More than ever before – during these last few months with the pandemic disrupting networks and consumer behaviours – supply chains have been challenged. The weakest links from supplier to customer were tested, and they often broke under repeated and intense pressure.
Many supply chains have not yet recovered.
How can technology help get us back on track and ensure our supply chains run smoothly – and are more resistant to disruption – in the future?
Here are eight tech trends affecting procurement, manufacturing, warehousing and transportation best practices:
1. The “platform economy” is here. In our personal lives we see it in car sharing, cleaning services and accommodation. In industry this same trend has provided organizations with platforms that allow them to access suppliers more easily around the globe, and group their requests with other players to obtain volume discounts. A great example of this is the Aeroexchange platform that allows airlines to avoid costly AOG (Aircraft on ground) situations by borrowing or exchanging broken parts with other airlines.
2. Another trend in Procurement is Collaborative Planning, Forecasting and Replenishment (CPFR). While the concept is not new (Walmart has been doing this with Proctor & Gamble since 2013), the ability to integrate the forecast and real-time inventory directly with a supplier’s system is relatively recent. By synchronizing sales forecasts and real-time inventory, suppliers are much quicker in responding to issues and changing trends in order to avoid undesirable stock-outs down the line.
3. While we used to talk about preventive maintenance, predictive maintenance is now becoming a common practice, and available to most companies through their maintenance software or ERP. Based on historical data, the software will propose actions to avoid failures before they happen. And if the machines are connected to the internet via an IoT (Internet of things) platform, the data used to detect failures is even richer when it comes from sensors.
4. With respect to training, COVID-19 has greatly increased both the availability of online learning content, and the acceptance of this form of learning as mainstream. Employees can expect to be directed to an online learning platform before entering the site, or when required to renew their competencies. Behind the scenes, employers need to develop the actual content, deliver the content through streaming technologies, and track progress and completion through a Learning Management System. Content should incorporate the SCORM standard in order to ease tracking within the learning platform.
Luckily for employers, more and more platforms provide content that may be leveraged, contributing significantly to lower overall training costs.
5. The introduction of a Labour Management System (LMS) in the distribution centre allows companies to better manage the performance of their employees. This type of system requires a tight integration with the Warehouse Management System (WMS) in order to share master data such as products, product locations and employee roles. By integrating the two and setting standard times in the LMS, employees can be given the appropriate amount of time for a task, and if they are underperforming the issues can be rapidly flagged to management. This integration provides better management of your true labour costs.
6. Another concern in the distribution centre is internal controls. Avoiding mistakes and reducing theft both lead to more accurate on-hand inventory. Internal controls have traditionally required exports of the data into voluminous spreadsheets that are then scoured over, looking for irregularities. The trend is to move towards exception reporting. By defining business rules of things to look for, irregular events are then flagged to management to be dealt with. Additionally, identifying unusual trends, such as a shift or a zone with a higher number of on-hand inventory errors, can help detect underperforming employees or fraud.
7. Network optimization is not new. Mathematicians have been trying to solve network problems since Euler’s Seven Bridges of Königsberg problem in 1736! But the computing power needed to process large problems has only become available in the last few years. And the move from the solving of the problem in a university math lab to industry has now become possible with the arrival of commercial software in this field. These new tools allow companies to position their distribution centres and crossdocking facilities in the best locations to minimize overall transportation costs.
8. In the U.S., about 90% of trucking companies operate 6 or fewer trucks, and the distribution in Canada is likely to be similar. Combine that with the high cost of empty backhauls and you find yourself with a classic supply and demand matching problem. Finding transportation suppliers has been made drastically easier by the arrival of digital freight matching/brokerage. Frost & Sullivan refer to this market segment as “trucking-as-a-service” or TaaS and predicts the market to grow to $79.4 billion the U.S. by 2025. Even Uber has realized the potential by launching Uber Freight!
These are just some of the technology trends that are making our supply chains more resilient. We are likely to see even more innovation in the coming years as machine learning and IoT technologies become more mainstream and accessible to manufacturers and distributors around the globe.
Acquiring the right software, and keeping it up to date, will be a critical success factor to accessing many of these technologies. Companies that successfully do this will see the benefits
as their supply chains become more effective and efficient and remain so into the future.