The Third Wave in Supply Chain Management
Every supply chain management process involves designing, planning, executing, controlling, and monitoring of supply chain activities. It helps in building a competitive infrastructure, creating net value, supporting worldwide logistics, bringing demand and supply in synchronization, and measuring performance globally. The supply chain manufacturing process is said to the unsung hero of the manufacturing sector and it is the foundation that acts a support system for every manufacturing business.
Importance of Supply Chain Management
Every supply chain management process plays a crucial role in running key operations for almost every organization. If the supply chains management process doesn’t run smoothly, the supply chain system can halt at the floor and ultimately lead to a loss in production. The importance of every supply chain management process lies in the fact that it helps in boosting customer service, reducing operational costs, and improving the financial position of an organization. The supply chain management process also has societal roles like ensuring human survival through healthcare and energy supply chain, improving quality of life, and protecting cultural freedom and development. But then, the most important question arises, which is, how can we achieve a successful supply chain management process? Here are the five most essential steps for effective supply chain management.
Steps for a Successful Supply Chain Management Process
The first step in every supply chain management process is planning. To come up with the best possible way to fulfill the end requirement is the first strategic aim of the process. There is a list of key components like warehouse designing, plant location and its size, delivery models and many more which need to be identified. Additionally, transportation cost modeling and warehouse efficiency models are the other components that need to be developed and without which the supply chain management process would be incomplete.
To find out the most reliable raw material suppliers and establish a smooth production process are the two critical steps in every supply chain management process. Companies should assess supplier performance if they are working with a network of suppliers or having inventory management or asset management problems.
This step is a crucial one as a perceivable shape is given to existing plans through manufactured products that are at the final stage of execution. Results are in a way quantified to achieve maximum efficiency.
This step of the supply chain management process is the core responsibility of the managers as they have to ensure the correct delivery of product or services at the right quantity, the right time, and the right location through suitable carriers. Modern IT tools are required at this stage to keep a track of delivery channels like warehouse networks, inventory, invoice, and payment receipts.
This is the last step of any supply chain process and it not only involves carrying out quality checks on the returned products or services, but also the management of the inventory. Management of returns should be a measure to improve the value and attain maximum efficiency.
From the initial assembly lines to today’s advanced robotics solutions, supply chain technology has evolved multi-fold. However, a company’s risk culture plays a critical role in determining the readiness to explore and adopt emerging offerings. When companies implement impeccable supply chain practices, consumer needs are met in a more expeditious and timely manner. Consequently, customer relationships and loyalty are strengthened, translating into revenue boost and acquisition of new customers through positive word of mouth. Hence, modern companies consider supply chain processes to be vital for their success, making them constantly look for new supply chain technology developments to enhance their operations. Let’s take a look at some of the biggest supply chain technology innovations for this year:
Supply chain technology trends that include immersive technologies like virtual reality (VR) and augmented reality (AR) allow supply chain businesses to enhance employee and customer digital experiences. Furthermore, it will also help companies to enhance repair and maintenance capabilities in manufacturing, and better logistics and warehousing. Though these technologies are already in use in several other industries, it in the pilot stage for supply chain process. However, AR and VR will soon become a mainstream supply chain technology in the next five to ten years.
Virtual personal assistants (VPAs) and chat bots are conversational systems that are taking interaction to the next level with the addition of conversational commerce. Virtual agents will also be more empathetic, understanding, and able to manage high-volume complex interactions without a human referral. These systems can prove to be highly beneficial in supply chain and will eliminate the requirement of manpower in operations such as handling payments, delivery, and customer service.
Autonomous vehicles are the new buzzword in town. However, there is a long way for this technology to go before they hit the roads in a full-fledged fashion, completely replacing human drivers. Businesses are taking inspiration from this technology to build autonomous trucks for industrial and supply chain and logistics uses. It is predicted that once autonomous trucks become operational, it will be one of the most popular supply chain technology that will be widely adopted. This is due to the cost and fuel savings that autonomous trucks would offer.
Mobile robots in warehousing
The use of mobile robots in warehousing is a supply chain technology that has been put to use by E-commerce giants Amazon. The company has proven they can be used at scale with a solid ROI. This advanced technology has also been proven to be a good alternative for the labor shortage in warehouses. Robotics in supply chain technology is also believed to make processes faster and more efficient when compared to the manual labor. Several other companies are already in talks to establish this innovation as a part of their supply chain operations.
To learn more about the challenges of implementing the latest supply chain technology
The client wanted to gauge the performance of their supply chain. To proactively address the growing complexities of their global supply chain, a specialty chemicals company approached SpendEdge to devise a comprehensive approach to supply chain analysis. A detailed quantitative analysis of supply chain was carried out to accurately forecast inventory and production needs of the specialty chemicals client.
Supply chain analysis enabled the client to integrate risk prioritization as a core strategy in their current risk management system. Following this, the specialty chemicals company redesigned their risk management system to uncover risk factors and include proactive risk mitigation strategies.
About the Client:
A multinational chemical industry client specializing in the manufacturing of specialty chemicals. The client is a leading player in the chemical industry with several well-established subsidiaries operating in over 35 developed economies.
The specialty chemicals company was facing difficulties in gauging the performance of their supply chain.
How did SpendEdge Help the Client:
- Step 1: Developed a three-step methodology that offered a clear roadmap of the specialty chemicals space
Our supply chain analysis experts followed a structured approach to develop a supply chain management framework.
- Step 2: Mapped the supply chain activities
This step involved the identification of activities, establishments, resources, and regulatory requirements that are required to create a flowchart to obtain an overview of the supply chain activities. It also offered details on the flow of raw materials and products throughout the supply network.
- Step 3: Developed a framework to gauge the impact each factor involved in the supply chain
The final step involved the quantification of the supply chain activities and their contribution to the flow of materials both in monetary and physical terms. This helped the client to assess the importance of each factor impacting the overall performance of the supply chain.
Key questions answered in this supply chain analysis study include:
Benefits of the Engagement:
Our supply chain analysis solution helped the specialty chemicals company to analyze every stage of their supply chain activity, starting from the acquisition of raw materials or supplies from the suppliers to the delivery of finished products to the end-user segments. The primary objective of the supply chain analysis engagement was to determine the impact of factors affecting the supply chain and to deliver the finished products more quickly and efficiently to the end-users. Also, the supply chain analysis offered greater visibility into supply chain processes by establishing a cohesive relationship between all tiers of the supply chain.
Why incorporate supply chain analysis?
Supply chain analysis helps in the identification of supply chain activities or processes that can be bypassed to reduce inventory costs and improve forecasts. It also helps organizations to optimize their supply chain processes and minimize redundancy while assisting in the creation of enhanced value-added services.
Supply chain analysis encompasses a wide range of functions that may seem daunting even to a well-established specialty chemicals firm. However, it can be effectively modeled by dividing them into several strategic areas. A supply chain analysis study that aims to determine current real-world practices in supply chain risks implies a radical takeoff from conventional models.
It expects organizations to redefine their supply chain management strategies and adopt a continuous approach to detect supply-side risks, classify risks, and prioritize them to drive business value. Moreover, supply chain analysis is a process, which not only emphasizes on the shortcomings in various segments of the supply network but also between the supply chain and the end-users.
To know more about our supply chain analysis solution
Client: A renowned player in the global retail sector, Size: >$10 billion in revenue, Area of engagement: Supply chain analysis
Overview of the Global Retail Sector
It is a transformative time for the retail sector globally. Shoppers are clearly in the driver’s seat, enabled by technology to remain constantly connected and more empowered than ever before to drive changes in shopping behavior. Across the retail industry, disruption of traditional business models has given way to transformative and unprecedented change to better serve more demanding shoppers and redefine customer experience. Transformations and innovations are happening faster and at a greater magnitude than ever before, presenting challenges for retail sector players who are accustomed to balancing conventional performance metrics like profitability, growth, and space productivity.
“Companies in the retail sector must look to make use of automated control management systems, to stay ahead of the competition.”
In the era of new technologies and innovations, many different tools have emerged. The use of modern automated control systems allows an enterprise to record information about the volumes of sales. Additionally, the application of these systems helps analyze indicators quickly. These indicators can be the turnover of any product. The determination of the amount of buying for each product is necessary to preserve quality and avoid damage. Unfortunately, not all establishments understand the importance of automated control systems.
The Business Challenge and Journey
Client background: The retailer has over 500 superstores in the US and serves its customers through mail order catalogs, e-commerce, and contract businesses.
Client issue: With a huge amount of goods passing through its supply chain, the company needed to improve the flow and speed of goods while maintaining a high level of service. The client wanted a more flexible, scalable, adaptable, and cost-effective supply chain – both in the US and in origin countries.
Client journey: The analysis provided the client with a base case that included current cost structure, lead time, and product flow. The client also identified business improvement areas across their supply chain and also benchmarked their process flow against other key competitors in the market.
Research methodology: The supply chain analysis experts at SpendEdge conducted a comprehensive research and carried out discussions with prominent stakeholders in the global retail sector to help the client develop a robust supply chain model and implement it successfully.
Key questions answered in this supply chain analysis engagement include
The customer put of the allocation decision, allowing for products to flow to the right place at the right time. This yielded savings on demurrage and detention bills by taking advantage of permitted yard time at deconsolidation. This also allowed the client’s own facility to hold less safety stock, freeing up capacity to accommodate future growth.
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Overview of the Global Automotive Tires Industry
Globally, the market for automotive tires is expected to reach 2.5 billion units by 2022, driven by the strong focus on fuel efficiency and the resulting demand for low rolling resistance tires. The global automotive tires market is also benefiting from the growing popularity of green tires against the backdrop of rapidly growing concerns over the environmental burden caused by inadequate recycling efforts and overflowing landfills of scrap tires.
The Business Challenge and Journey
Client background: A global leader in automotive tires manufacturing. The company mainly focuses on innovations that are thoughtfully designed based on extensive consumer insights to meet the real needs of end-users across the globe.
Client issue: With an aim to build competitive strength, the client decided to tweak their sourcing model from 80% of goods manufactured in the US for the domestic market to 80% manufactured in China.
To help the client develop a robust supply chain model, implement it successfully, and assist them in going through the major change, the supply chain analysis experts at SpendEdge conducted a comprehensive research and carried out discussions with prominent stakeholders in the automotive industry space.
Client journey: The client established a dedicated customer team of qualified industry experts to develop and deliver the solution. The solution included:
- Booking coordination and pro-active follow up with factories in China
- Purchase order and SKU data collection at the origin
- Carrier management and exception handling
- Full system integration (EDI) and in-transit online visibility on every shipment and SKU
- Deconsolidation and delivery at destination
- Direct delivery model (DC bypass) for selected products reducing inventory holding and shortening product lead time
Key questions answered in this supply chain analysis engagement
The automotive tires manufacturing client achieved a cost savings of USD 400,000 per annum. An additional cost savings of USD 700,000 per annum was achieved from the restructuring of their domestic transportation model and delivery process in the US.
Challenges Facing the Automotive Tire Manufacturers
Our in-depth analysis of the global automotive industry shows that the manufacturers are facing challenges in terms of:
- Inventory: Managing inventory with the right technology support to provide automotive tire manufacturers with better control and visibility – on a real-time basis – is a major pain point.
- Supply chain: The pressure to reduce cost, manage shortened order-to-delivery cycles, and establish a highly efficient logistics network is a huge concern for stakeholders in this industry.
Therefore, to capture the competitive advantage and increase overall profitability, automotive tires manufacturers are leveraging solutions that aid in supply chain analysis. Supply chain analysis helps companies to map out its specific activities within the supply chain and look for ways to create efficiencies.
To know more about our supply chain analysis solutions
Overview of the drilling rig manufacturing space
Over the past few years, the drilling rig market has started moving from a manufacturing-based business model to a more service-oriented business model. As a result, prominent players in the drilling rig market are redefining their business models to improve their production capabilities. However, drilling rig companies have started experiencing setbacks in terms of losses faced and low return on investments. Consequently, firms operating in this industry space have begun adopting new technologies to identify potential value opportunities. The growth prospects of the drilling rig manufacturing industry are spurred by the increasing mining and oil and gas extraction activities around the globe.
Although the drilling rig manufacturing industry is expected to display substantial growth in the coming years, a few factors are expected to influence the growth prospects of the industry. Some of the elements include:
- Shortage of raw materials: With the exponential growth in mining and oil and gas activities over the last few years, there are supply shortages for the products among the end-users of this industry. As a result, firms are forced to maintain supply consistency in their products offered.
- Innovations: Several drilling rig companies are in the early stage of growth and are heavily relying on obsolete techniques to meet the end-user requirements. Nevertheless, companies have started using innovations in their production capabilities due to the advances in technology. As a result, it becomes essential for players in this industry to efficiently meet the business requirements.
Such factors are compelling firms in the drilling rig manufacturing space to leverage the use of supply chain analysis solutions. Supply chain analysis solutions help companies to capture the competitive advantage and increase overall profit. These solutions also help firms to map out specific activities within the generic value chain activities and look for ways to create efficiencies.
The Business Challenge and Journey
Client background: A UK-based manufacturer of the drilling rig equipment. The company recognized that there was no defined fallback position from which support could be maintained at appropriate levels at all time.
Client issue: The company was not able to provide an appropriate level of support to offshore facilities which could potentially jeopardize their objective to safely, efficiently and effectively deliver drilling rig products and services to customers.
The supply chain analysis experts at SpendEdge conducted a comprehensive research and carried out discussions with prominent stakeholders in the oil and gas industry space to help the drilling rig manufacturer overcome their predicaments.
Client journey: The client recognized the value in engaging with our experts to carry out the business continuity planning and support the identification of appropriate strategies with their IT provider and support their offshore facilities.
Key questions answered in this supply chain analysis engagement
SpendEdge’s supply chain analysis engagement helped the drilling rig manufacturer to plan and put strategies in place that would help meet future needs of the organization.
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Overview of the global energy sector
The fourth industrial revolution has been an exciting time, especially for companies in the global energy sector. In 2017, the global energy landscape outgrew the traditional centers of demand and turned its focus to emerging economies. The evolution of IoT, blockchain, and distributed energy systems are some of the significant trends influencing the energy sector. Additionally, smart meters, microgrids, energy management systems, and IP-enabled sensors are just a few more examples of how innovative digital assets have become the “hot trend” in the global energy sector.
However, several factors are affecting the growth prospects of the global energy sector. A few factors include:
- Uncertainties: A major issue facing the energy sector is the mounting uncertainty that complicates the financial feasibility of the major investments required for the development of large conventional and deep-sea oil and gas projects. Moreover, these uncertainties come from the effects on the supply side of tight oil and shale gas production and the factors that affect demand for oil and gas in major importing countries.
- Price volatility: Forecasting oil and gas prices has always been a challenging exercise for energy sector players, but it has gotten even more complicated in the past few years. Earlier, there was a broad consensus of where supply and demand would head, and the industry invested accordingly. However, now, there are several new factors affecting supply and demand.
Many such challenges are compelling firms in the global energy sector to leverage the use of supply chain risk assessment solutions. Supply chain risk assessment solutions help firms prune their supply chain and improve: lead time, transportation risks, customer service, risks associated with profitability, and order-fulfillment times.
The Business Challenge and Journey
Client background: One of the largest energy companies in the world operating in over 17 countries.
Client issue: The company recognized that there were single points of failure in the onshore and offshore ICT dependencies and infrastructure that could mean a loss of critical services for many weeks. As a result, they wanted to devise recovery strategies and plans to understand the exposures and requirements of the business.
To help the client devise recovery strategies and plans across their business units, the supply chain risk assessment experts at SpendEdge conducted comprehensive research and carried out discussions with prominent stakeholders in the global energy sector.
Client journey: The client undertook a risk assessment study to understand all potential single points of failure and to identify risk controls and solutions that would reduce the likelihood of disruption or minimize the impact. The client also drafted a programme of activity that ensured all pre-incident actions were taken to implement practical solutions, as well as producing comprehensive disaster recovery and business continuity plans detailing all post-incident actions and information to ensure response and recovery would be controlled.
Key questions answered in this supply chain risk assessment engagement
With the help of SpendEdge’s supply chain risk assessment engagement, the energy sector client allocated recovery times to all critical activities, coupled with the identification of all resource requirements and minimum requirements.
To know more about our supply chain risk assessment solutions for energy sector firms