While it’s been several years since the COVID-19 pandemic revealed the vulnerability of global supply chains, aftershocks continue. Staying ahead of disruptions today is both art and science: the art of knowing the trends to prepare for, and the science of determining how to reduce risk and increase resilience.
Following are three trends that will be key to a creating a stable, less stressed and more efficient supply chain in the years ahead.
Reimagining the supply chain. With e-commerce fulfillment occurring from brick-and-mortar stores, distribution centers and even manufacturing facilities in direct-to-consumer models, stakeholders are finding the process to be highly complex. All must rethink how they can better support customers through buy online, pick up in store (BOPIS) and buy online, return in store (BORIS), as well as direct fulfillment and return paths. Operational speed, new product profiles, packaging levels and paths to market are crucial considerations.
Three factors that will impact the re-design of the supply chain are customer expectations, cost and inventory in brick-and-mortar stores. Look for customer requirements to drive service in assortment and turnaround time. Changing cost elements including facilities, labor and transportation, will dictate new priorities.
Rising investment in physical automation (for example, autonomous mobile robots) will help make labor more effective, while higher fuel costs will cause an increase in over-the-road transportation costs. Finally, determining how to optimize brick-and-mortar store inventory will be part of the supply chain solution for retail. Uncertainty is yet another important factor, and will drive more businesses to partner with third-party logistics providers where appropriate.
Reverse logistics and returns management are also growing in importance. Online shoppers have become accustomed to ordering the same item in multiple variations of size and color to try on at home. This poses not just a transportation and distribution challenge, but impacts inventory levels as well.
To be a successful service provider in this space, you need to be able to determine whether a returned item requires re-conditioning, needs to be discarded or can be added back to inventory earlier in the reverse logistics chain, with the goal of lowering transport costs and safety stock requirements.
Expanding networks. Fragmentation in the supply chain will expand, especially now that its resilience has been tested and proved insufficient. With more complex and fragmented supply chains, the number of supply chain nodes will increase. Each may hold its own data in a legacy system of record. Accessing this local data for an end-to-end view will improve the visibility of goods flowing through the supply chain, from manufacturing to final consumer.
Closing these visibility gaps will become more important, if not imperative. A natural first step is to review site-specific visibility capabilities. Real-time data capture of individual items, cases or crates in addition to pallets could prove advantageous not just for local inventory management, but could contribute toward full chain visibility.
Some parts of the supply chain are more prepared to capture more granular data faster than others. Serialization in the distribution of pharmaceutical products or just-in-time production of automotive parts are examples of harnessing greater node visibility enabled by more granular and timely data capturing.
Connecting for speed and collaboration. Supply chain organizations may start by adopting mobile communication and collaboration tools that enable front-line workers to better coordinate with robots, one another, suppliers, customers and logistics and shipping partners.
Many decision-makers believe such tools will also boost overall productivity and workflow conformity. But they can’t afford to stop there. They’re missing too many pieces of the puzzle, and responses to disruptive incidents are far too slow. Operating with greater speed goes hand in hand with achieving greater precision. Errors, unavailable or overutilized assets and, most importantly, labor problems, are increasingly disruptive in a time where customers demand speed.
Technology and sensors, both in the hands of associates and in the infrastructure of the distribution center, are crucial to ensuring performance, network-wide optimization, and the ability to react quickly to change. In times of limited access to qualified labor, scalability will become a technology investment theme. The ultimate goal is to make the available staff as efficient and productive as possible. By removing non-value-added steps in the workflow, and improving connectivity and analytics-enabled decision-making on the spot, companies can improve supply chain performance.
Andre Luecht is global strategy lead, transportation, logistics and warehouse, with Zebra Technologies.
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