Driving Visibility, Intelligence, and Agility through Supply Chain Technology on Cloud

Driving Visibility, Intelligence, and Agility through Supply Chain Technology on Cloud

Whether we are talking about healthcare, food, or fashion, the supply chains which convert the raw materials to finished goods are getting more and more complex. Regardless of the industry, increasing complexity undeniably increases opacity.

The world we currently live in has become increasingly unpredictable, volatile and fast-changing. Supply chain managers can easily risk their sanity overwhelmed by the amount of data and chaotic disruptions they often find themselves in.

Speculating the chance of creating a successful growth business

Necessity remains the mother of invention. To make sense of the complex supply chain, to align demand and supply, and to respond to market for survival, countless professionals have attempted to remedy these challenges with band-aids. While large companies opt for upgrades of Enterprise Resource Planning (ERP) software features, SMEs often go for changes such as day-to-day tweaks in an excel template of their shipments, in the hope that this can increase the chance of creating a successful growth business.

We are not discounting such efforts in optimizing operations, but to achieve a fundamentally visible, intelligent and agile supply chain, these efforts are far from enough. In a classic literature on innovation, The Innovator’s Solution (ref 1), Clayton Christensen proposes that it is “the absence of conscious, trustworthy theories of cause and effect” that makes success seem random.  However when collectively exhaustive and mutually exclusive categories of circumstances are defined, things can get predictable. The next question then becomes:

Is your product demand predictable?

The fact that supply chain appears chaotic, inefficient and slow to market is just the tip of the iceberg. One must understand the cause behind such phenomenon, and then develop categorization for what circumstances to do, what actions to take and come up with rationales in practice.

In the Harvard Business Review article entitled  What Is the Right Supply Chain for Your Product?, the authors identified that the first step to developing an effective supply chain strategy is to consider the nature of the demand for your companies’ products. What are the functional products that have more established demand? What are the innovative products where demand is unsure but which have high margin potential?

For functional, sustaining products, maximizing supply chain efficiency through a process of work flow optimization makes sense. For example, you want to cut costs with a faster courier, or invest in reducing the lead time of your manufacturing.

For innovative, unknown products, however, more emphasis should be put on how to respond to the market. How do you react if there is a sudden spike in demand for the new product? How do you reduce excess inventory if the innovative product is not popular? The critical decisions to be made about inventory and capacity are where in the chain to position inventory and available production capacity in order to hedge against uncertain demand. And suppliers should be chosen for their speed and flexibility.

HBR graphic (ref 2):

Technology as the key to achieving supply chain resilience

With the knowledge of product classification, however, many companies still find themselves lacking  in the area ofsupply chain resilience. They are aware of the mismatch in supply chain, but what actions are needed for improvements?

In the April Issue of Logisym Magazine, the President of The Logistics & Supply Chain Management Society, Dr. Raymon Krishnan, has provided a great formula as a definition of supply chain resilience:

As firm supporters of digitalisation, we believe that technology is the key enabler for visibility, intelligence and agility in any supply chain.

For visibility, technology helps capture the firehose of data from the point it is generated, track through the data’s life cycle, helping to maintain an accurate and transparent picture of the macro to granular of the supply chain.

For intelligence, augmented by artificial intelligence (A.I.) and machine learning, managers can now make sense of the complex situations they are dealing with. They can easily analyze correlations between attributes and trends of the market, without significant manual lead time.

For agility, supported by a management system on cloud, supply chain managers can act with flexibility and responsiveness to market by making and communicating trackable decisions with a wide range of internal and external parties.

Case study: Reengineering a forwarder’s fulfillment journey

To illustrate how technology on the Cloud can drive visibility, intelligence, and agility of supply chain, let’s take a look at the real case of one of the top 10 forwarders in the world. One of their customers engage in the ecommerce of beauty products.

This forwarder is appointed to store the goods and fulfill the B2C orders for the beauty product owner. The requirement is simple:

The buyer should receive a parcel that has:

• The product
• An invoice
• Courier shipping label

BEFORE

In their legacy operation, there were multiple systems that the forwarder was involved in, and a total of 14 steps were needed to accomplish this goal of delivery.

The supply chain was lacking visibility between multiple systems, it was too complex to comprehend, not to mention deploying actionable steps to mitigate risks or respond to market.

AFTER

When the forwarder recruited us as technological partner and we reviewed the overall workflow, we proposed a simplification of steps, with the use of 1 holistic software, resulting in a 65% decrease of handling costs and time.

Case study: Transform scrap metal processing plant with Internet of things (IOT)

Supply chain challenges manifest in different ways but still evolve around the lack of visibility, intelligence and agility. Let’s take a look at the challenge faced by a SME in a fast-growing country.

Established with warehouses all over the region, the collection of scrap metals has been a complex process for this company in the Philippines. The increasing volume of inflow and outflow of materials involves tedious records and has made manual tracking more and more difficult.

At the collection stage of scrap metals, there was also insufficient visual and digital proof to record a transaction, resulting in limited visibility of operations. Staff members were using basic programs such as Microsoft Excel to manually track operations, which was prone to mistakes and was time-consuming.

We were tasked to tailor technological solutions to streamline their business processes. We added in transmission of data from weighing scales and CCTV camera through Internet. With such IoT integrations ready, this recycler started to be able to capture real-time data from the incoming metal-loaded trucks and streamline their operations with automation. Upon implementation, handling time of scrap metals has shortened 53%.

When companies accept that innovations are inherently an unknown trajectory, the great responsiveness of Cloud technology becomes the best companion of growth. Businesses can then reduce risk with large-scale data collection, avoid risks by allocating sufficient lead time for technological adaptation and hedge risks with buffer of stock and capacity.

Ultimately, technology means the process to convert inputs of labor, materials, capital, energy, and information into outputs of greater value. Partnering with the right people with growth mindset, the odds of supply chain resilience and therefore success in business, will not be random.