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Trends

4 Supply Chain Trends that Should Be on Your Radar Now

by Peter Edlund

 

Running an efficient supply chain in a market driven by ecommerce and higher customer expectations requires sharing information in real time to speed up transactions, making accurate business decisions, and improving planning to ensure customers have access to the products they want, when they want them. But seamless collaboration between suppliers and retailers is challenging, resulting in higher costs and issues in meeting customer demands.

To stay relevant, both suppliers and retailers need to find effective ways to coordinate their procedures and improve the supply chain process. Successful companies are nimble and pay attention to trends, ensuring that they can react quickly to the new technologies and practices that keep them one step ahead of their competitors.

Tracking Trends to Engage in Today’s Hostile Markets

Tracking trends is familiar terrain for me. When I started my career in the Navy, I was an intercept controller.  My job was to monitor and direct air-to-air combat engagements using advanced radar systems and data links to identify potential hostile aircrafts and direct aircraft engagements ahead. Now at DiCentral, many years later, I’m still looking forward, and helping our clients seek out new opportunities to engage in today’s hostile markets.  

Failing to respond to market changes can have a detrimental impact on any company, even a large multi-billion dollar retailer like Target. In 2013, the company opened its first stores in Canada, and less than two years later closed them all. While there were several factors that contributed to the venture’s failure, one of the key mistakes involved Target’s managing its supply chain with a legacy software that couldn’t be adapted to fit the new needs in another country. These challenges severely affected the supply chain, and Target stores in Canada were often missing basic products.

Target’s experience may be an extreme example. But looking ahead and being mindful of shifts in the market and technology that will impact your business are critical no matter what industry or line of business you are in. With that focus in mind, I’ve pulled together four trends that I believe you should have on your radar now.  If you’re not facing some of these things yet, I expect that you will be dealing with them soon.

Trend 1: Extensive Terms & Conditions are the New Norm

There is an increased focus on productivity in every organization. And in the supply chain, where complex networks of businesses must work together, we’re seeing this drive to efficiency result in more checks and balances, and specifically increases in extended Service Level Agreements (SLAs). Retailers need to have product stocked, when they need it, and extended SLAs often cover the sequencing of activities and performance around time. For example, a retailer may send a purchase order to a supplier that requires an acknowledgment back.  And the supplier may accept that order as is, accept it with changes, or reject it.  The point is that there are checks and balances to provide confidence that the vendor can fill the order.  And these requirements are built into the contracts and integrated into contract management systems for greater control.

Trend 2: The Cloud Provide More Options for Redundancy

Just consider the Hanjin cargo ship crisis which stranded an estimated $14 billion of goods at sea to appreciate the risks associated with getting supplies where they need to be. Retailers can’t afford to have empty shelves or disappoint ecommerce customers. So they are building out extended networks, with duplicate suppliers and transport options to hedge their bets, and taking advantage of the prevalence of cloud solutions, real-time chat and other social networking technologies, the availability of big data, and more sophistication in terms of developing detailed plans and testing.  Today, the number of threats and crises that can disrupt a supply chain are many, and building redundancies into the process flow is a trend I expect we will continue to see for a long time, adding new complexities and challenges to be addressed.

Trend 3: Big Data Drives More Organization-wide Visibility

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The significant amount of data available throughout the supply chain  from production to shipping to delivery is driven by the exponential growth in automation and technology.  Today, companies can get granular visibility to manage every aspect of the supply chain and distribution more effectively.  The challenge, for many, is turning that data into information and insights, and ensuring the right people in the organization have access to it. Companies can analyze both cost and performance, including the results of various channels and products, such as how ecommerce is performing. And most importantly, they can identify root causes of problems and issues, and take corrective action early.

Trend 4:  Omnichannel & Real-Time Package Monitoring

In ecommerce, as packages are shipped directly to consumers, there are new challenges when it comes to shipping and payment.  More vendors are integrating small parcel carriers with track and trace for visibility all the way through the channel. Technologies like radio frequency identification (RFID) and barcodes are often used to send signals to suppliers and retailers letting them know where the package is and when it is delivered so retailers can remit payment.

These trends all have one thing in common—they are dependent on suppliers and retailers having the right tools to unify the supply chain and provide more flexibility and visibility. Distribution networks today are more complex, and greater transparency, collaboration and control is critical, so it’s more critical than ever to keep looking ahead, and be ready to shift quickly.
 

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