The need for real-time tracking, accurate and timely delivery systems makes supply chain management ripe for technological innovation.
The pandemic has caused a significant change in how consumers and businesses are now behaving. Once COVID-19 is contained, some of these changes will be the new normal for us. Long-term digital disruption is probably the most anticipated shift that will reshape businesses in the coming decades.
Worldwide supply chains have long strived to keep quality relatively constant while cutting costs at every step. It resulted in a dramatic concentration risk in terms of multiple countries and vendors for many businesses. For instance, China shutting down factories due to the pandemic and creating a knock-on supply, results in the impacts we see today and shows the necessity of more resilience in this approach.
In terms of supply chains, there is an urgent need for a more distributed, coordinated and traceable global supply of components and suppliers while maintaining economies of scale. Therefore companies across the world would have to adopt such sophisticated technologies as digital paper, blockchain, IoT & 5G, and robotics.
Protecting means for COVID-19 have shown that actions reliant on physical assets, like paper, can face severe disruption when operations employees cannot provide physical signatures and handle paper printouts. Besides, value chains that rely on information in these documents lose access to that visibility very quickly and cannot respond to changing conditions.
The digitizing of the paperwork is not merely a matter of cost, but primarily of transparency and managing supply chain risks. To minimize such risks in the value chain, you need to make data available through digital means. In the current pandemic, governments and corporations with reliable digital infrastructure such as e-signature and e-transactions laws at hand, are coping with the supply chain disruptions better than those without.
According to Oracle, the benefits blockchain offers for supply chain include transparency and visibility, faster root-cause analysis, simpler efficient processes, and better decision making. Many successful pilots suggest that managers can get significant benefits from blockchain, ranging from cost-savings and increased capabilities to new operational models, specifically in the following areas of supply chain management:
- Provenance and traceability
- Digital payments and contracts
Here are four of the most notable cases for using blockchain that make it highly applicable for the supply chain management:
- Transparent and controlled transactions. Having no intermediaries (e.g., bank) blockchain allows making faster and more transparent settlements, as the ledger is updated automatically. Payment conditions can also be pre-set, enabling only authorized participants to see a transaction.
- Preapproved transaction fees. When making cross-border Swift payments, the transaction fee is only deducted after the transaction completion. Blockchain, on the opposite, allows you to know the commission beforehand.
- All the transactions are instantly visible to authorized people, meaning no one can tamper, delete or conceal any information added to the blockchain.
- Due to its distributed nature, blockchain does not have a single point of failure. Furthermore, all the transactions processed on the blockchain are permanent, further excluding the risks of fraud.
Internet of Things (IoT) and 5G
In a recent survey from Gartner, 66% of companies are going to deploy 5G, the fifth generation of cellular network technology, by 2020. Those companies expect 5G networks to be chiefly used for IoT communications and video communications, with increased operational performance as the key profit.
Here are the most striking ways in which IoT can revolutionize global supply chains:
- Track the real-time product location. IoT offers supply chain managers real-time data on the product location and the transportation environment. A manager will be informed if the product is sent in the wrong direction and will be able to control the delivery of goods.
- Monitor storage conditions. Thanks to sensors, supply chain managers can track the shipment process inside the vehicle — the temperature, pressure, humidity, and other factors that could damage the product.
- Predict the transportation and the arrival of the product. Thanks to real-time tracking, a supply chain IoT company can foretell the final delivery date as well as predict and mitigate risks before they occur.
- Locate goods in the warehouse. Thanks to real-time location trackers, the operators know the exact way to a specific parcel. Combined with artificial intelligence, IoT is a stepping stone for automated vehicles that can retrieve devices without human supervision.
- Improve contingency planning. IoT devices help supply chain managers plan routes, taking into account the number of unforeseen events during product movement. The technology offers supply chain managers immediate alerts that increase the speed of risk mitigation.
The need for autonomous robots is growing, therefore the end-to-end supply chain operations alignment will become more fluid. Currently, many companies, which use robots, have implemented them for targeted functions within their supply chain, piloting various robots to check expected performance gains. As innovative companies grow, robots that build robots could be the norm for economically and efficiently optimizing manufacturing operations.
These benefits of robotics for supply chain are worth mentioning in particular:
- Increased efficiency and productivity
- Reduced error, re-work, and risk rates
- Improved safety for employees in high-risk work environments
- Better focus on more strategic efforts that cannot be automated
- Revenue growth thanks to improved order fulfillment, delivery speed, and customer satisfaction.
Drones are one of the examples of using robotics in a supply chain. This aircraft does not have a human pilot on board. It is either remotely controlled by a pilot on the ground or autonomously controlled by computer systems on the aircraft. By 2021, the overall drone aircraft industry is expected to reach $10 billion.
Drones can be used in warehouse operations, from inbound logistics in time-critical situations, delivering supplies from storage to the factory, transporting directly from receiving to shipping, and scanning inventory and dramatically reducing labor costs.
All in all, adoption of new technologies like blockchain, IoT, or robotics was already underway before the pandemic, but the current pandemic may force this to happen faster. Imagine the world with speedy and accurate deliveries, transparent and, at the same time, secure transactions, lightning-fast warehouse operations, and 100% customer satisfaction. All this may happen with the implementation of reliable platforms backed up by technological innovations.
Guest Author – Rocky Osborn
Rocky Osborn is a Senior Vice President at Innovecs, a global software development company. He is an accomplished and result-driven senior management executive focused on high-value revenue growth, business development, strategic marketing, and client success. Rocky successfully developed and lead global businesses that worked with the world’s leading supply chain, fintech, e-commerce, and SaaS companies.
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