Understanding how different factors affect the supply chain remains a top priority for research firms around the globe. This unwavering drive represents the continued interest in advancing today’s capabilities with state-of-the-art technology and adaptability. From artificial intelligence to refocusing on procurement, the state of supply chain continued to explode throughout 2016, and you need to understand why.
The State of Supply Chain 2016 Trends
Artificial intelligence (AI) is among the most well-recognized ideas in science fiction. However, it’s true applications are becoming more apparent daily. At the dawn of 2016, Facebook CEO Mark Zuckerberg called on his team to create a personal assistance, and he professed his belief in personally coding the assistant would be key to unlocking the secrets of AI. While this may seem like a revelation, personal assistants are already omnipresent, including Cortana, Siri, Google, and Alexa.
As explained by Christine Douglass of Phys.org, artificial intelligence has the potential to change healthcare supply chains, particularly in respect to non-direct care equipment. In other words, the use of AI may help to improve patient outcomes and reduce delays from misdiagnoses or laboratory testing. Of course, the human controlling capacity for actual AI is still far from realistic, but the concept of a superior AI did make strides this year.
Additionally, the push toward creating a self-sufficient AI is growing stronger among supply chain professionals. A 2016 Accenture survey, reports RF Gen, explained how more companies are taking advantage of AI benefits through linked supply chains. Essentially, a supply chain that is linked together is more responsive and intelligent than individual workers or silos within the company. Consequently, all processes, including inventory management, logistics, data analytics and ongoing performance management, as reiterated by the staff of Supply Chain 24/7, improvement, can be optimized, creating a more efficient, direct and intelligent supply chain network.
Agile = The New Lean
Another key player in the 2016 state of supply chain report was the move away from rigid, lean processes to agile methodologies. Ultimately, lean supply chain processes improved efficiency, but they limited the variability and adaptability within a company. Most importantly, agile methods allowed for faster decision making across a virtually limitless stream of issues, and this trend held true throughout the year.
The move to agile supply chain management inherently required more data sources than traditional supply chains, reports GT Nexus.
For example, planning, purchase order placement, manufacturing floor information logistics operations and beyond became essential variables in the goal of creating a more agile supply chain. Thus, more companies replaced antiquated enterprise resource planning systems, as explained in another GT Nexus report, with an easy-to-integrate solution, such as the Cerasis Rater. This helped to build an ideal, cohesive center for making the best decisions possible under any circumstances. Also, it bridged the divide between manufacturing operations and service (logistics) operations, explains Springer Link.
Gathering this information via new systems also enables quality benchmarking across the supply chain. Per River Logic, the first step toward the creation of any agile supply chain is the ability to detect and project disruptions before the occur, allowing for better mitigation of issues.
For example, the Internet of Things (IoT) may rely on temperature sensors in trucks to identify food spoilages, which can catalyze a diversion of an existing shipment to meet the immediate needs of the consumer affected by spoilage. In other words, these hypothetical scenarios give companies a means of seeing problems before they occur and devising solutions required to overcome them.
Procurement’s Role Did Become More Important.
While much of the conversation on supply chains in 2016 focuses on after manufacturing, it always helps to go back to the beginning. The start of any product or service is procurement, explains Jonathan Webb of Forbes Magazine, which refers to the obtaining of raw materials needed to create a product.
The 2016 state of supply chain prediction called for enhanced procurement capabilities, focusing on establishing new supplier-vendor relationships. This would help manufacturers adjust to changes in the availability of raw materials, and according to the Wall Street Journal, manufacturers are on track to spend more than $1.5 billion by 2018 to grow these relationships. Unfortunately, there continue to be major costs associated with procurement. In fact, as much as 70 percent of costs related to the supply chain derive from procurement and logistics operations. Clearly, additional resources are needed to help drive costs down.
The solution to rising procurement and logistics costs is collaboration. Collaboration, explains Datex, can overcome the challenges unique to procurement and logistics by creating a common ground for procurement and logistics operations. When a company’s whole logistics operation, including procurement, is considered cohesively, different means of reducing costs may become evident.
For example, raw materials for product A may be sourced more effectively from supplier B. However, if the materials are much cheaper from supplier A, which is closer to consumers, the ideal solution would be to move manufacturing centers closer. Essentially, the interchanging of information and working together helps to build a circular supply chain, but that will be discussed in greater detail in the next blog post.
Supply Chain Methodologies and Intellectual Capacity Grew.
Supply chains are growing smarter and more efficient. With the increasing capabilities of artificial intelligence, agile processes and collaboration between procurement and logistics, the next wave of supply chain management is around the corner. In fact, the recent shopping holiday saw the highest consumer spending rates in existence, and future demand on the supply chain will only grow. Thus, our next post will continue the collaboration discussion and touch on the importance of a circular supply chain and resiliency.