For some organizations, SCM advances have been gradual while for others, they have been transformational. Let’s take a look at the journey of SCM to better understand how technology has influenced its evolution.
Until the 1990s, SCM involved replacing manual processes with automated systems and leveraging advances in engineering. The increased adoption of enterprise resource planning systems during this period significantly improved SCM integration across various organizational functions and for different stakeholders in the entire value chain.
ERP systems addressed several challenges within the extended supply chain, including demand volatility, changing supply dynamics, shrinking margins, shortening product lifecycles, high product complexity, and lack of inventory visibility across supply chain nodes. Thus, the adoption of ERP fostered progress across the supply chain in areas such as planning, procurement, manufacturing, warehousing, distribution and logistics.
The 21st Century, with dramatic leaps of technology, has accelerated the SCM transformational journey to a lightning-fast pace – one that is expected to continue over the next decade. A number of factors have contributed to this accelerated change, including social, mobile, cloud, big data, and Internet of Things. In addition, the emerging markets of Brazil, Russia, India, and China (BRIC) are huge accelerating factors.
In fact, the amount of data generated is expected to double every two years, and there are already more connected devices than people in the world. Thus, in an age where data drives revenue, SCM continues to evolve beyond ERP systems.
In view of this, one can only imagine how newer technologies such as 3D printing, connected homes, smart cities, wearables, virtual reality, driverless cars, robotics, and deep learning will change the supply chain of the future.
Let’s explore the possible impact of two such trends to better understand what's in store for tomorrow's enterprises:
• Robotics – robotics is already influencing supply chains within the automobile industry and will see greater adoption across several industries. With the potential of robots to replace human labor for simple or repetitive jobs, several tasks within warehouse systems can be easily automated, thereby reducing labor cost and human error and improving operational efficiency. From here, it is only a mere step away to imagine how the use of drones can revolutionize the logistics industry.
• Internet of Things – known as the next step in the evolution of the Internet, the IoT generates big data that is enabling smart analytics. With capabilities to extract, collate, organize and analyze data, organizations are getting better insights to make strategic business decisions. The power of intuitive insights can trigger new advances in technology and automation, thereby increasing efficiencies. As device connectivity becomes popular, mobile applications are already making significant in-roads within industries such as retail, consumer and commercial telematics, smart metering, consumer electronics, and remote health monitoring, among others.
Despite the technological promise of the future, the explosion of new trends has led to several SCM challenges such as:
• product obsolescence
• need for increased supply chain visibility and real-time collaboration
• responsive customer service solutions that can track complex and dynamic patterns to deliver a superior customer experience
• shrinking cost arbitrage opportunities between different economies leading to rising cost pressure
• pressing environmental concerns and increased competition owing to globalization
To address the above challenges and keep pace with these disruptive changes, organizations must become more responsive. The winning players in the SCM battle are those that can prepare themselves for increased complexities, global uncertainties and rapid change, thereby ensuring profitability.
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