Other Voices: Top 3 supply chain trends for proactive improvement
Traceability and connectivity are critical for the digital transformation, even as the physical supply chain footprint continues to expand.
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Editor’s Note: The following column by Chase Sowden, supply chain architect, Barcoding, Inc., is part of Modern’s Other Voices column. The series features ideas, opinions and insights from end-users, analysts, systems integrators and OEMs. Click here to learn about submitting a column for consideration.
2017 will mark the year that more companies will look at becoming proactive, instead of reactive as a way to be more profitable. In order to do this companies must begin and continue to ask themselves, ‘How well are we really doing and what can we do to improve?’
By dissecting operations and taking a holistic view of their processes, businesses can clearly see what areas need improvements. This will ensure their people, processes and technologies are all working together to help them be more efficient, accurate and connected. Supply chain process improvements are also heavily impacted by trends happening in the market, including the following three:
1. Responsibility of traceability: In 2017, and for the next three to eight years, we will see more companies put an emphasis on traceability, especially as they become more global. They’re being pressured by the Food and Drug Administration (FDA), other regulatory requirements and even their end customers to know where their product, as well as the items that store their foods, is at any given point in the supply chain.
These companies will look for different types of technology to gain more control and visibility as well as security. According to the recent Zebra Retail Vision Study, 72% of retailers plan to reinvent their supply chains with real-time visibility enabled by automation, sensors and analytics. Data analytics can be used to help prevent food spoilage by moving products faster and more efficiently while RFID-based solutions can provide a constant tracking and tracing as the product moves through the supply chain. The same study also reports that 70% of retailers plan to provide, or are currently providing, item-level RFID technology.
2. Acceleration of the supply chain: In the last year, organizations have begun to realize that they need to take a deeper look at the technology they’re implementing to make sure it is enabling them to be more efficient, have better control, reduce risk and manage cost savings. In order to do this, they need to understand the importance and take advantage of big data. Big data must be pulled from all areas of the supply chain– from the product floor to the end of transport– to provide a holistic view of their operations to make improvements.
With your holistic view or operational assessment in hand, you can focus on your company’s people, processes and technology, and see how all three are integrated and work together to enable better collaboration, business processes and decision making for the entire organization. Before you dive into introducing technology, you must first identify the problem, and then, determine a possible solution. The solution may or may not include technology; you may even find that you can solve the issue without introducing the latest and greatest data collection software or mobile hardware. In the end, the technology must complement the process, not mask the problem.
When embarking on an operational assessment, you need to first consider your customer. The customer should be your primary focus, and every organization needs to understand how their customer defines value. In actuality, the customer stimulates the demand for a service or product, defines the requirements and evaluates the results. Therefore, any improvements should aim to optimize areas within your supply chain to deliver customer value and, anything that doesn’t add value is waste. You must look for these “non-value-added” steps, and find and address their root cause.
3. Expand supply chain footprint: With an increasing need to get product to customers in a timely manner to be profitable, companies are looking at building new facilities. Companies looking to expand their supply chain footprint have traditionally only focused on the capital needed to build the facilities. To have a higher return on investment (ROI), organizations need to consider outside factors– both geographical and economical. This includes the weather, local military bases, interest rates, regional minimum wages and other employers in the area. These factors can change the way a business operates. For instance: Expanding in the Northeast means that companies must consider the amount of snow and if their product will be able to be transported when required.
Some errors to avoid when selecting a new facility include:
● Not having all corporate decision makers aware of and agree on search requirements.
● Inadequate labor and talent without sophisticated skills to meet production levels.
● Not taking advantage of state and/or community cost incentives.
● Selecting a site solely based on the best incentive package, rather than selecting the site best aligned with your company’s ongoing operational needs.
● Choosing a site too small.
● Picking a location that has high logistics costs that will make distributing product more difficult.
Staying on top of supply chain trends like these and continuously looking for ways to improve operations will allow businesses to be more successful in the coming years. In your own practice, strive for operational efficiencies that will positively impact your bottom line and allow your data to assist you in making well-informed decisions so that they align with your company’s goals. The time is now to be proactive instead of reactive to market changes and demands.