Here’s how companies can use technology to better manage supply chain disruption, constraints, transportation issues and other challenges.
Technology has always been at the forefront of supply chain management, where having high levels of visibility, effective collaboration with partners and streamlined processes generally translated into a better experience for everyone—the end customer included. The global pandemic further cemented this assumption and forced even more companies to invest in the software and hardware needed to keep their supply chains running smoothly.
Now, what the pandemic started has turned into a bullwhip of challenges across many different industry sectors. The chip shortage, Russia’s invasion of Ukraine, the ongoing labor shortage and inflationary pressures are just some of more publicized challenges that organizations and entire industries are grappling with.
A deeper dive reveals a whole host of disruptions ranging from Hershey’s anticipated chocolate shortage just in time for Halloween to the ongoing disruptions in the food production sector to difficulties sourcing nitrogen, phosphorus and potassium, all of which are made in Russia and used for crop agriculture.
The good news is that companies have gotten smarter and sharper as a result of these ongoing challenges. For example, suppliers have become more strategic with their transportation plans; are collaborating more closely with one another to forecast lead times and control costs; and are sharing the costs of air freight for rush shipments (rather than bearing the costs alone).
“As stakeholders found ways to overcome challenges, they learned that solutions had one thing in common,” Jason Ford of MicroTouch writes in Supply & Demand Chain Executive (S&DCE). “Technology is the key to greater efficiency and collaboration.”
Here are five specific ways technology is helping organizations win the supply chain disruption battle:
- Automates manual processes. Automation increases productivity, allowing employees to focus on their primary tasks rather than on paper records and low-value, repetitive work. It also makes them more efficient and saves time, easing pressures created by the labor shortage and reducing costs. “Automating data collection, labeling, and palletizing goods can also improve accuracy, eliminating rework and interruptions,” Ford writes. “Furthermore, automated processes are consistent, resulting in compliant outcomes and experiences that routinely meet customer expectations.”
- Breaks down data silos. Technology also helps supply chains break down data silos, improve visibility, and make smart decisions. “Supply chain partners enable integration with their systems to share information for data-based decisions,” Ford writes, noting that prior to the pandemic, companies primarily focused on shipping information from their Tier 1 and 2 suppliers. “Now they’re looking deeper into when raw materials arrive at a manufacturer and estimated lead times from tier 3 and 4 suppliers as well as tier 1 and 2,” Ford writes, “so they can make the best decisions for their businesses and their customers.”
- Gives companies a leg up on their competitors. In a recent Gartner survey, 61% of respondents said technology was a source of competitive advantage. Many also identify several emerging technologies as critical investment areas, with 20% investing in robotics. Over the next 3-5 years, Gartner anticipates increased adoption of digital supply chain technologies, as well as technologies that improve human decision-making. “There are certain developments that drive further investments into technology, most notably labor constraints and the need for more agility,” says Gartner’s Dwight Klappich. “Given today’s volatile and disruptive environment, supply chain organizations must become more flexible, and the solution is digitalization.”
- Helps organizations analyze and act on data sets. According to ReadyMode’s Jason Jantz, a growing number of companies are leveraging AI to analyze data sets, learn more about customer behavior and better predict future demand. This is helping them better identify, avoid and/or mitigate supply chain disruptions. “By improving their forecasting ability, companies can streamline their supply chains while saving valuable time and resources,” Jantz points out. “Combating the volatility of supply chains with better short-term decision making can have a significant impact on a company’s bottom line.”
- Eliminates misplaced inventory and shipments. Using sensor technologies like RFID chips coupled with Internet connectivity, companies can collect data at every logistics checkpoint—from raw materials to delivery of finished goods. “This improved real-time transparency, signaling and response ensures that inventory levels are always current, improving capital and time management so that products and services are delivered to the end customer on time,” City National Bank states in 5 Ways Tech Can Improve Your Supply Chain. “This ability also helps eliminate misplaced inventory and shipments, [thus] reducing revenue loss.”