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Future of Supply Chain – 4 Key Trends

By | Ashwanth B Raj

Technology continues to transform every industry and every business on the planet. Enterprises are adopting newer strategies and incorporating more modern tech in their processes to not only cater better to their customers and differentiate themselves from their fierce competition but for the company as well. The supply chain is one sector that is benefiting from new trends and is poised to innovate the way businesses function. Hence, let’s look at some of the key trends and opportunities for businesses to implement in their supply chain management in the future.

  1. ANTICIPATORY SHIPPING

What if a firm could delight its customers by shipping the products that they desire before they even place the order? It is theoretically possible through “Anticipatory Shipping,” a term coined by Jeff Bezos’s Amazon and patented by them in 2014. This approach is similar to that of allocating ambulances in hotspots of major cities, where the ambulance is stationed closer to a locality to be used as and when an emergency call is made. If perfected, we could see Amazon delivering packages through this technique as early as 2021. The process could cut down delivery time and cost and ensure customers do not turn to brick-and-mortar stores to satisfy the needs immediately. According to statistics, online retail sales in the US currently account for only one-tenth of the total retail sales in 2019, which could be attributed to an ordinary person’s perception of delay between purchasing and item arriving. It would require a considerable amount of data, and Amazon has got lots of it about a user like their buying patterns, most frequently ordered items, wish-lists, website surfing history, and much more. The data would then be fed into an algorithm. It does have the potential to take predictive analytics to a whole new level.

Apart from the company, it has benefits for the customers as well, such as taking over the responsibility from customers for replenishment orders of every-day use products. Since such orders are a low-involvement purchase, the buyer would not mind outsourcing that decision to Amazon. In turn, it would free up one’s time to do other essential tasks. Questions do arise, such as whether the customer would accept the product at the time of delivery, or the accuracy of the product description or the delivery address. However, in the initial stage, Amazon would be focusing on shipping products that you would buy for sure. They would first deliver to a geographical area and only completely specify the delivery address after receiving the order confirmation, probably with the package still in transit. One thing is clear – the package would be in continuous transit on trucks and involve re-routing until a customer places an order.

 

  1. ADDITIVE MANUFACTURING

Bottlenecks in the supply chain can be alleviated using additive manufacturing, aka 3-D printing. It could prove to be a solution in industries such as the pharmaceutical industry. Consider the case of a generic drug manufacturer that manufactures various kinds of drugs. It cannot hold all the different types of drugs in its physical inventory due to inventory holding costs, perishability of certain drugs, and uncertain demand. Furthermore, when a hospital or a pharmacy places an order for a drug that is not in stock with the manufacturer, they usually have to wait. At times, the hospital or the pharmacy would maintain an inventory of their own until the replenishment arrives.

With additive manufacturing, the turnaround time for manufacturing a drug could be significantly reduced and would prevent capital held up as physical inventory or the obsolescence involved in maintaining inventory. Though it is beneficial while producing small batches of medicines, the feasibility is questionable while used in mass manufacturing at a higher rate. At present, 3-D printing is used for specialty products such as implants, where the precision and quality requirement is high, and for a few other personalized medications for patients. Moreover, since they can be made promptly on demand, the long shelf life would no longer be required for such medicines.

 

  1. SUPPLY CHAIN-AS-A-SERVICE (SCaaS)

New business models are emerging under Supply Chain 4.0, such as Supply Chain as a Service (SCaaS), which can be used for planning functions or transport management. Similar to a SaaS, this can be bought and paid as per usage. It alleviates the need to have resources and capabilities in-house. This, in turn, allows the users to tap into the economies of scale of service providers as well as enable users to focus on other areas such as strategy, research, and product design. Also, it becomes easier to attain instant scalability. One application could be where logistics companies could act as aggregators and leverage local and non-professional contract transporters to pickup consignment from say a manufacturer’s facility and deliver them to another user’s warehouse facility to ensure last-mile delivery. It could be applicable in reverse logistics as well to pick up product returns, defective goods, and goods meant for recycling from the retailer’s end back to a manufacturer’s designated facility. And in doing so, it would help to achieve a circular supply chain. The SCaaS can be extended to other functions of the supply chain such as Manufacturing, Distribution, Procurement, and more.

 

  1. DIGITAL & CLOUD WASTE

In today’s fast transforming business environment, companies are turning to IT-based solutions to power their supply chain. One such aspect of IT is the usage of cloud computing to augment the speed at which new products and services are introduced in the market. When many cloud service providers provided the option of stashing and processing data on remote servers, many firms did away with the traditional way of depending on their on-premise servers. Such firms benefited by saving up on investments on purchasing and maintaining expensive hardware, energy consumption, and generating physical waste when such equipment became obsolete. Little did they that a new type of waste was taking shape, one that was invisible and utilized a lot more energy to be maintained. When firms pay for cloud services, the cost is much higher than the cash paid to the provider. The data has to be stored and have multiple backups on the cloud provider’s servers inside gigantic server farms. Such farms are energy-intensive and require industrial cooling systems, which are prime sources of greenhouse gas emission as they draw power from a conventional power plant. 

Similar to a traditional supply chain, a digital supply chain also consists of wastes that include old emails, spams, attachments, documents, pictures, video files, and all data that is created online that is no longer in use. As such, increasing the digital footprint leads to an increase in the carbon footprint as well. Server operators could reduce energy use by adopting newer high-performance energy-efficient hardware that would utilize better designed cooling systems. Another course of action could be to pursue renewable energy with zero emissions to power large server farms. Though most of the solutions are directed at having efficient hardware, the software also plays a part in maintaining sustainability. Highly efficient programs would avoid using redundant calculations, that waste processing power.

Another area of worry is the pace at which data formats are evolving, and proprietary formats are being used. Audio/video formats from the past such as WMA, WMV, RM required a specific software for it to be played, such as a Winamp player or a RealMedia player. Newer software might not be compatible with the older formats, and hence, they become obsolete and inaccessible in our systems. This would take a toll on firms that have digitalized and encrypted their data using a particular provider’s software and later migrated to another provider. In the migration process, large quantities of data are bound to be orphaned somewhere in the cloud space. Removing data might be hard, but limited measures do exist. For example, in the case of online networking sites, if we could specify our data to be removed instantly or after a set period of non-use from the servers, it could save up on energy consumption. Valuable server space wouldn’t be occupied by junk such as old photos, and videos and energy wouldn’t be needed to run such servers on idle. On a bigger note, firms have to make a decision and frame policies to get rid of their digital data such as purchase orders, software versions, outdated formats, account statements, and other multi-media after a mandatory period of legal compliance. This, in turn, would help in limiting the size of their archives and ensure such waste does not pile up and become forgotten.

Thus businesses should leverage such emerging trends and grab onto potential opportunities to satisfy their demanding customers and, at the same time, cut costs and improve profitability. Lastly, ensuring such practices are undertaken under the purview of sustainability would ensure more significant goodwill and reputation and become best practices for others to follow.


Author Bio:

Ashwanth is an India based writer, who is a Management Graduate working specializing in Operations. His interest lies in Occupatiomal Health & Safety, Supply Chain, and Quality Management. He’s passionate about traveling, photograpy and food. When he’s not busy with his profession as a supply chain consultant, he likes cooking with his wife, bar-hopping, and visiting historic places.

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