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Key Trends Driving Today’s Intelligent Supply Chains

11/17/2020

By Karen Whipple

On October 15th, Momenta hosted a webinar on intelligent supply chain innovation, which featured notable supply chain leaders Mahesh Veerina of Cloudleaf, Neil Furukawa of AKUA, and Tim Williams of NanoThings, as well as Executive Director Ken Forster and Strategy Partner Ben Tao of Momenta. Their riveting discussion was centered around three key trends driving today’s supply chain:

 

  •       Real-world examples of impactful supply chain innovation
  •       Best practices in developing and delivering value for their clients
  •       The current and future opportunity landscape

Here are some of the key takeaways from the webinar to help you understand the digital industry’s impact on intelligent supply chains. You can also check out the webinar in its entirety here.

Takeaway #1: With the massive shift to electronic and mobile commerce, consumers are simultaneously demanding variety, same-day delivery, high quality and low cost.

According to Momenta Partners, low-cost delivery is the top priority for 50% of consumers. Entering the race for same-day delivery can be hard; 97% of organizations are not able to sustain free shipping, as they struggle with the costs involved in providing such a benefit. In order for a company to offer free shipping to their customers, they may have to eat those costs, or find alternative ways to supplement the cost. In this competitive arena, companies need to know which product is where and in what quantity. This requires a distributed order management system capable of interlinking the various nodes in the network and instantly determining the optimal dispatch point. To have the right quantity in the right place, organizations need to make sure their planning factors in the inventory levels and forecasts of all supply chain partners, and this requires end-to-end supply chain visibility.

Takeaway #2: The gig economy, drones and  “product postponement” manufacturing strategy are rewriting the last-mile script.

According to Capgemini Research Institute, 40% of consumers take frequent advantage of delivery services (i.e., ordering once a week or more). However, as delivery becomes increasingly popular, the cost of providing last-mile services accounts for a whopping 41% of overall supply chain costs.

There’s a growing group of part-time gig workers who are using their personal vehicles to provide last-mile delivery of e-commerce orders. As companies rush to fulfill e-commerce orders, they are turning to gig workers who can quickly and efficiently deliver products to the end consumer.

Last-mile delivery is often the most difficult part of a package’s journey. The implementation of drone technology has the potential to optimize last-mile delivery by transporting packages from nearby warehouses or distribution centers to a specific address. McKinsey estimates that autonomous vehicles including drones will deliver 80% of all future products. 

3D printers also have the potential to alter the supply chain in many ways, including reducing manufacturing lead times and time-to-market for new designs, as well as the ability to more quickly satisfy customer expectations. A product postponement strategy refers to the concept that companies should postpone the creation or the delivery of the final product as long as possible; this strategy reduces inventory obsolescence as well as the costs associated with having undesirable products.

Takeaway #3: Intelligent automation and social distancing are driving down labor and driving up digital commerce performance.

Capgemini Research also found that labor costs consume 50% to 70% of a warehouse operating budget, and 70% of labor time is spent walking around and picking up objects. This data shows that there is a significant opportunity to reduce costs and deliver products on time through order fulfillment automation. With intelligent automation, business processes learn and adapt over time. A combination of intelligent automation, AI and machine learning make up a powerful toolkit for digital transformation; combined with a digital visibility platform, this toolkit can dramatically improve visibility across your supply chain.

Takeaway #4: Despite Covid-19, the essential product demand spike is propelling the global logistics market to continued growth.

Post COVID-19, the global logistics market size is projected to grow from USD $2.7 billion in 2020 to $3.25 billion by 2021, according to Research and Markets. The exponential growth of online shopping worldwide is acting as a significant driver of the logistics market.  Because of the spike in product demand, it’s essential that companies analyze how spikes in demand could impact their inventory control and management functions and use that data to develop plans for future unanticipated demand fluctuations.

Takeaway #5: Tariff and trade wars are accelerating regional vertical integration to minimize production disruption.

Supply chains are extremely vulnerable to this year’s climate of tariffs and counter tariffs. Building a lean and agile supply chain and applying AI can help organizations adapt to this new protectionist world. McKinsey estimates that 40% of all procurement tasks (vendor management, order placement and invoice processing) can be automated today, and 80% soon; this could produce annual cost savings of 3-10%. All told, the application of AI to supply-chain management and manufacturing could create between $1.3 and $2T of value, according to McKinsey.

Takeaway #6: Regardless of the amount of pre-planning, when products move, problems start to appear.

Once a product starts moving from “source” to “make” to “deliver, regardless of the amount of planning and optimization that’s been done, all kinds of problems often appear. Supply chain managers need to know: what condition is my product in? Is it in compliance? Do we have the right inventory at the right place and at the right time? Is my shipment delayed? These questions still plague organizations that lack supply chain visibility.

Takeaway #7: The fundamental supply chain problem is lack of visibility.

There are three main issues regarding visibility in today’s supply chain. The first one is about data organization – many organizations suffer from data silos, data fragmentation and inaccurate data within their supply chain systems, either within their company or among other nodes in their supply chain, such as 3PLS. The second issue is about data blind spots throughout the supply chain. As products move from a supplier to a carrier to the warehouse, it is essential to leverage IoT and other technologies to track product movement. The Cloudleaf Digital Visibility Platform enables real-time views and insights across the ecosystem—from suppliers through production and distribution to customers.

Takeaway #8: Most transactional systems lack the context needed to make sense of the data.

The third factor impacting supply chain visibility is lack of context.  All data needs some context to make sense of it. For example, where is my product? Is it stranded at the airport; is it in customs? What are the weather and traffic conditions, and how will they affect my delivery? Most of the transactional systems today lack such context. In the last two decades, companies have made significant investments in supply chain, technologies, planning and optimization tools. Yet, regardless of the amount of planning, there’s always a variation between the plan and the execution, and this delta variant is what is costing supply chains billions of dollars today. Cloudleaf’s approach is to provide customers with continuous visibility into the context, condition, timing and location of material and assets throughout their supply chain. 

Takeaway #9: Cloudleaf provides real-time visibility and intelligence so companies can respond and take action in real time.

Cloudleaf’s vision and goal is to help companies minimize the variant between plan and execution and provide visibility and intelligence in real time, so they can respond and take action in real time. We offer operations intelligence within the four walls, logistics intelligence, and inventory and asset intelligence across the supply chain network. With over 400 APIs, Cloudleaf makes it easy to deploy the platform and scale as you go.

Contact Cloudleaf to get started on your journey to supply chain transformation, and check out our many resources on supply chain visibility.