Supply chain management (SCM) is the management of the process that transforms raw materials into finished commodities. It includes a broad range of activities from planning to execution, all in the most economical way. Logistics and supply chain management must ensure the quality control of raw materials through quality management systems and efficient, low-cost manufacturing. In addition, they must have excellent communication with distributors and vendors while tracking, transporting, and storing the finished goods, and must cater to consumer needs and delivery.
A sound supply chain management system is vital to the success of any company. In fact, an effective SCM system can lead to higher efficiency, improved quality assurance, and reduced cost effects, all of which boost company revenue. It is essential that companies prioritize supply chain management in their business operations. In this article, we look at the evolution and future trends of supply chain management.
Effects of Urbanization on Supply Chain Management
Urbanization has impacted every aspect of business. For supply chain management, rapid urbanization has had impacts on the availability of raw materials as well as on the cost of production and delivery due to increased congestion. At the same time, urbanization has allowed for better employment opportunities, access to healthcare and education, and modern housing, recreation, and social services.
With this, the preferences and buying patterns of consumers have changed; they now have the opportunity to buy products online from anywhere in the world. As stated by the Vice President of Global Marketing for Sealed Air, Erin Sellman, “Whether you are talking about China or North America, customers now believe they should have whatever they want and have it whenever and wherever they want it. Those changing expectations are a direct result of e-commerce and urbanization.” These expectations of abundant supply and fast delivery can only be met by upgrading the supply chain.
According to an article in Transport Topics, technologies such as traffic prediction tools can be used to optimize SCM. These tools include RFID tags and barcodes to track a product along the supply line, road sensors to detect traffic flow, and GPS and geofencing devices to track routes and shipments. Additionally, onboard vehicle telematics can reschedule deliveries that have been delivered wrong or need replacement. These technologies serve to make supply chains smaller and more agile and are sure to gain traction in the future.
The Cloud and Automation in SCM
Like most other global and large-scale industries, automation is revolutionizing logistics. Experts predict that autonomous mobile robots (AMRs) will soon play an integral role in supply chain management. Steve Banker, VP of ARC Advisory Group, says that future trends in SCM include “the emergence of a class of autonomous mobile robots built to optimize the picking process …similar to what a warehouse management system (WMS) does. WMS suppliers have new competitors from a field they might not have expected: hardware suppliers.”
Secondly, cloud computing, a feature already trending in SCM, will prove to be even more cost-effective in the future. Cloud computing in SCM eliminates maintenance costs of regional data centers and software, and increases efficiency by consolidating and sharing large amounts of data across the globe. Similarly, the Internet of Things (IoT) will cause a manifold increase in the delivery and supply chain industry. Artificial Intelligence is an important part of this as it analyzes patterns of present operations to predict future outcomes. This can be used to automate much low-level decision making, freeing the time and skills of senior managers.
Sustainability in Supply Chain Management
All kinds of businesses are realizing the need to move towards a greener and cleaner planet. In terms of supply chain management, the depletion of renewable energy sources is likely to wreak havoc on the availability of raw materials and the cost of production and delivery. Due to this, there is an urgent need to shift towards green, renewable energy.
Green supply-chain management (GSCM) is a trend that caters to sustainable product development. This includes ethical sourcing alongside product processing. One example of this trend is the “Detox My Fashion” campaign to end the use of chemicals in the clothing industry. GSCM also consists of reverse logistics, promoting recycling, and using “Just-in-time” SCM. These tactics help to avoid excessive inventory and to adopt fuel-saving technology in transportation. GSCM also includes green certification initiatives such as LEED, Green Globes, and Energy Star.
Companies Leading the Way
Today, many big companies are paying close attention to improving their supply chain management systems. For example, Samsung’s program focuses on creating a corporate ecosystem that promotes sustainable growth, ethics and human rights management, environmentally suitable manufacturing (like collaborating only with Eco Partner certified suppliers), and procuring new suppliers through the International Procurement Center (IPC) and Global Supplier Relationship Management System (G-SRM).
Toyota manufactures in close collaboration with suppliers, maintains a disaster-resilient supply chain and promotes total optimization through the Toyota New Global Architecture (TNGA) program. Google is emphasizing technological innovation, responsible sourcing, monitoring risks to both the environment and humans, and maintaining a strategic supplier relationship including the Coercive Action Plan (CAP) to resolve supply chain problems.
It is now vital to re-imagine global supply chains so that they can achieve optimal working conditions while reducing costs. Risk mitigation, management of relationships with suppliers, adoption of automation, and sustainable production are essential to managing future supply chains.