, and for less. And it’s up to companies to cater their supply chains to those demands. In turn, however, through the utilization of technology such demands are more feasible than ever too.

Globalization

Finally, in many ways, globalization’s central to many of the obstacles outlined here. The market’s gotten larger, more interconnected, and complex. With that comes uncertainty, confusion, and externalities that are hard to prepare or mitigate for. Thus, companies have to account for these factors when constructing their supply chain strategies.

5 Ways the Cloud is Improving Supply Chain Management

As the demands placed upon supply chains become greater, new innovative mechanisms will be necessary to respond to those pressures—here’s how the cloud is addressing them.

The expectations placed upon supply chains are higher than ever. As a result, there’s a need for even stronger supply chain management. In turn, more powerful management platforms are needed. And, in response, many companies are turning to cloud computing to help deliver their management needs. Unlike some other recent technological innovations, cloud technology is already delivering the results.

Hunter Lowe from Select Hub emphasizes this,

Ask a supply chain executive about cloud computing, and they only want to know if it can deliver more speed, scale and accuracy. None of them care about the technology; all they want are results. Cloud applications and platforms are the growth catalysts that will keep improving supply chain performance…

This week’s article by Morai Logistics highlights 5 key ways in which clouds are making supply chain management better.

Flexibility

One of the most important things a modern day supply chain needs is the ability to adapt and grow. Not only that, but be responsive to the forces influencing it. By taking a cloud-based approach, managers gain access to easy scalability. Since clouds are hosted on the internet, they have no physical limitations placed upon them. What this means is supply chains can shrink and expand according to what’s required of them.

Low-Cost

Cloud technology, in comparison to the alternatives, is a fairly cost-effective avenue for supply chain management. First of all, it generally has an affordable installation fee, even for smaller businesses. Moreover, the subsequent costs associated with it are flexible due them being subscription fees that vary depending on the package a company selects.

In contrast, management softwares can have large implementation costs and be difficult to build upon. Not only that, but cloud’s save companies money down the line as well. By being able to host the latest and greatest technological advancements, cloud’s can make previous operational procedures cheaper via machine learning and automation.

Secure

This might be surprising to some, given the concerns about cloud-based security. However, it’s becoming increasingly clear that it’s not clouds themselves that are typically a security concern, it’s the practices around using them. As Gartner reported earlier this year,

Gartner estimates that the majority of cloud security failures will be the fault of the customers through 2023.

Gartner’s Peter Firstbrook further broke this down,

Organizations must invest in security skills and governance tools that build the necessary knowledge base to keep up with the rapid pace of cloud development and innovation.

With that in mind, with the necessary investment and skills, data security on the cloud is not only not a liability, it’s actually a strength.

Easy Integration & Connectivity

Supply chains today can be very large and unwieldy. Consequently, it’s critical that the systems used to manage them can tie together all their disparate parts. This requires systems with visibility, connectivity, and the ability to integrate the various networks that make up the supply chain.

Cloud computing is such a system. It allows for fast integration, can host a variety of different softwares and networks, and enables all this in real-time. Furthermore, as a result of being online, the cloud can keep all parties in a supply chain up to date on its latest developments.

Accessible

Finally, the concern with any new technology, especially one that will be as foundational as a cloud, is how complex it is. In turn, how this complexity might be a barrier to easy use. There needn’t be any such concern with cloud-based approach however. As an article from Supply Chain 24/7 explains,

In addition, there are numerous efficiency benefits, including simple and intuitive user experience, quick access to accurate and timely analytics, social collaboration tools, and much more – all of which can be accessed anywhere, at any time, and from virtually any device.

Supply Chain - Overcoming Extreme Weather

A critical component of supply chain management is planning around risks that can compromise the chain, and few risks are more disruptive than extreme weather.

In a time when the ill-effects of climate change are being felt around the world more than ever, supply chains have to mitigate for those effects to function year-round. Of course, what makes extreme weather so troublesome for supply chains is that it’s unpredictable and can come in many forms. With each form—flooding, storms, freezing temperatures, etc.—coming with its own host of problems. It’s imperative then that supply chain managers help form their chains with the possibility of extreme weather in mind and plan accordingly.

Resilinc spoke about this and the importance of planning around disruptive weather in their blog,

Bad weather tests the agility and resiliency of even the best supply chains. However, companies that manage weather-related disruptions as part of their event-monitoring best practices and supply chain risk management strategies tend to fare better than those that don’t take preventative measures, Resilinc’s work with customers shows.

This article by Morai Logistics highlights some of the key ways that supply chains can navigate the risks of extreme weather.

Have a Back-up Plan

At times the weather event that hits a supply chain will be too great to overcome. No amount of resilience can overcome a hurricane, for instance. This is when it’s crucial to have an additional plan in reserve. So, in practice this could look like a warehouse being impacted by bad weather. And, in response, those in charge of the supply chain having some spare carriers ready at another warehouse (at a separate location) with the same product.

While this is an additional cost, considering the physical and reputational damage bad weather can inflict, it’s a necessary one. Not only that, but, in the long run, a potentially cost-saving measure too.

Embrace Technology

There’s a variety of technology that helps supply chains work around or anticipate extreme weather. Foremost amongst this technology is artificial intelligence, particularly machine learning. Via machine learning supply chain companies can gain access to data regarding internal and external risks, including weather.

This means having the latest information about the weather as well as the most precise predictions possible regarding it. Thus, through this technology supply chain companies can potentially avoid extreme weather by anticipating it. Or, at the very least, they can start planning for the weather as soon as possible.

Flexibility

A supply chain needs the ability to maneuver whatever comes its way. This is true in general but especially so with extreme weather. There will be instances where the weather isn’t so bad that the supply chain is completely brought to a halt. Rather, more often than not, the weather will require supply chain adaptations to still function. These can be as simple as taking a slightly altered route.

This point was emphasized in a Supply Chain 24/7 article about El Niño,

The key to riding out a situation like El Niño is to have a supply chain that is flexible enough to adapt. With an efficient and accurate inventory process, you’ll know what must be shipped by air and what can wait the extra week to arrive via ocean.

Robust Infrastrucure

Even with great technology, planning, and flexibility, each facet of a supply chain needs to be strong enough to deal with harsh weather conditions to some extent. For example, a supply chain’s warehouse should be able to withstand strong wind without being breached. Or, its production facility should have a variety flood-proof installations so that a flood has minimal impact upon it. In turn, when the products are being transported they might need to be temperature controlled. All in all, each step of a supply chain needs to have resiliency. So it can handle whatever weather conditions it might face.

5 Supply Chain Trends to Watch Out For

With supply chain companies having to continually respond to the needs of their respective markets, it’s critical that they stay cognizant of the many structural and operational advances being made in order to remain competitive.

Customers’ expectations about what supply chains should look like in terms of responsivity, transparency, and flexibility are greater than ever. As a result, supply chains are evolving faster than ever to meet and surpass those expectations. In turn, this evolution means monumental changes to the technology, management, and operations of supply chains.

Globecon Freight pointed out the scale of these changes in an article earlier this year,

Supply chain management is undergoing a significant transition that will change the face of shipping and logistics.

This week’s article by Morai Logistics identifies 5 prominent trends taking place and set to take place in the world of supply chains.

Digital Transformation

The need for supply chain operations to be digitized is stronger than ever and will only grow going forward. If supply chains are going to take advantage of the many technological innovations today and in the coming years, they need the infrastructure for it. That means making their operations digital. By undergoing a digital transformation, supply chain companies can lay the groundwork to make their technological progress iterative, not singular. Technology will keep advancing and it’s crucial supply chains keep abreast of it.

Artificial Intelligence (AI) and Automation

Both AI and automation are set to greatly boost efficiency, lower costs, and drive profitability in supply chains. They can work individually or hand-in-hand to improve a range of supply chain processes. These include (but aren’t limited to) warehouse management, forecasting, data collection, equipment maintenance, and waste reduction. AI and automation are only going to become even more powerful, adaptable, and precise in the future. Thus, it’s inevitable that their presence will only grow in supply chains.

Transparency

More than ever before, customers expect to know the state of their product from beginning to end. This means that supply chain companies need to ensure that their chains are as transparent as possible. This is set to be achieved in a variety of ways, including blockchain, transparency mapping, tracking materials, and third-party certification. Blockchain in particular is primed to play a major role in supply chains going forward, as it is a database that’s data cannot be altered. Moreover, the data that’s entered in a supply chain blockchain needs to be verified by everyone in it.

Real-Time Tracking

Building off the demand for transparency but also the continual need to be able to check on the integrity of a supply chain is the advent of real-time tracking apps and devices. These can be wearable devices that employees wear, helping them with a variety of tasks that are then instantly available for review. For example, a warehouse employee can use a device to input data regarding inventory. This data in turn can be viewed by the inventory manager. Additionally, apps can be made available for customers and those overseeing the supply chain, so they can see the data being collected along it to make sure it’s proceeding smoothly.

Customer-Specific Supply Chains

A generic, one size fits all supply chain is quickly becoming a thing of the past. Supply chains are growing increasingly segmented for the sake of customers. In order for customer needs to be met more precisely than before, supply chain companies are recognizing that each supply chain should be uniquely geared to them. In practice, that means dealing with customers directly (a direct-to-customer approach). It also means setting up supply chains to be pliable enough to proactively respond to customer interests.

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. 

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.

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.