Advances in commerce have caused modern consumers to raise their baseline expectations. The rise of next- and same-day delivery has created a standard of demand that puts a new kind of pressure on businesses. Because of this increase in demand, the entire supply chain is rapidly evolving from having a functional orientation to a global and interconnected network of data and processes. There are several new and emerging ways that businesses are transforming their supply chains to meet modern customer demands. Cutting-edge technologies like artificial intelligence (AI), blockchain, and automation are being integrated into the digital supply network, which integrates data and information from different sources to drive distribution of manufactured goods along the value chain.
Demand for goods has far outpaced the capacity for many businesses to deliver. More than half of retailers offer same-day delivery, however customers still expect these products at the same cost. What retailers call “the last-mile”—the final delivery destination that goods must make from warehouse or the transportation hub is becoming a growing problem, especially in urban areas, as customers need fast and flexible deliveries. One way forward-thinking businesses are evolving to meet consumer demands, while at the same time keeping overhead costs low is to automate some of their last-mile delivery systems. With smaller, last-mile distribution centers being built no farther than six or nine miles from major metropolitan areas, the work of delivering packages can be done by a combination of traditional shipping as well as autonomous vehicles and even drones. With more small and specialized last-mile distribution centers being built for different products and needs, the delivery methods of these products can be diversified further. Ultimately, automated vehicles and drones may also help retailers dramatically cut the cost and burden last mile delivery has on infrastructure.
Artificial Intelligence (AI) technology plays an important role in modern supply chain optimization. In warehousing goods, for example, AI and location intelligence can help retailers maintain a competitive edge for their product delivery and supply chain operations. Multi-faceted big data from specific geographic locations blended with online interactions can show buying patterns based on certain times, events, and conditions within detailed customer segments. A retailer can therefore use AI to predict which products are more cost-efficient to stock in a certain warehouse based on its proximity to certain areas. The demographics as well as other behavioral information in that location determines how and what will be stocked, and this information can be changed depending on shifts in behavior or external factors. For instance, if there is a heatwave anticipated in a specific area, retailers will need to stock more air conditioners and this increase in supply will be forecasted.
There has been a lot written about blockchain technology lately, but sometimes it can be difficult to simplify exactly what it is and how it benefits companies and their customers. Essentially, blockchain is a way of distributing the process of verification for anything from financial transactions to logging shipping information. This is an invaluable asset in the supply chain because it elevates the level of trust for recording every interaction that a product or shipment might have by requiring that everyone on the “chain” verify the data being input, and ensuring that this data cannot be changed once it is committed to the digital ledger. What businesses then have is a permanent record of a product’s journey along the supply chain that provides everything from location to the time of arrival, and even all environmental conditions throughout the journey. This can be a revolutionary new tool, for instance, if a company is shipping perishables like fish, and they must remain at a certain temperature the entire way. The company shipping the fish can see if the temperature exceeded the allowable threshold and the real temperature at any point in the journey, and if this has affected the cargo this capability allows them to mitigate food quality issues. Over time, the aggregated blockchain ledger information can reveal weaknesses within the supply chain and help organizations continually optimize operations.
The Digital Supply Chain Model
One reality that has complicated supply chains of the future in terms of sheer logistics, is their global nature. Most major companies have supply chains that exist in multiple countries, sometimes on multiple continents. With organizations being spread out so far and wide, any event that disrupts the supply chain can be catastrophic to operations—costing time, money, and sometimes lives—and put critical customer service obligations at risk. These can range in anything from labor disputes to natural disasters. Once management finally discovers the root of the issue, it might be too late to mitigate damage, especially if they operate across the world and in different time zones from where the disruption is taking place. Location intelligence gives a comprehensive view of all parts of the supply chain, and most importantly, allows personnel to know what is happening and where in near real-time. For instance, a magnitude 7.1 earthquake in central Mexico closed several roadways and impacted the supplier operations of a major US car manufacturer. The car company used geoenriched maps along with spatial analytics to identify suppliers within a 100-mile radius of the quake. From there, they contacted the suppliers to be sure they were healthy and safe. They then verified if they needed help or resources, given the impact, to get the operations back up and productive. Location intelligence dramatically increased event-detection speed and accuracy, and also improved the efficiency of the company’s response.
As supply chains evolve, they are moving from a purely functional, physical system to a global and interconnected network of assets, data and processes. This digital supply network will be made up of many different new technologies, but they will all be connected by location intelligence. AI, automated vehicles, blockchain, and other transformative advances will be given the power of geographic context with spatial analytics, and this allows the digital supply network to function as a digital model of the entire supply chain. It is this dynamic, always moving, real-time representation that will allow businesses to have complete situational awareness and predictive control of all aspects of their organizations in the future.
Source: Forbes. “How The Modern Supply Chain Is Evolving“. (https://www.forbes.com/sites/yasamankazemi/2019/06/27/how-the-modern-supply-chain-is-evolving/#10f3d2df169b). Yasaman Kazemi. June 27, 2019