Supply chain management has undoubtedly changed over time. Currently, there is a greater need for multi-tier supply chain management in developing economies. The lessons learned from the pandemic and recent war events are also compelling factors for organizations to use enterprise technologies for creating future-fit supply chains. Moreover, there is a growing plea for green supply chain management, nullifying wastages through lean processes and creating highly efficient supply chains through industry 4.0 solutions.
Warehouse management is playing a critical role in the supply chain by efficiently allowing businesses to control inventory distribution, sort logistics, manage docking processes, payments, etc. Organizations are deploying warehouse management software (WMS), which provides end-to-end visibility into inventory operations, distribution centers, and warehouse activities, and streamlines other supply chain tasks. These days, with the advancement of technologies, businesses are replacing their traditional warehouse management systems with AI-based systems that integrate well with the SCM to address the challenges in the industry. Integrating warehouse software with automation, AI, blockchain, and data analytics tech further strengthens supply chain operations holistically. The interplay of ecological, social, and economic dimensions in global supply chains has also sparked managerial activism for creating secure, profitable, resilient, and sustainable supply chains.
The News:
- Supply chain management is the fastest-growing market in the Gartner enterprise application software area, with revenues to reach $20.24 billion in 2022.
- Warehouse Management System manages almost all supply chain-related tasks, giving supply chain managers more control over increasingly complex supply chain activities. 83% of warehousing and logistics companies in the US employed a warehouse management system (WMS) between 2015 and 2021.
- The supply chain industry is projected to grow at a CAGR of 11.2% from 2020 to 2027.
- Supply Chain Management Software's revenue is expected to reach US$17.58 billion in 2022.
- 60% of businesses across all industries anticipate that by 2025, robotic process automation will significantly or moderately impact supply chains.
- In the Supply Chain Management Software segment, the average Spend per Employee is expected to reach $5.09 in 2022.
- The top supply chain challenges, according to Statista, are shortages and disturbances in the supply chain (57%) and obtaining and keeping skilled people (54%).
- Between January 2020 and March 2022, the number of supply chain manager positions available is more than doubled.
- It is expected that the market for blockchain technology in supply chain management will expand yearly at a CAGR of about 51.3% (2022-2028).
- 69% of businesses consider sustainability performance in supply chains when choosing new suppliers and extending contracts.
- After the COVID-19 pandemic, 42% of the shipping and freight experts intended to alter their supply chain and shipping tactics. In the same survey, 33% said they intended to invest in their staff to help the industry recover from the COVID-19 crisis.
- Businesses learned about operational shortcomings and the significance of improved inventory and supply chain management techniques due to the disruption of global supply chains caused by COVID.
- The global reverse logistics market will grow at a compound annual growth rate (CAGR) of 5.5% from 2023 to 2028, reaching US$ 858.8 billion.
How did we get here?
#1 Challenges of SCM
Worldwide, supply networks have experienced challenges due to unanticipated demand and constrained logistics capacity. The following are the main challenges in supply chain management:
Increasing supply chain risks
Market volatility is the primary source of supply chain risks. Supply chain management is at risk from various factors, including shifting consumer demand, trade disputes, shortages of raw materials, climate change, tighter environmental rules, economic uncertainty, policy changes, industrial unrest, and others.
Rising freight costs
Freight prices have increased due to rising energy costs and increased demand for container shipping. The pandemic's e-commerce boom led to an upsurge in demand for container shipping.
Delayed Chains
Global supply networks are prone to delays since they entail multiple phases and great distances. Goods with long lead times are more prone to unforeseen delays in shipments.
Demand forecasting issues
Demand forecasting became difficult and almost impossible to anticipate figures for manufacturing and inventories.
Consumers greatly influence supply networks. Ongoing trends, convenience, and market rivalry influence consumer demands. Nowadays, consumers have a wide range of online options and alternative items to choose from, which has caused supply chains to be influenced by speed, quality, and service.
Issues in digital business transformation
To fasten and smooth supply chain operations, companies must undergo a digital transformation by adopting technologies like IoT, AI, drones, and robotics. However, integrating these technologies across current supply chain activities is challenging.
Difficulty in cost management
The cost of labor, energy, freight, and raw materials has increased globally. Businesses must strengthen cost control to guarantee uninterrupted operations and continuous delivery of high-quality items at competitive prices. However, without strategic initiatives, long-term cost management is a big challenge.
Data synchronization and cooperation throughout the supply chain
For effective supply chain management, access to real-time data is essential. Data management is a significant difficulty in supply chain management because of the abundance of data points in global supply chains. Also, sharing the data with all stakeholders and supply chain partners in real-time for collaboration is overwhelming, considering the complex supply chains and humongous data that they generate.
#2 How to Overcome SCM Challenges?
Supply chain managers must combine various tools, methodologies, and approaches to address short-term and long-term difficulties due to the growing complexity of global supply networks.
Here are some tips for improving supply chain management:
Tracking inventory meticulously
Global logistics networks are used to transport goods. The supply chain is tightly linked to inventory. Businesses may ensure they know their needs by tracking and monitoring inventory levels.
Numerous inventory-tracking software are used by firms nowadays as part of their overall company strategy. For storage space reduction and better value-adding uses, such software frequently focuses on reducing retained inventory. Managers can assess if they need to stock up on particular items if they anticipate a disruption in the supply chain by keeping an eye on the inventory.
Supply chain diversification for meeting customers' expectations
To expand the pool of suppliers, ecommerce companies can use the supply chain diversification method. In uncertainty, the company can commit to providing exceptional customer service that exceeds client expectations.
Supply chain diversification also increases cost-effectiveness by enabling e-commerce businesses to select suppliers that fit the available budget. This is particularly crucial in the aftermath of the pandemic because rising demand and supply chain problems have dramatically driven up manufacturing and transportation costs around the globe.
Forecasting supplier and manufacturing delays
Companies must overcome the burden of manufacturing and supplier delays. Implementing supply chain diversification, inventory planning, and robust order management is a great way to reduce problems brought on by delays in the supply chain. E-commerce companies will have to plan for shipping and manufacturing delays. They need to streamline inventory levels and tighten up all sales channels, so the company knows precisely how much product it needs to sell.
Actively communicating with the customers
Lack of communication is the main issue with companies. If companies are having supply challenges, they should address them immediately. Many customers will understand a delay if informed beforehand. Companies must collaborate and take feedback to fix the issue.
Preparing a contingency plan
Unexpected issues have become the new standard for all industries since the COVID-19 breakdown. Although ecommerce businesses have always been encouraged to prepare for the unexpected, the pandemic's ongoing effects have highlighted the true value of creating a backup plan—especially during periods of high sales volume.
Ecommerce operators should be prepared to use their contingency plan to tackle issues head-on when unforeseen difficulties, such as unanticipated sales volumes or limited suppliers, impede ecommerce companies.
#3 Robust Supply Chain Management With Enterprise-Suite of SCM System
The following points prove that supply chain management software is a game changer for companies:
Assists in cost control and reduction
The organization's performance can be significantly impacted by cost reduction. With the help of a supply chain management system, organizations may cut expenses related to inventory stacking and eliminate waste by enhancing quality control. Additionally, suppliers always pay on time by tracking payments, avoiding late fines, and occasionally receiving early payment discounts.
Reduces risks
The operations of the supply chain may be threatened by a range of economic, environmental, political, and technological reasons. By identifying and keeping an eye on these risks through SCMS, one can anticipate supply-related problems and implement a plan to reduce disruption. SCMS can help mitigate risks such as late goods and logistical mistakes.
Automates time-consuming tasks
Efficient SCMS streamlines processes like order processing, invoicing, and shipping monitoring to save time and money on administrative expenditures and assist with forecasting and decision-making. Inefficient supply chains cost businesses a lot of money since time equals money. Businesses may speed up execution by identifying and eliminating bottlenecks slowing down supply chain activities. In addition, productivity is increased, and time-to-market is shortened by integrating SCM software with existing systems and automating manual operations.
Provides real-time access to data
Supply chain management software gives real-time access to data. The cost of raw materials, delivery schedules, and sales numbers are just a few examples of the wealth of valuable information generated by each operation along the supply chain. Managers can monitor process performance and make data-driven decisions to enhance supply chain operations and give customers the greatest experience possible. With SCMS, inventory management is improved, resulting in more precise demand planning by identifying excess materials or processes and potential cost savings in transportation, warehousing, and manufacturing. Coordinating all supply chain processes with an integrated SCMS, warehouse management software, and logistics software will increase on-time delivery.
Enhances compliance preparedness
The supply chain's various activities must adhere to rigid compliance regulations; for example, raw materials must meet specified requirements, sustainability criteria must be followed, and foreign exports need customs paperwork. The reduced chance of human error and assurance that rules are followed is made possible by SCM software's greater visibility and the capability to incorporate compliance controls into processes. Doing this reduces the risk of non-compliance, potential fines, and reputational harm to the brand. It also enhances the ability to respond to unforeseen circumstances, such as equipment breakdowns, personnel absences, lost goods, urgent customer orders, and human error. It gives managers instant access to management reporting and analysis.
Increases network visibility
Effective supply chain management depends on knowing where and what is happening in the supply chain. SCMS provides visibility between suppliers, manufacturing facilities, storage, and distribution centers to help managers better understand the processes. SCM software gives a centralized picture of the people, processes, and technologies used across all operations, providing end-to-end visibility of a company's supply chain. By enhancing data exchange and collaboration between suppliers, distributors, and retailers, improved transparency enables companies to track performance along the whole supply chain.
What’s Next?
Businesses involved in the supply chain will face new difficulties and technological advancements in the upcoming years. We are already seeing a muted peak. To combat unforeseen disruptions, businesses will start concentrating on supply chain resilience. Utilizing robotics, AI, automation, and digital supply chain twins will assist supply chains to be adaptable, scalable, and agile. The emergence of blockchain will offer transparency into transactions and procedures. Along with supply chain support in the form of SCaaS, the market for cloud-based solutions will keep expanding. Also, now managers can accurately monitor incoming and outgoing stock and track orders more effectively by accessing real-time operational data. Future warehouse management systems will make it simpler to scale the business.
Supply chains are becoming larger and more complex with time. Customers' expectations have compelled this growth, and now suppliers, retailers, and producers must maintain the efficiency of their supply chains to maintain their competitiveness.
Supply chain managers must utilize all available tools to keep their supply chains resilient to disruptions. Effective supply chain management software is the key to efficient supply chains. Through various tools, SCMS enables supply chain managers to access every stage of the supply chain, from order fulfillment to compliance.
