March 8, 2021
Technology has a way of worming its way into business processes and transforming them seemingly overnight. Take the case of the internet and sales processes for instance. Online selling dramatically changed the way companies do business in less than a decade and birthed enormously-successful, continent-spanning behemoths like Amazon. A similar evolution is happening for the ubiquitous supply chain – the logistical backbone of every organization. It’s being slowly but surely reshaped and rewrought by modern technological advances.
The evolution of the supply chain isn’t quite on the scale of e-commerce, perhaps, but it’s enormously impactful nonetheless. According to a McKinsey report, companies that proactively digitize their supply chains can expect annual revenue growths of 2.3 percent. This is a significant number for any industry, including the bulk materials one.
Supply chains can be categorized based on their levels of digitization – their digital maturation, in other words. There are three stages: Supply Chain 2.0, 3.0, and 4.0.
The three stages essentially describe a company’s transition from a paper-based supply chain to a digital one. In 2021, most companies are still on Supply Chain 2.0 and 3.0. They operate hybrid supply chains that are a combination of paper-based and digital processes. Very few have made the move to Supply Chain 4.0, although that is likely to change soon. Gartner predicts that 50% of large global companies will be using AI, advanced analytics, and IoT in supply chain operations by 2023 – all important components of a fully-automated supply chain.
Supply chains are being transformed rapidly. In many companies, the transition is being helmed by a new-age manager: the Chief Supply Chain Officer. Below is a brief overview of some crucial aspects of a digitally-enabled supply chain:
Automation is arguably the biggest determinator of a digital supply chain. It involves utilizing the latest technologies in robotics, the internet, and data collection to carry out routine, labor-intensive processes automatically. The aim is to save time, money, and labor. Automation applies to all aspects of a traditional supply chain. This includes production, supply and reordering, manufacturing, distribution, and customer interaction. Some examples include using robots for production and a Vendor Managed Inventory (VMI) system for automatically restocking an inventory when it’s about to run out.
Digital is synonymous with instant. Digital supply systems employ a host of internet-connected systems (internet of things) to capture and record data in real-time. This data is then analyzed by an expert team of data scientists or, failing that, advanced computer algorithms to predict factors like supply-demand, material shortfalls, and inefficiencies in business processes. The data gathered allows companies to forecast months into the future and make informed business decisions. It’s a superior alternative to the traditional surveys, estimates, and guesswork.
Many supply chains are fitted with third-party solutions that can analyze inventory-related data on-demand and generate reports for a manager on-site in a matter of hours. The manager can use the data in the report to oversee operations, direct workers, and generally adjust production on-the-fly. They can make corrections when needed based on concrete data. This data-assisted decision-making ensures efficiency is heightened and write-offs are kept to a bare minimum.
As touched on briefly before, digital supply chains use an interconnected network of computers, sensors, drones, and other everyday gadgets for data gathering. This is often referred to as the internet of things. In industries like hospitality and retail, the internet of things is leveraged to enable applications like footfall monitoring, popularity checking, and automated checkouts. In the bulks material business, IoT enables tasks like spot-checking of supplies, automated reordering, and instant volume measurements. Some companies use sensors in shipping containers to measure vibration, temperature, pressure, and location.
Traditionally, a supply chain manager is responsible for keeping track of a company’s logistics and inventory. They update the inventory count, analyze operations, and troubleshoot problems. They collaborate with vendors and manage distribution. Finally, they ensure quality and safety standards are met, and occasionally collect data for auditing and the financial department. These functions are slowly but surely being automated by smart apps and smart contracts. “Smart contracts” are blockchain-based apps that self-monitor and self-execute. They can be applied to many processes – like procurement, auditing, and distribution – and speed everything up drastically.
Transportation and distribution are also being digitized. Autonomous vehicles and drones will soon deliver products to manufacturers or directly to consumers. A good example is Tesla’s driverless trucks, which are currently being tested by companies like Waymo and Uber. Amazon is already implementing its Prime Air service, which will use autonomous drones to deliver packages to customers. In the bulks material industry, autonomous drones may soon become a reality and help carry out tasks like inventory measurements.
Artificial Intelligence is being utilized in all parts of the supply chain, but it’s perhaps most visible today in customer-and-sales-related processes. Chatbots can assist customers with basic troubleshooting and returns processing, taking the burden off human workers. AI helpers can help company agents close deals. Advanced AI can help companies identify customer-related trends and preferences, allowing companies to modify production to meet demand.
There are several other technologies involved in supply chain digitization worth a mention such as the Cloud, machine-learning, 3D printing, and AR.
Often, when we discuss automation and the future, the prevailing sentiment is that human labor is about to become unnecessary. There’s talk of robots replacing human workers at manufacturing plants, for example, and automated vehicles that won’t need human drivers. From the perspective of several experts, technology and automation won’t replace human input. Instead, it will supplement and, in many cases, assist human workers. Managers will have their work simplified thanks to apps and automation. The nature of the work may change, and new, different jobs will pop up. Essentially, supply chain workers may have to re-skill, but they likely won’t be out of a job.
amount of investment in terms of planning, labor, time, and money. Moreover, it’s not always enough to digitize parts of a supply chain – it must be done in its entirety for the best results.
For instance, some companies manage to digitize their operations processes and see short-term benefits. But in the long run, there aren’t any major gains because the other non-digital parts of the supply chain can’t take advantage of the upgraded bits.
Early adopters that aggressively pursue supply chain digitization can expect major benefits before supply-chain digitization becomes commonplace. Stockpile Reports can help in that regard. We provide a futuristic, near-autonomous way to measure your volumetric inventory with the help of drones, fixed cameras, and an iPhone app. You receive actionable data on-demand, put in an easy-to-analyze report. Our customers frequently use the data to make operating, procurement, logistical, and other business decisions. They report benefits like fewer write-offs, the ability to maintain optimum production levels, and huge resource savings! Talk to us now to learn how we can help you digitize your supply chain.
Be the first to know about the latest Stockpile Reports news and features.