Key ways to tackle the Supply Chain effectively in 2020

Today, businesses are operating in a modern world where the exponential speed of innovation and the digitization of everything has made managing a supply chain more complex. There is no doubt that people nowadays are more connected, more environmentally sustainable and socially responsible. Yet, the markets are more demanding and less committed. Consumer expectations Key ways to tackle the Supply Chain effectively in 2020has now reached another level concerning delivery times and product customization. The result of such changes has had great impacts on supply chain to the extent that supply chains are no longer chains but a network of opportunistic demand, supply and capacity entities. 

 

So how does a company make its supply chain ready for 2020?

To answer this question, we need to take a look at some of the factors that will influence the supply chain in the future: 

According to a research project from the MIT Center for Transportation and Logistics (CTL), a number of global “macrofactors” will have a huge influence on supply chains in the coming decade. Some of these are: 

Aging of the Developed Countries: Based on the population trends, there will be a “dislocation” between younger workers in developing countries who increasingly will be making and distributing products, and aging populations in developed nations who will be buying products. It has been predicted that consumers will demand personalized products that will help them with issues such as physical, hearing and sight challenges. 

Volatility of Oil Prices: A more costly energy will lead to more focus on slower, more energy-efficient transportation such as shipping and trucking, and moving production closer to where products are consumed. 

Green Laws: It is certain that transportation is the second largest source of greenhouse emissions after electricity generation. It is the responsibility of companies to develop energy efficient transportation operations. This will greatly improve logistics capabilities, help them move toward green product design and take a holistic view of supply chain compliance. This will lead them to become aware that their image in the marketplace depends not just on their own operations but their whole supply chain.

 

Here are some effective ways to tackle the supply chain in 2020: 

 

  • Risk Management and Compliance

 

Risk management is one of the most essential factors to consider. For instance, a risk event such as a supplier shortage or natural disaster can have disastrous consequences that reverberate up and down the supply chain and eventually impact your organization’s profitability and brand. Here are few ways in which supply managers can mitigate risk:

  • Conducting a supply chain audit and creating an emergency plan with documented response procedures. 
  • Improving supply chain visibility. 
  • Maintaining standards with an effective compliance program for suppliers. 
  • Ensuring you and your employees stay informed and educated about relevant compliance programs. 
  • Developing meaningful relationships with critical suppliers using a structured Supplier Relationship Management (SRM) program to lower risk and improve transparency. 
  • Managing the risk of raw material price volatility with financial hedges, operational hedges, and price increase controls. 
  • Managing the cybersecurity risks involved in additive manufacturing (3D printing) such as IP theft

 

  • Supply Chain Optimization Technology

 

With the advances in technology, such as AI and machine learning, logistics can become seamless, greatly improve demand forecasting, warehouse management, provide the data and visibility necessary for Just-in-Time (JIT) inventory management, or revolutionize your supply chain with a combination of cloud-based operations, robotics, and the Internet of Things (IoT).

However, these technologies cannot work effectively without data. It has become a priority in 2020 to work out how your organization can access, capture, analyze, integrate, interpret, and action supply chain data before investing in AI or other advanced technology. 

 

  • Responsible Sourcing

 

Responsible sourcing is also a key risk-mitigation strategy in an period when ethical breaches can severely damage a company’s brand. Many companies are now turning towards ethical sourcing which means that they have an environmentally and socially responsible approach to strategic supply chain management. For example, ensuring human rights are respected, fair wages are paid, communities are treated fairly, factories are safe, and the environment is impacted as little as possible. Some benefits of responsible sourcing include:

  • More flexibility and reduced supply chain costs through local sourcing. 
  • Improved company reputation and brand sentiment through green supply chain management. 
  • Ensuring minerals are responsibly sourced and conflict-free 

 

  • Supply Chain Transparency

 

Today, customers are increasingly expecting supply chain transparency and they support ethical or environmentally friendly companies. It will come as no surprise if traceability and provenance will reach the stage where customers will be able to scan a product’s barcode at the point of sale and access data about its entire journey through the supply chain. 

The question is how to achieve supply chain transparency? Manufacturers can start by gaining access to data by joining supply chain information-sharing networks or investing in supply chain data management services. However, the key enabling technology is blockchain. This will enhance traceability in the supply chains of the future.

 

Conclusion

It is clear that a supply chain 2020 strategy has a lot to do with technology. New technologies will enable connectivity, responsiveness, and the visibility required to thrive in 2020 as far as supply chain is concerned. For this to happen, you need analytics to provide decision supporting visibility. Besides, automation is required at every step for a successful supply chain that will ultimately lead to customer satisfaction. 

 

References: 

Industry Week

Global Trade Mag

Supply chain Digital