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Decoding Today’s IT Trends

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4 Supply Chain Management Trends That Give You a Competitive Edge

5 Sep 2017 by Diana Rose Brandon

This article originally appeared in Volume 2, Issue 3 of <theScript> Quarterly digital magazine.

What matters in business today is that customers have an excellent experience without regard for the work, training and moving parts involved in delivering it. Customers expect a frictionless experience and will rant on social media if they don’t get one. At the same time, employees expect the technologies they use in the workplace to be as familiar and easy to handle as what they use at home.

As business and technology converge to accommodate these high expectations, it’s clear a human-centric model can be a game-changing approach to supply chain management. While this is an extensive subject, we’ve narrowed it down to four trends to help you optimize operations in an increasingly automated and technology-driven environment.

1. E-commerce business

According to TradeVitality, the e-commerce industry in the United States is growing 23% year over year. As shown in Figure 1, quarterly retail e-commerce sales in the U.S. totaled more than $105.74 billion the first quarter of 2017.

Graph depicting the retail e-commerce sales in the US from 1st quarter 2009 to 1st quarter 2017 (in millions of dollars) as discussed below
Figure 1

Business Insider Intelligence forecasts e-commerce spending in the U.S. will reach $632 billion in 2020. This increase in online shopping forces businesses to reconsider supply chain management strategies. There’s more to e-commerce business than just efficiently selling to customers. The internal side of the chain requires the efficient management of supply and demand.

In order to streamline purchases, meet growing consumer requests and drive faster business impact, organizations need to invest in lifecycle services that provide end-to-end solutions. Whether this means using online accounts or partnering with third-party suppliers, leveraging e-commerce tools leads to greater visibility into the entire supply chain process — without having to manually manage every step.

“Simplification and automation through e-commerce are no longer options,” says Jamie Werve, director of e-commerce at Insight. “Through insight.com, our clients get a customized online experience. They can extend purchasing to end users while maintaining control through catalog standardization, automated approval routing and SmartTrackers.”

The immediacy of e-commerce helps businesses personalize the customer experience and deliver services customers expect, such as 24-hour shipping and same-day delivery. These services apply pressure on the back end. As e-commerce grows, businesses need to be prepared for changes around order processing and fulfillment, too. Automation technology is being introduced in warehouses, shipping and other supply chain functions as a way to keep up.

2. Automation technology and robotics

As companies strive to fulfill a higher number of smaller, individual orders, they can turn to modern technology to assist with warehousing and delivery. Automation technology accomplishes a number of operational goals, including cost savings and increased productivity for the business — and fewer order errors for customers.

Amazon’s purchase of mobile robotics fulfillment systems manufacturer Kiva Systems (now known as Amazon Robotics) in 2012 ignited the demand for warehouse automation. Today, there are 1.1 million working robots in the world that help with repetitive, manual and time-consuming processes.

A May 2017 article in Digital SupplyChain written by Mark Parsons, chief customer officer for DHL supply chain, reviewed the future of automation for the international courier. “At DHL, we are looking at a number of different ways to integrate robotics into the supply chain,” he wrote. “We have already seen how flexible automation can be utilized in warehousing and fulfillment, with collaborative robots equipped with high-resolution cameras, pressure sensors and self-learning capabilities to assist workers with tasks such as picking, packing and sorting.”

Any activity that requires repetitive motion is a good candidate for automation. Warehouse robots are mostly engaged in assisting, following behind or bringing items to humans. But efforts are underway to develop robots that can identify and grab products of varying sizes and weights off traditional warehouse shelves. Developing these kinds of robots is incredibly complex but could allow companies to operate distribution centers around the clock without jeopardizing worker safety — and save money by reducing errors.

For now, automation technology may be relegated to large enterprises that can afford the investment required. But as the “holy grail” of warehouse automation, robot shelf-picking technology will undoubtedly become more accessible to smaller companies as the industry progresses.

In addition to assisting with order fulfillment, robots are capable of collecting vast amounts of information. Machines can quickly and reliably analyze volumes of data for patterns and deficiencies, leaving humans to focus on how to transform business using the insights provided.

3. “Last-mile” efficiencies

The last mile is the part of the supply chain process that addresses final delivery of a product to a customer. Various conditions influence the increase in complexity of final delivery, including the rise of e-commerce business and fast delivery demands.

Thanks to what’s being called “the Amazon effect,” customers expect deliveries to be made securely and in as little time as possible. However, city centers typically have a maze of regulations in place to control noise, delivery times, pollution and other factors that can cause logistics challenges. It’s little wonder that last-mile delivery can account for nearly half of overall transportation costs, according to McKinsey & Co.

In this last stage of the supply chain, businesses should look to modern delivery methods for faster speed and accessibility. For example, both UPS and Amazon partner with local businesses to house storage lockers. Customers who lack a secure place for deliveries at their homes or who need to accept deliveries at alternate locations can choose to have their orders stored at a nearby locker until they’re ready to pick them up.

Amazon locker located in grocery store
Figure 2 shows an Amazon locker located in a Safeway grocery store in Mountain View, California. Access to packages stored at this facility is granted through the touchscreen located on the front of the locker.

For door-to-door deliveries, automation technology is now a reality on the road, too. Driverless trucks have been around for years in industries such as mining, but they’re primarily used on work sites and not meant to interact with customers. However, with companies such as Amazon, Apple and Google making major investments in this technology, alongside car manufacturers, the race is on for driverless vehicles on the consumer end.

In March, Mercedes-Benz announced a significant investment in an all-electric, self-driving vehicle called the Vision Van, as well as in an autonomous drone. While the concept doesn’t eliminate a driver altogether, the van and drone work together to deliver packages faster and more accurately than one human could.

The van is loaded at the warehouse with a pallet of packages in a mechanical shelving unit. The system knows where each package is located in the pallet and where it needs to go. The pallet fits into the back of the delivery van, and the system notifies the driver en route when it’s near a delivery point. Packages are then automatically pushed to the drone and sent out. Once all of the legal issues concerning drones are worked out, this could improve both the driver and customer experience.

4. Corporate social responsibility

The definition of Corporate Social Responsibility (CSR) varies by country, but the connecting thought for these policies is a concern for people — whether in securing jobs, protecting the environment, creating safe products or developing policies based on diversity, ethics or other human-centered ideals.

Mercedes-Benz Vision Van
Mercedes-Benz Vision Van concept presented at the International Motor Show for Commercial Vehicles. Equiped with drones on top and intelligent cargo spacing.

A 2015 study by the Logistics Bureau found that “more than 80% of participating consumers take CSR into account when deciding what to buy or where to shop.” This is an important consideration not just for employees who want to feel good about their employer, but also for consumers who are increasingly interested in how businesses interact with the world.

“Getting a competitive advantage means doing something unique or better. … What will be unique will be how companies organize their people and talent in order to put … technology to use,” says Michael J. Gravier, associate professor of marketing at Bryant University. “The walls will blur between the company and the rest of the world, and companies will need a diversity of connections to various markets. This will help at every level, from idea generation and production to order taking and demand fulfillment.”

In an era when everyone is connected to the internet and can broadcast their findings about a company online, businesses should be aware of what’s happening throughout their supply chain process. After all, customers expect businesses to take the lead on being inclusive and improving conditions. With increased visibility into the supply chain, customers and companies can ensure they’re supporting ethical practices.

Efficiently manage supply and demand.

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