Commerce is evolving and creating some big supply chain challenges. Luckily, we also have your solutions.
The supply chain industry has its share of challenges to overcome. When you think of all the logistic and procurement needs for even one big company, like Amazon or Walmart for instance, you can only begin to grasp how difficult coordination must be.
Made of many different moving parts, the goal is to simplify processes while maximizing effectiveness—a task much easier said than done. Although the are many challenges in the supply chain industry, here is a brief look at seven big supply chain challenges to watch for in 2018.
Traditional Supply Chain Billing
Traditional supply chain billing systems are not suitable for the future ahead. They are inflexible and prone to human error. Supply chain billing software of tomorrow will offer communication between buyer, seller, and cargo in real-time. The integration of additional entities will simple and many processes will be automated–think autopay payments. Data will be easily accessible and presented in a meaningful way that empowers decision makers to decrease costs at every step of the process.
All of these changes are driven by one major need.
“You want to be as automated as possible,” said Mike Regan, Founding President of TranzAct Technologies.
Modern supply chain billing is the ideal solution to this supply chain challenge because it also allows for the elimination of human intervention, improves accuracy, regulates the path to meeting quality metric standards, allows for adaptability to meet the specific needs of businesses, enhances client experience, and contains cost in both immediate and long-term cases.
Customer Service Demands
Another way automation is tackling supply chain challenges is by facilitating the improvement of the industry’s customer service. This particular issue has begun taking priority considering customer sentiment toward two-day shipping fees is unfavorable.
Despite consumer interest for delivery in less than two days declining, Amazon has continuously, since 2012, expanded their use of robots to upwards of 80,000 across 25 distribution centers to speed up delivery times. Additionally, the Internet of Things (IoT) and the cloud are contributing to the improvement of how these robots perform.
“The ever-increasing demands for faster and more accurate order fulfillment requires IT tools that accurately track and measure both human and robotic performance,” said Bruce Welty, Chairman of Locus Robotics. In this way, customer service is markedly improving with the rise of artificial intelligence in the supply chain industry.
While digitization is one of the most revolutionary elements to hit the industry, it’s one of the supply chain challenges with the heaviest risks—the vulnerability of cyberspace. Interconnectivity between networks and systems is fraught with challenges as traditional security borders have become obsolete.
If the past is any indication, like the 41 million customer records compromised after the Target hacking incident, this challenge is at the forefront for an industry that requires interconnectivity to thrive.
Host organizations are now faced with the requirement of taking additional security measures that include: internal infrastructures, vendors, customers, and partners. Despite the way cybersecurity culture has evolved, many third-party collaborators have yet to adapt. This indicates that cyber risks remain strong and in need of adjustments from all parties involved in the supply chain.
Yet another supply chain challenge with economic repercussions is the current truck driver shortage. The industry is in a tight spot as the average truck utilization—a measure of how many trucks are in demand versus how many are available—went from the 10-year average of 93 percent to 100 percent last year.
Jennifer McKevitt of Supply Chain Dive shared some of the issues that contribute to this shortage include. From inaccurate or misleading driver record reporting companies to dissatisfaction with the ELD mandate and misclassification lawsuits, the shortage doesn’t look like it’s going to improve anytime soon.
Delivery Cost Demands
With the meteoric rise of Amazon, even two-day delivery has been revolutionized with its ability to offer members the service for free. In response, almost 60 percent of online transactions included free shipping.
“Any retailer who is still holding on to the past, that shipping isn’t free for me so I can’t offer free shipping, will find themselves not being relevant to the retail world,” said Satish Jindel, President of ShipMatrix.
As companies expand into the global market, it’s crucial for them to ensure that business systems between all locations remain connected to prevent losing track of their full inventory. Not only is management impeded by the lack of communication between locations, but it is also impossible to track products that are in transit.
To prevent losing proper management, control, or visibility over inventory, it’s crucial to effectively manage diverse structures of data in methods that are geographically relevant. For example, while EDI is standard in North America and Europe, communicating via email and fax is the most common in Asia.
Rising Fuel Cost
Fuel is an important element in the supply chain industry, so it’s logical that rising fuel costs are one of the top supply chain challenges at the moment.
Rising fuel costs impact the supply chain in three essential ways: nearshoring becomes the central focus of the industry, product design is driven by ‘shipability’ rather than marketability, more attention is given to lean transport policies instead of lean inventory. In short, rising fuel costs lead the supply chain industry to make curtailing expenses their main priority. An increase in fuel makes every mile driven, every mile sailed, and every mile flown more expensive.