UNIT 3

SUPPLY CHAIN MANAGEMENT

What is supply chain management?
Supply chain management is the handling of the entire production flow of a good
or service — starting from the raw components all the way to delivering the final
product to the consumer. A company creates a network of suppliers (“links” in the
chain) that move the product along from the suppliers of raw materials to those
organizations that deal directly with users.

How does supply chain management work?

According to CIO, there are five components of traditional supply chain
management systems:

Planning

Plan and manage all resources required to meet customer demand for a
company’s product or service. When the supply chain is established, determine
metrics to measure whether the supply chain is efficient, effective, delivers value
to customers and meets company goals.

Sourcing

Choose suppliers to provide the goods and services needed to create the product.
Then, establish processes to monitor and manage supplier relationships. Key
processes include: ordering, receiving, managing inventory and authorizing
supplier payments.

Manufacturing

Organize the activities required to accept raw materials, manufacture the

product, test for quality, package for shipping and schedule for delivery.
Delivery and Logistics

Coordinate customer orders, schedule deliveries, dispatch loads, invoice

customers and receive payments.

Returning

Create a network or process to take back defective, excess or unwanted products.

Why is supply chain management important?

Effective supply chain management systems minimize cost, waste and time in the
production cycle. The industry standard has become a just-in-time supply chain
where retail sales automatically signal replenishment orders to manufacturers.
Retail shelves can then be restocked almost as quickly as product is sold. One way
to further improve on this process is to analyze the data from supply chain
partners to see where further improvements can be made.

By analyzing partner data, the CIO.com post identifies three scenarios where
effective supply chain management increases value to the supply chain cycle:

Identifying potential problems. When a customer orders more product than the
manufacturer can deliver, the buyer can complain of poor service. Through data
analysis, manufacturers may be able to anticipate the shortage before the buyer
is disappointed.

Optimizing price dynamically. Seasonal products have a limited shelf life. At the
end of the season, these products are typically scrapped or sold at deep
discounts. Airlines, hotels and others with perishable “products” typically adjust
prices dynamically to meet demand. By using analytic software, similar
forecasting techniques can improve margins, even for hard goods.

Improving the allocation of “available to promise” inventory. Analytical software

tools help to dynamically allocate resources and schedule work based on the sales
forecast, actual orders and promised delivery of raw materials. Manufacturers can
confirm a product delivery date when the order is placed — significantly reducing
incorrectly-filled orders.

Key features of effective supply chain management

The supply chain is the most obvious “face” of the business for customers and
consumers. The better and more effective a company’s supply chain management
is, the better it protects its business reputation and long-term sustainability.

IDC’s Simon Ellis in The Path to a Thinking Supply Chain defines what is supply
chain management by identifying the five “Cs” of the effective supply chain
management of the future:

Connected: Being able to access unstructured data from social media, structured
data from the Internet of Things (IoT) and more traditional data sets available
through traditional ERP and B2B integration tools.

Collaborative: Improving collaboration with suppliers increasingly means the use

of cloud-based commerce networks to enable multi-enterprise collaboration and
engagement.

Cyber-aware: The supply chain must harden its systems and protect them from
cyber-intrusions and hacks, which should be an enterprise-wide concern.

Cognitively enabled: The AI platform becomes the modern supply chain's control
tower by collating, coordinating and conducting decisions and actions across the
chain. Most of the supply chain is automated and self-learning.

Comprehensive: Analytics capabilities must be scaled with data in real time.

Insights will be comprehensive and fast. Latency is unacceptable in the supply
chain of the future.

Many supply chains have begun this process, with participation in cloud-based
commerce networks at an all-time high and major efforts underway to bolster
analytics capabilities.

Evolution of supply chain management

While yesterday’s supply chains were focused on the availability, movement and
cost of physical assets, today’s supply chains are about the management of data,
services and products bundled into solutions. Modern supply chain management
systems are about much more than just where and when. Supply chain
management affects product and service quality, delivery, costs, customer
experience and ultimately, profitability.

As recently as 2017, a typical supply chain accessed 50 times more data than just
five years earlier. However, less than a quarter of this data is being analyzed. That
means the value of critical, time-sensitive data — such as information about
weather, sudden labor shortages, political unrest and microbursts in demand —
can be lost.

Modern supply chains take advantage of massive amounts of data generated by

the chain process and are curated by analytical experts and data scientists. Future
supply chain leaders and the Enterprise Resource Planning (ERP) systems they
manage will likely focus on optimizing the usefulness of this data — analyzing it in
real time with minimal latency.

ISSUES WITH SCM

What Are the 7 Biggest Supply Chain Challenges?

Supply chain management is at the core of manufacturing business success. To be

successful, a supply chain strategy needs visibility, reliability, and predictability.
Below are the seven major issues we see ahead, along with possible mitigation
techniques.

1. Material Shortages
Supply & Demand Chain Executive cites material shortages as the one of the most
significantly disrupting elements of 2021. Their article references a Hubs report
which finds that 56% of businesses experienced more supply chain disruptions in
2021 than in 2020.

In one example of how material shortages are heightening supply chain issues,
Forbes reports that, “Wineries around the country and world are reporting
shortages in packaging and production materials, while simultaneously
experiencing logistics headaches as they work to get the resources they need to
transport their wine to consumers.”

How To Overcome Material Shortages

In a study by Supply & Demand Chain Executive, 57% of companies surveyed

believe that the best way to prevent future disruptions in material supplies is by
diversifying the manufacturing supply. However, other strategies include:

A) Monitor trends and integrate the latest advancements in supply chain

automation.

B) Expedite parts when necessary.

C) Improve supplier collaboration.

D) Focus on inventory management to identify potential shortages in advance.

2. Lack of Supply Chain Visibility

Supply chain visibility is the ability to pinpoint the location and track the
movement of individual components from raw materials and individual parts, to
the final products as they are delivered to suppliers and consumers. A high level
of visibility enables the company to know when goods will reach their destination,
and when they will be available to move on to the next step. All-too-real
examples of supply chain visibility during the pandemic appeared in shortages of
personal protective equipment and ventilators for COVID patients, as well as
initial distribution problems for the vaccines.

How To Improve Supply Chain Visibility

To improve supply chain visibility, first analyze your current supply chain and
identify the pain points where bottlenecks occur. Prioritize remedies for these
areas based on what is most important to meeting the company’s goals and
objectives. Eliminate siloed technology systems that don’t work well together,
and implement full-featured supply chain management technology.

3. Demand Forecasting Complexity

The ability to accurately gauge customer demand and prepare for future needs
can be critical to efficient supply chain management. It’s essential for business
profitability and growth, and ensuring strong customer relationship management.
Factors that can complicate the accuracy of demand forecasts include:

A) Corporate changes to the product mix

B) Seasonal variations

C) Adaptation to competitor activities

D) Changes in end-user requirements

E) Seasonal swings in supply and demand

F) Changes in supply channel and vendor requirements

G) External factors

Some of the methods businesses use to forecast demand include exponential

smoothing, moving average forecasting, an auto-regressive integrated moving
average, bottom-up forecasting, and multiple aggregation prediction algorithms.

How To Simplify Demand Forecasting

The University of Tennessee Knoxville Global Supply Chain Institute suggests that
the components of a successful demand forecasting strategy include:

A) Clean, reliable data

B) Actionable input from affected stakeholders

C) Robust analytics

D) Flexibility to find and correct potential errors and change course as needed

E) Building strong collaboration with supply chain partnerships

The Institute cites the example of Amazon for its work in demand forecasting.
They report that Amazon has sophisticated supply chain planning, which allows it
to accurately anticipate demand and efficiently move its ecommerce products to
warehouses close to customers most likely to order them. Powered by AI,
Amazon uses demand forecasting to follow through on its one-hour delivery offer.

4. Supply Chain Fragmentation

Supply chain fragmentation is when the supply chain is spread over multiple
suppliers and manufacturers. While this may allow for some price or quality
advantages, managing the supply chain can be challenging. Apple’s iPhone may be
assembled in China from parts made in factories across the world. Motor vehicles
may be assembled in the U.S., Mexico, or Canada, with parts delivered on a just-
in-time basis from various manufacturers.

Once again, the pandemic showed how fragile the fragmented supply chain can
be when factories closed in one country, or borders were closed completely,
preventing the delivery of needed parts.

How To Identify and Avoid Supply Chain Fragmentation

The most efficient way to overcome the challenges of supply chain fragmentation
is through better data management. Eliminate siloed systems that are not capable
of communicating with one another. Actively search for any disruptions to the
supply chain and analyze their possible impact on your operations. Use predictive
analysis to predict the best course of action based on the available data.

5. Congestion at Critical Ports

Congestion at critical ports can be caused by factors beyond those exemplified

during the pandemic. Other critical issues that can lead to congestion include:
A) Old, outdated, malfunctioning, or insufficient equipment

B) Weather delays and natural disasters

C) Labor strikes or slowdowns

D) Lack of yard space to handle container shipping from modern super-sized

carriers

E) Insufficient transmodal capabilities

F) Regional conflicts, wars, or port blockages

How To Source New Suppliers to Mitigate Port Congestion

Tips for businesses that want to overcome the challenge of congestion at critical
ports include:

A) Increase supply chain visibility as it relates to supplies moving through the

congested ports.

B) Extend lead times as much as possible.

C) Search for onshore suppliers to serve as backup alternatives.

D) Investigate possible rerouting options through non-congested ports.

E) Adjust inventory policies to meet port-sensitive variants.

F) Improve logistics visibility to track shipments and consider implementing a

three-way matching process.

6. Increasing Transportation and Freight Costs

Another impact of the pandemic, worldwide social upheavals and increasing

inflation can be seen in transportation and freight costs. The costs of fuel have
skyrocketed, impacting every mode of transportation by land, sea, or air.
According to Foley & Lardner LLP, “The cost of shipping a container on a
transoceanic trade route increased seven-fold in the 18 months that followed
March 2020. Further, within the last couple of years, several large railroad
companies have significantly raised rates and demurrage fees.” This leads to
higher costs for suppliers, which are then passed on through the supply chain to
the final end user.

How To Reduce Transportation Costs

Tips to overcome the challenge of high transportation costs include:

A) Consolidate shipments whenever possible.

B) Search for suppliers in closer geographic proximity and prioritize domestic

suppliers.

C) Consider dual sourcing to have a more stable supply of materials.

7. Digital Transformation and Integration

Improved digital technology is necessary to collect, analyze, integrate, interpret,

and manage high-quality, up-to-the-minute data. This data can then be used to
support the automation and forecasting tools that will be necessary for today’s
supply chain management. Some of the various types of technology that can aid
in supply chain management include:

Supply Chain Management Software: This type of software is used to oversee

and integrate activities across the entire supply chain. It can be used to manage
supply chain transactions and control the associated business processes.

Supply Chain Relationship Management Software: This tool is used to assist in

supplier selection, performance tracking, and document management. It can also
be used for new project collaboration.

Inventory Management Software: This software system tracks inventory levels

and follows orders, sales, and deliveries.

Supply Chain Invoice Processing: Production management system is the perfect

automation solution for AP automation. Users can streamline ordering and
accounts payable processes, while keeping data accessible for the entire team.

How To Integrate Technology into Your Day-to-Day Operations

The steps to integrate technology into your day-to-day supply chain operations
include:

A) Conduct a supply chain audit. Assess your current situation and prioritize
needs.

B)Investigate possible technologies that may be able to meet your needs. Obtain
product demos to see the technology in action.

C) Assemble an implementation team consisting of representatives of all affected

stakeholders.

D) Conduct a test implementation.

E) Establish standard operating policies for the new technology.

F) Train all users.

G) Update all suppliers and customers as to how the change may impact your
relationship with them.

H) Launch, assess, communicate and fine-tune.

According to Harvard Business Review, technology can benefit your supply chain
through:

A) Enhancing supply chain visibility

B) Optimizing supply chain resources

C) Managing the supplier network efficiently

D) Supporting relationships throughout the supplier network

E) Improving billing timeliness and accuracy

F) Serving as an early warning system of potential disruptions

Distribution management
What Is Distribution Management?

Distribution management is the process used to oversee the movement of goods

from supplier to manufacturer to wholesaler or retailer and finally to the end
consumer. Numerous activities and processes are involved, including raw good
vendor management, packaging, warehousing, inventory, supply chain, logistics
and sometimes even blockchain.

What Is a Distributor?

A distributor is an entity that supplies products to retailers and other businesses

that sell directly to consumers. Take, for example, a wholesale liquor distributor
that supplies alcohol to restaurants, grocery stores and liquor stores.

Other examples include a produce distributor that supplies lettuce, tomatoes and
other produce to restaurants; and a pharmaceutical distributor that supplies a
variety of prescription-controlled drugs to pharmacies.

Distribution vs. Logistics

Logistics refers to the detailed planning and processes involved with the effective
supply and transportation of goods. Logistics includes activities and processes
such as supply management, bulk and shipping packaging, temperature controls,
security, fleet management, delivery routing, shipment tracking and warehousing.
It is perhaps easiest to think of logistics as physical distribution.

Distribution is a management system within logistics that is focused on order

fulfillment throughout distribution channels. A distribution channel is the chain of
agents and entities that a product or service moves through on its way from its
point of origin to a consumer. Examples of distribution channels include
ecommerce websites, wholesalers, retailers and 3rd party or independent
distributors. Distribution includes activities and processes such as consumer or
commercial packaging, order fulfillment and order shipping. In short, distribution
is most easily understood as commercial or sales distribution.

Why Is Distribution Management Important?

Distribution management is first and foremost about organizing everything

involved in getting goods to the buyer in a timely fashion and with the least
amount of waste. Therefore, it has a direct impact on profits.

What Is a Distribution Network and What Are the Benefits?

A distribution network is a connected group of storage facilities and

transportation systems. It is formed in accordance with a distribution strategy
designed to move goods from manufacturer to wholesalers, retailers or buyers.

Advantages of Distribution Management

Besides delivering higher profits, distribution management eliminates waste in a

number of ways, ranging from reduced spoilage to reduced warehousing costs
since products and goods can be delivered as needed (“just in time” inventory),
rather than stored in bigger bulk (“just in case” inventory).

Distribution management leads to decreased shipping charges and faster delivery

to customers, and it also makes things easier for buyers as it enables “one stop
shopping” and other conveniences and rewards, such as customer loyalty rewards
programs.

Distribution Management Challenges

Distribution challenges can arise from a variety of disruptions. Natural disruptions

include severe weather events, raw material shortages (e.g. bad crop years), pest
damages, and epidemics or pandemics. Human disruptions include riots, protests,
wars and strikes.

Transportation disruptions include transport vehicle disrepair, maintenance

downtimes and accidents, as well as delayed flights and restrictive or new
transportation regulations such as those regularly seen in trucking.
Economic challenges include recessions, depressions, sudden drops or increases
in consumer or market demands, new or changes in fees or compliance costs,
changes in currency exchange values and payment issues.

Product disruptions include product recalls, packaging issues and quality control
issues. Buyer disruptions include order changes, shipment address changes and
product returns.

5 Factors That Influence Distribution Management

Many things can influence distribution management. The five most common are:

Unit perishability – if it’s a perishable item then time is of the essence to prevent
loss.

Buyer purchasing habits – peaks and troughs in purchasing habits can influence
distribution patterns and therefore varying distribution needs that can be
predicted.

Buyer requirements — e.g. changes in a retailer’s or manufacturer’s just in time

inventory demands,

Product mix forecasting – optimal product mixes vary according to seasons and
weather or other factors and

Truckload optimization – relies on logistics and fleet management software to

ensure every truck is full to capacity and routed according to the most efficient
path.

3 Distribution Management Strategies

At the strategic level, there are three distribution management strategies:

Mass:

The mass strategy aims to distribute to the mass market, e.g. to those who sell to
general consumers anywhere.

Selective:
The selective strategy aims to distribute to a select group of sellers, e.g. only to
certain types of manufacturers or retail sectors such as pharmacies, hair salons,
and high-end department stores.

Exclusive

The exclusive strategy aims to distribute to a highly limited group. For example,
the manufacturers of Ford vehicles sell only to authorized Ford dealerships, and
producers of Gucci-brand goods only sell to a narrow slice of luxury goods
retailers.

Choosing a Distribution Management System

Choosing the right distribution management system for your organization

depends a great deal on your organization’s distribution goals and challenges, and
the distribution models and channels your company uses. But as a general rule,
companies should evaluate:

A) Ease of integration and compatibility with legacy systems.

B) Scalability and elasticity

C) Security

D) Data management and analytics, including real-time data streaming and

ecosystem data-sharing

E) Adaptability, whether the system is agile enough to accommodate the rapid

changes needed to overcome obstacles or seize new opportunities

What Are the Elements of Distribution Management?

The elements of distribution management systems are the steps involved in

getting the product from the manufacturer to the end customer and can include:
supply chain, blockchain, logistics, a purchase order and invoicing system, vendor
relationship management (VRM), customer relationship management (CRM), an
inventory management system (IMS), a warehouse management system (WMS)
and a transportation management system (TMS).
LOGISTICS FRAMEWORK
Introduction:

The term logistics includes multitude of functions in movement of materials and

goods from sources of supply to the users. The management of logistics calls for
effective planning, execution, controlling and coordinating several activities. Its
scope is wide that involves processing of orders, maintenance of inventory,
transportation, materials handling and packaging.

LOGISTICS MANAGEMENT: CONCEPTUAL FRAMEWORK

Logistics management is an integrating function which coordinates and optimises
all logistics activities, as well as integrates them with other functions, including
marketing, sales, manufacturing, finance, and information technology.

Logistics management activities include inbound and outbound transportation

management, fleet management, warehousing, materials handling, order
fulfilment, logistics network design, inventory management, supply/demand
planning, and management of third-party logistics services providers. the logistics
function also includes sourcing and procurement, production planning and
scheduling, packaging and assembly, and customer service. It is involved in all
levels of planning and execution i.e. strategic, operational, and tactical.

Logistics management is a process of planning, executing, and controlling the

efficient and effective flow and storage of goods and services, and related
information from the point of origin to point of consumption for the purpose of
conforming to customer requirements. It is defined as a process of management
which integrates the movement of products, services, data, and capital from the
stage of raw materials to the consumer product.

SCOPE OF LOGISTICS MANAGEMENT

The scope of logistics management involves order processing, inventory control,

transportation, warehousing, materials handling, and packaging, all integrated
throughout a network of facilities. The goal is to support procurement,
manufacturing, and customer service operational requirements. It aims internally
to coordinate functional competency into an integrated operation focusing on
serving customers (internal); and externally, to ensure operational
synchronisation which is essential with customers (outside of the firm) as well as
material and service suppliers to link internal and external operations as one
integrated process.

The scope of logistics management includes:

Business Logistics: It is the systematic and coordinated set of activities to provide

the physical movement and storage of goods, services, and related information
from the point of origin of the vendor or the supply services through company
facilities to the point of consumption (customer/market) and the associated
activities (like packaging, order processing) in an efficient manner necessary to
enable the organisation to contribute to the explicit goals of the company and
meet customer requirements.

Materials Management: Materials management is the planning, organisation and

control of all aspects of inventory, embracing procurement, warehousing, work-
in-progress, shipping, and distribution of finished goods. It is the inbound logistics
from suppliers through the production process, the movement and management
of materials and products from procurement through production.

Physical Distribution: It is the movement and storage functions associated with

finished goods from manufacturing plants to warehouses and to customers.
Distribution relates to outbound logistics, from the end of the production line to
the end user having activities associated with the movement of material, usually
finished goods or service parts, from the manufacturer to the customer. These
involve the functions of transportation, warehousing, inventory control, material
handling, site and location analysis, packaging, and the communications network
necessary for effective management.

Supply Management: Supply management is the act of identifying, acquiring, and

managing the resources and suppliers that are essential to the operations of an
organisation. It includes the procuring of physical goods, information, services,
and any other necessary resources that enable a company to continue its
operations. The main goals are cost control, the efficient allocation of resources,
risk management, and the effective gathering of information to be used in
strategic business decisions. It is a systematic business process that goes further
than procurement to include the coordination of pre-production logistics and
inventory management.

Decentralised Logistics Management:

Decentralised logistics management is based on the premise that a company

needs to decentralise its operations to enable the organisation/company to
respond to the local needs. Any company while dealing with different local
specific cultures requires inputs from the dispersed/ local organisational units.
The managers who deal with the local cultural variations daily normally know
what works and what does not. The product moves further away from the key
stakeholders at the central corporate office and closer to the end customer. While
this can be accomplished through self-owned warehouse and logistics, a managed
decentralised logistics network is far more suitable than its counterpart.

IMPORTANCE OF LOGISTICS MANAGEMENT

1) Cost Reduction and Profit Maximisation: The optimal way is to boost

the revenue by improving logistics management. Logistics management
results in cost reduction and profit maximisation, primarily due to:
a) Improved material handling .
b)Safe, speedy, and economical transportation
c) Optimum number and convenient location of warehouses etc.
2) Efficient Flow of Manufacturing Operations: Inbound logistics help in
the efficient flow of manufacturing operations, due to on-time delivery of
materials, proper utilisation of materials and semi-finished goods in the
production process and so on.
3) Competitive Edge: Logistics provide, maintain, and sharpen the competitive
edge of an enterprise by:
a) Increasing sales through providing better customer service
b) Arranging for rapid and reliable delivery
c) Avoiding errors in order processing; and so on.
4) Effective Communication System: An efficient information system is a
must for sound logistics management. As such, logistics management helps
in developing effective communication system for continuous interface
withsuppliers and rapid response to customer enquiries.
5) Sound Inventory Management: Sound inventory management is a byproduct
of logistics management. A major problem of production
management, financial management etc., is to ensure sound inventory
management, which is solved by logistics management.

Internet enabled SCM

Impact of Internet of Things (IoT) on Supply Chain Management
IoT is a revolutionary technology for every major industry — retail, transportation,
finance, healthcare, and energy. The Internet of Things shows its potential to the
fullest in processes like supply chain. Management, forecasting, and oversight
applications help fleet managers improve the operational efficiency of distribution
and add transparency to decision-making.
All areas of the complex supply chain process can be improved with the Internet
of Things. In this post, you’ll find about the impact of IoT on supply chain and
learn about the applications used in this industry.
Why using IoT in supply chain management
Tracking and monitoring are some of the main objectives for IoT deployment in
supply chain management. The technology allows warehouse and fleet managers
to keep track of their cargo and inventory.
However, there’s more to the Internet of Things than its asset management
potential. Here are many more reasons for using IoT in SCM:
Real-time location-tracking
Internet of Things provides managers with a coherent stream of real-time data
regarding the location of the product and the transportation environment. You
will be alerted if the product is shipped in the wrong direction and will be able to
monitor the delivery of ready goods and raw materials.
Storage condition monitoring
Thanks to environmental sensors, managers can track shipment conditions and
proactively respond to changes. For instance, one of the most common IoT supply
chain solutions gathers data on the temperature inside vehicles, pressure,
humidity, and other factors that could compromise the product’s integrity and
triggers automatic condition adjustment.

Forecast the movement and the arrival of the product

Managers use IoT devices and data analytics systems to improve the quality of
decision-making and increase the precision of delivery forecasts. Thanks to real-
time tracking, companies are able to monitor goods during shipment and predict
the delivery as well as forecast and mitigate risks associated with delays.
Locate goods in the warehouse
Integration of IoT-based supply chain management systems is among the top
warehouse technology trends. The benefits are numerous from the increased
efficiency of warehouse processes to better inventory management and
employee safety. Thanks to real-time location trackers, for instance, employees
on-site can easily locate goods and get quick to the exact aisle for a specific
product. In this case, Internet of Things enables seamless workflow and
performance that is impossible to achieve otherwise. Moreover, combined with
artificial intelligence, IoT becomes a stepping stone for full-on warehouse
automation with little to no human supervision.
Improve contingency planning
IoT and data analytics help supply chain managers plan routes, taking into
account traffic, weather, possible accidents or other delay-inducing occurrences
that happen on the way. The Internet of Things curates all data needed to
develop flexible contingency plans and get to the cause of existing delays. The
technology offers supply chain managers real-time alerts that increase the speed
of risk mitigation.
Use of IoT in supply chain across different industry sectors
Supply chain management is a multi-faceted field. Throughout the delivery,
dozens of operations unfold simultaneously and it’s crucial for managers to
streamline them. The Internet of Things is the technology that helps build big-
picture views and create complex yet functional frameworks for operational
efficiency in this field.
Here’s how the technology touches upon various aspects of supply chain
management — communication, logistics, storage, shipping and others.
1. Asset management
IoT systems facilitate asset monitoring and management. Instead of logging the
data manually or using traditional inventory devices, managers can now fully rely
on software to update the status of all assets. Similar to asset tracking in retail,
connected tech such as sensors, RFID tags, beacons and smart materials allows to
effortlessly track each item and help supply chain managers can get instant access
to key insights on each delivery, including the contents of the parcel, storage
manuals, and so on.
2. Automation
The full potential of this technology is unlocked when it comes to managing large
warehouses for major retail and logistics companies. There are many applications
of Internet of Things in supply chain management that help automate warehouse
operations from inventory drones to connected infrastructure for warehouse
condition monitoring and remote control.
The human-technology synergy in manufacturing and supply chain helps
warehouse managers increase productivity, cut costs and increase resilience.
3. Improved resource management
One of the most important benefits of IoT in supply chain comes from machine
intelligence and the ability of technology to find issues or saving points that
people won't be able to spot – detect resource leaks, find inefficiencies,
determine possible machine failure and even see the future. In fact, connected
systems gather data needed for predictive analytics at different stages of supply
chain (detecting equipment failure, predict maintenance, plan load, etc.). The
power of predictive analytics is widely used in many industries — it is the next big
thing in supply chain management. Only by being able to forecast system failures,
supply chain and warehouse managers significantly cut downtime, hence save a
lot of money.
4. Transparency
Internet of Things in logistics improves the efficiency of communication between
all parties in the supply chain. Managers are able to track drivers and shipping and
see if they comply with internal policies, if the product is stored the right way, and
if there aren’t any delays between the warehouse and the customer’s doorstep.
Having access to real-time location, productivity, and environmental data,
managers can also communicate with end clients and keep them informed thus
providing better more personalized service.
5. Sustainability
In a smart supply chain, IoT is also a sustainability enabler and one of the
technologies to help managers comply with the current environmental
regulations and emission caps. Thanks to different IoT sensors for supply chain
management and asset tracking, they now can get a very precise picture of how
resources such as power and water are used, implement green strategies to fleet
management and shipping and integrate environmental initiatives at scale
(renewables, electric vehicles, energy-efficient spaces).

Benefits of IoT in supply chain

With the growing popularity of the Internet of Things in mind, more businesses
seek to reap the benefits of the technology in the supply chain. In case you are
wondering how IoT can improve your company’s efficiency and reduce operating
costs, here’s an overview of its benefits in SCM.
Higher speed
Smart route-planning tools and IoT tracking technologies increase the overall
supply chain speed exponentially. Integrating these technologies in everyday
operations, managers shorten the feedback circle, benefit from faster decision-
making, proactively mitigate delay risks, and generally improve the efficiency of
locating goods within the warehouse.
Higher accuracy
Connected platforms are faster and easier to access than closed systems. By
building a cloud-based IoT system, companies ensure all parties involved in the
supply chain lifecycle will have access to relevant data and can address issues fast.
On top of that, web and mobile tools for different users (employees, managers,
operators, customers) help them work with the insights, use collected data to
build strategies and different scenarios relevant to user roles and needs.
Improved flexibility
IoT provides managers with detailed insights on the goods turnover, helping
retailers and supply chain managers know how many units of every product
should be ordered. The Internet of Things reduces the impact of human error as
well by adding high precision in asset tracking, shipping and navigation for the
drivers on the road.
Better segmentation
Combining IoT and supply chain management is a good way for retailers to learn
more about their products, customers and demand and build relevant strategies.
Data collected throughout the product cycle helps better understand the market
and segment products with the target audience in mind.
Increased efficiency
IoT empowers a wide range of connected platforms geared towards employees.
Tools like smart glasses help instruct warehouse workers seamlessly to ensure
they spend less time completing a task. Also, IoT captures efficiency-related data
and brings more awareness into resource and labor management. Thanks to the
technology, supply chain managers will ensure all the parties involved in the
delivery perform to the best of their ability.
Emerging Trends in Supply Chain Management
It is essential for living beings, businesses, processes, and so on to evolve so that
they can survive and thrive.
The same goes for supply chains as well.
Cloud computing, artificial intelligence, robotic process automation, and other
new technologies are disrupting not only the supply chain software environment
but also the way supply chains function.
Trends in Supply Chain Management
1. Resilience
The lockdown caused chaos and upheaval in all sectors all over the world; supply
chains have had to innovate and venture into uncharted territory.
Since the pandemic set in, the supply chain pressure index has been very volatile.
McKinsey says that companies have to discover and mitigate hidden risks while
reshaping strategies that are no longer relevant so that they can be more resilient
to such situations in the future.
Value chains include everything from procuring raw materials to delivering the
products to customers.
The impact of supply chain disruptions extends beyond these value chains.
Every tier in the supply chain suffered losses during the pandemic, as a disruption
at any point in the chain has a cascading effect and impacts several activities in
the chain.
These risks are forcing supply chains to take a fresh look at risk assessment and
their vulnerabilities to have flexibility and resilience.

They have to consider:

1) The weak links in vendor partnerships
2) Important areas in the chain not in their control
3) Reliance on items with just one source that could disturb the supply chain if
they faced issues
4) If they have adequate visibility into end-to-end processes that will enable them
to be agile during unforeseen circumstances
It is not that being flexible and resilient are new concepts; in the race to cut costs,
these objectives were often ignored.
From now on, choosing the lowest cost option can be damaging to the supply
chain.
2. Blockchain
Blockchain technology offers outstanding transparency and visibility.
Instead of the conventional method of storing information in tables, blockchain
uses blocks of data.
New blocks are created as each storage block gets filled with data, and are
‘chained’ to the previous block.
These blocks become undisputable records, giving users transparency into every
transaction with precise time stamps.
It is one of the important supply chain trends as it allows:
Better tracking of materials from the source, across the chain, up to the customer
a) Reduces administration and paperwork
b) Improves security of transactions and offers better visibility into suppliers etc.
c) Enhanced security and fraud detection
3. Digital Supply Chain Twins
With social distancing and remote work, digital became more popular than
manual, as it provides real-time data from across the supply chain along with
precise analytics.
This helped avoid many disruptions.
They recreate a supply chain and its processes in entirety, in a digital environment
that can be accessed easily.
The real-time data collected from IoT devices offer full visibility into everything,
from what customers order, to individual items going through the supply chain.
It can identify delays in production and possible consequences, while alerting you
to machinery in need of repair.
They offer massive benefits to industries out of supply chain management too,
but necessitates huge investment financially and equipment-wise.
4. Supply Chain as a Service (SCaaS)
SCaaS is rapidly becoming one of the most popular supply chain software trends.
As value chains gain complexity, it becomes very difficult to handle every process
in-house.
The trend is to shift to digital from manual, where data maintenance and analysis,
implementing massive numbers of IoT devices, etc. become the norm.
Most small and medium businesses will be unable to execute these tasks
themselves, choosing to outsource them instead.
SCaaS can help reduce costs, boost productivity, and enhance customer service,
and offers specific benefits for the supply chain like improved asset management,
flexibility, agility, and resilience.
This affords a tactical opportunity to work with organizations who aim at making
every part of the chain more efficient.
When each segment can focus its efforts on rotating inventory or managing
assets, it becomes possible to innovate and gain competitive advantages.
Of course, it necessitates surrendering control over specific parts of your supply
chain and can be worrisome; but bear in mind the advantages you can gain.
5. Circular Supply Chains
Conventional linear supply chains dispose materials left after producing an item;
with sustainability becoming more important than ever, circular supply chains are
gaining in popularity.
Here, unused materials are pushed back into the chain – recycling and promoting
low or zero waste.
Today’s customers care about the ethical value of their products, and
governments define limits for waste too.
To be successful today, you must use ethical practices and have sustainability in
sourcing.
Circular supply chains require some effort but can help cut costs significantly.
6. Cloud-based Products
Cloud-based systems reduce expenses and customization issue, without
compromising on security or functionality.
A study by Markets estimates that the market for cloud-based supply chain
management will cross 45 billion dollars by 2027.
Businesses today are more open to outsourcing, and are not worried about third
parties accessing their software, inventory information and the like.
The benefits provided by cloud software like Tranquil are numerous: rapid
deployment, lower upgrade costs, better software lifecycle, anytime anywhere
access, and so on.
Extreme customization is possible with on-premise deployments but with little
customization in cloud-driven software, you may end up altering your processes
so that it works better with tech – and this can bring you many more benefits.
7. AI and IoT

With low price and reliability, IoT sensors are available in ample quantities;
internet penetration is massive and increasing still, data storage capacity has
increased tremendously as has processing capabilities, and AI has not only made
its entry but is also gaining more applicability.
All these have driven the rapid adoption of IoT in supply chain management.
Thanks to AI and IoT, customers today can find out where their shipments are at
any given time; the technology helps reduce costs and boost productivity,
increasing revenues.
AI saves time and money, and speeds up the entire supply chain process end-to-
end.
With lower-level decision making automated, management can focus on strategy
formulation and higher-level decisions.
AI helps in balancing supply with the demand forecast and transform the way you
view future trends in supply chain management.
It studies current patterns and predicts potential results for future scenarios –
thereby solving inefficiencies in the present chains.
8. Robotics and Automation
Supply chain can benefit significantly by adopting modern robotics, as they can
integrate with your processes safely, from remote locations.
While there is the fear of humans losing jobs, it actually only takes up low-value
tasks, enabling you to divert your attention to complex challenges and value-
adding tasks.
The employees performing lower-value tasks can be upskilled – they don’t have
to be dismissed.
Like it or not, automation is here to stay thanks to the increased productivity and
efficiency it offers.
9. 5G Networks
It is imperative that we have networks capable of handling a large number of
devices, now that thousands of IoT-enabled devices are becoming available in the
market.
There is a huge gap between the capabilities of 4G and 5G. while the former is
capable of handling 10,000 devices in a square mile, the latter can handle a
hundred times that number.
The rapid adoption of digital necessitates a robust network being in place to
enable seamless and speedy communication between machinery, processes, and
users.
5G offers better quality and also optimizes important supply chain components,
from logistics to distribution, up to warehouse management.
10. Capacity Crunch
The possibility of a capacity shortage stretched the trucking industry to its limit in
the past few years.
It was expected that this would be rectified by 2020, but then all hell broke loose
with the pandemic, and it doesn’t look like it will improve anytime soon.
With more people preferring to shop online, it is becoming challenging to deliver
their orders on time.
While revenue increase is an outcome of the increased need for transporting
goods, it has several challenges – maintaining trucks, for instance.
Truck breakdowns can have a ripple effect, especially when demand is at a high.
Companies have to become agile and diligently track their business processes to
respond to market changes.
Truck manufacturers should invest in software that automates processes and
reduces expenditure.
Trucking companies and shippers will require robust collaboration systems to sail
through the choppy waters of the supply chain