Supply Chain Trend 1: Digitisation
As we enter the age of Industry 4.0, organisations need to digitise many aspects of their supply chain operations. The implementation of new digital technologies will facilitate the creation of a connected, smart and highly efficient supply chain. According to PwC, the aim of digitisation is to transform the supply chain of today from “a series of largely discrete, siloed steps” into “a completely integrated ecosystem that is fully transparent to all the players involved”. Check out our dedicated infographic to learn more about what digitised supply chains will look like in Industry 4.0.
So how can blockchain be utilised within the supply chain and logistics sector? The blockchain offers a less corruptible alternative to complicated record keeping systems for the tracking of products. As such, it has the potential to provide a strong solution for traceability and provenance tracking. It could also help to streamline processes by paying linked supply chain partners upon the completion of their part of a chain of linked activities.
The blockchain presents many benefits specific to supply chain management. According to a survey from APQC and the Digital Supply Chain Institute (DSCI), over one-third of supply chain workers cite cost reductions as the primary benefit. However, it also has the potential to accelerate admin processes, facilitate greater interoperability, reduce instances of fraud and errors and increase consumer and partner trust.
- Warehouse Robotics
So, what are warehouse robots and how do they work? Mobile logistics robots are intelligent devices that are programmed to perform tasks that help to enhance the efficiency of supply chain operations. They are fitted with sensors, manipulators, control systems, power supply, and software. They have sophisticated navigation systems installed that enable them to autonomously navigate their way through a fulfillment centre. Some autonomous robots are programmed with artificial intelligence so that they can learn from their surroundings and make decisions independently.
Companies benefit from the use of robots in the warehouse as they work more quickly, provide round-the-clock productivity, and improve accuracy. Robots also free up time and improve safety for warehouse staff by taking on monotonous or dangerous tasks.
- Autonomous Vehicles
- The transportation of goods within warehouses and distribution centres.
- Delivery of products to customers. Take a look at our recent infographic to discover more about why delivery drones are taking off.
- Visual inspection of large fleets by video drones.
- The Internet of Things
The “Internet of Things” (IoT) refers to the billions of internet-enabled devices around the world that can talk to each other via the sharing of data. This enhances the level of digital intelligence of otherwise “dumb” devices so that they can exchange real-time data without human involvement.
Data from Global Information Inc reveals that the number of Internet of Things devices is expected to grow to 83 billion by 2024 . 2021 could be the year that the Internet of Things (IoT) takes over the supply chain industry. Decreasing costs and technological advancements means that it has never been easier for SMEs to integrate this technology into their supply chain operations.
The deployment of IoT gives organisations real-time information about inventory levels and deliveries. Another major benefit is that it can boost efficiency by automating stock reordering. IoT sensors can also be used to predict wear and tear on equipment and allow organisations to order new parts in a timely fashion.
- Big Data
Gartner define big data as “high-volume, high-velocity and/or high-variety information assets that demand cost-effective, innovative forms of information processing that enable enhanced insight, decision making, and process automation.” Organisations today enjoy access to vast quantities of data and are using this to garner business intelligence. This has given rise to the field of big data analytics which employs a mix of tools, processing systems, and algorithms to pick out insights from this data.
Big data analytics has the potential to optimise the efficiency of supply chain operations. For example, companies could analyse data relating to customer preferences and market trends in order to make the supply chain more responsive, demand-driven and customer-centric.
- Artificial Intelligence
An increasing number of businesses are turning to Artificial Intelligence (AI) technology to optimise their supply chains. McKinsey estimates that businesses will gain between $1.3tr and $2tr a year in economic value by using AI in their supply chains. When paired with big data, AI can be employed to complete a wide range of tasks, including:
- Automating procedures
- Demand forecasts and planning
- Identify purchasing patterns
- Manage inventory
- Reduce manual work
AI can help to reduce workload and save time and frees up employees to focus on other areas where they can deliver stakeholder value. In fact, Gartner predicts that this could lead to an increase of 6.2 billion hours of worker productivity globally by 2021. This tech can also help to improve end-to-end visibility and speed up reactions to unforeseen events.
Supply Chain Trend 2: Sustainability
More and more modern consumers are factoring sustainability when they shop for products or services. What’s more, organisations are under increasing pressure from governments to institute greener practices in order to comply with stricter regulations. As a result of this, companies are more aware of their carbon footprint and are taking steps to integrate sustainability into their supply chain planning.
- Circular Supply Chains
A linear supply chain can be described as the process an item moves through from raw material to the manufacturing centre to the distribution centre to the consumer and then to the bin. Whereas a circular approach involves “taking apparent waste materials and returned goods and turning them into products which can be resold, and with sustainability goals in mind, companies need to find ways to reduce the carbon footprint of shipping freight” (definition from SupplyChain247).
Nike’s “Reuse-a-Shoe” programme is an example of a circular supply chain planning. When customers are ready to dispose of their shoes, they are encouraged to drop them off at in-store recycling points. The material from these shoes is then transformed into Nike Grind - a material used in creating athletic and playground surfaces as well as some Nike products. Since 1990, the programme has collected over 28 million shoes for recycling.
- Greener Product Packaging Design
A report expects the global e-commerce market to grow at a CAGR of around 16% during 2021-2026. That's a lot of packaging and cartons, which implies a lot of waste and materials that will take hundreds of years to degrade.
Many firms are guilty of not being ecologically friendly when it comes to packaging. Boxes are being used unnecessarily to send slightly smaller boxes; styrofoam peanuts are being placed inside boxes, which can take up to 500 years to biodegrade; and in the United States, over 165 billion products are shipped with cardboard each year, equating to over one billion trees.
In a survey carried out by Statista in June 2021 80% of respondents stated that they had the intention to purchase items with eco-friendly packaging or less packaging. In the same survey, around 89 percent of them would choose products with traceable and transparent origin.
Many firms consider paper and cardboard to be quick solutions for achieving their plastic reduction goals. Due to the pandemic, demand for corrugated cardboard has outstripped the capacity of paper mills, resulting in cardboard shortages. Many businesses are switching to paper because it is more environmentally friendly, as it poses less of a hazard to the environment if any ends up in the ocean or waterways. Not only that, but starting in 2022, any plastic container containing less than 30% recycled content will be subject to a £200 per tonne tax, putting even more pressure on firms to decrease their usage of plastic.
Supply Chain Trend 3: Omnichannel
Omnichannel is a lead nurturing and user engagement approach in which a company gives access to their products, offers, and support services to customers or prospects on all channels, platforms, and devices.
Omnichannel retail refers to a company's presence across several channels (such as ecommerce and physical stores), as well as the integration of inventory, customer service, and sales to provide a seamless transition between channels based on the consumer's preferences. Consumers increasingly anticipate to jump from one channel to the next:
- View the product in person and order it online (the showroom experience)
- Investigate online before making a purchase in a store (to touch and feel the product)
- While you're at the store, read reviews and compare products.
- View the product in person and make a reservation for a variant (different color/size) at a different location.
- Place your order over the phone and pay for it online.
- Purchase online and pick up in person or at the curb e.g. Click and Collect
- Purchase online and have it delivered to your location.
Allowing people to shop effortlessly online or in physical places puts more strain on logistics and supply chains. With the demands of fulfilling individual client orders while also replenishing stock at retail locations. The transition from single and multi-channel distribution to omnichannel distribution necessitates a complete rethinking of supply chain operations.