Successful Global Supply Chain Management

#Whitepaper
#Software Development
#Logistics
July 8, 2020 17 min read

The value of effective global supply chain management is increasing each year, as the logistics industry is finally making a recovery after COVID. In the US, supply chain gains accounted for 8.7% of the entire GDP, and the number is only expected to grow. This percentage shows that people tend to consume more and more. And along with the need to get the deliveries on time, customers seek a seamless and superfast shopping experience.

According to Zendesk, customer-centricity (making your client’s customer journey the priority) earns retail companies 60% more profits, and logistics are a big factor in customer satisfaction. Indeed, companies with high-performing supply chains get more revenues, than the average logistics performers.

supply chain free shipping

With this in mind, leaders have to find out the ways to transform their global supply chain management and to adapt to growing customer mandates.

What Is Global Supply Chain Management?

Global supply chain management generally refers to all processes regarding a product’s lifecycle, from the concept of its creation to distribution to endpoints. Global SCM is aimed to enhance the productivity of each stage of this lifecycle, get rid of inefficiencies, and deliver the products timely and seamlessly.

The traditional global supply chain comprises four critical stages: supplier, manufacturer, retailer, and end-user.

supply chain stages

The value of effective global supply chain management is increasing each year, as the logistics industry is finally making a recovery after COVID. In the US, supply chain gains accounted for 8.7% of the entire GDP, and the number is only expected to grow. This percentage shows that people tend to consume more and more. And along with the need to get the deliveries on time, customers seek a seamless and superfast shopping experience.

According to Zendesk, customer-centricity (making your client’s customer journey the priority) earns retail companies 60% more profits, and logistics are a big factor in customer satisfaction. Indeed, companies with high-performing supply chains get more revenues, than the average logistics performers.

Market Overview: Global Supply Chain Management Software

The current landscape of supply chain management software is all about AI-driven predictive analytics for demand forecasting, real-time visibility through IoT and cloud integration, and sustainability features to optimize eco-friendly practices.

AI in particular is the new superstar of supply chain management. Generative AI alone could add the equivalent of $4.4 trillion to the world economy by 2040. Artificial Intelligence can power robots, accelerate data analysis, and imitate human communication on the simpler client-facing tasks. It is definitely here to stay and grow.

Seamless omnichannel integration and robust cybersecurity measures are also paramount for efficient operations and maintaining trust across global supply networks. The international shift to omnichannel retailing that’s been happening over the years has made a tangible impact on how supply chains and warehouses function. According to FM Logistic, 60 % of companies stated that an omnichannel supply chain ensures efficient stock management.

Blockchain has been quietly on the rise for enhanced transparency, but not without challenge. The industry still lacks the overall understanding and experts to efficiently implement this technology, and those who decide to commit to implementation need to brace for regulatory challenges and interoperability issues. The end result is worth it, though – blockchain-powered transactions are next level in terms of security and trackability.

Benefits Of Global Supply Chain

Why is effective global supply chain management so important? Companies who have debugged SCM can reap their benefits, from lower supply chain costs to faster transactions lifecycle and thus faster revenues. Here are the key advantages of streamlined SCM.

lower cost

Improved Overall Effectiveness

With real-time tracking the availability of goods in stock, companies can better conduct a demand-planning and source raw materials from a reserve supplier if needed. This reduces the number of delays and customer dissatisfaction.

Thus, supply chain management software underpinned by smart solutions results in improved overall efficiency.

Better Management of Demand Fluctuations

Supply chain management is a critical milestone in operating a product company, but demand forecasting can be very tricky. Every business leader has probably dealt with the so-called bullwhip effect. Put simply, this effect refers to spikes and drops in customer demand which literally causes waves hitting the supplier of raw materials.

With robust SCM software in place, supply chain managers have access to a constant stream of real-time data. This data can be leveraged to better forecast demand and promptly respond to ever-changing consumers’ needs. This way, leaders overcome challenges like the bullwhip effect.

Optimized Transportation Management

The global supply chain management grows aggressively along with the spending on deliveries. ING states that the transport and logistics sector will see growth of 4% in 2023 and 3% in 2024.. Another article states that last-mile delivery in particular is rife for optimization, accounting for approximately 41% to 53% of the total supply chain costs.

using Transportation Management system

Supply chain managers often adopt transportation management software (TMS) to have the utmost control over transport and reduce associated costs. The figures below demonstrate the beneficial effect of TMS:

  • According to Uber Freight, their consulting team increased a client’s annual savings by 13% after leveraging TMS and conducting a transportation assessment.
  • TMS solution can help shippers to reduce their bills by 90-95%.

The TMS market across the globe was USD 10.8 billion in 2022 and is projected to grow at a CAGR of over 9.5% between 2023 and 2032, meaning it’s high time for businesses to invest in the right technologies.

With TMS, you can track your shipping operations anytime and in real time. You gain better control over fleet maintenance, fuel spending, route planning, communication between suppliers, and more.

Better Risk and Threat Management

Access to real-time supply chain data, on-time analytics, and backup planning can help managers to run impeccable supply chain risk management, meaning they will be able to foresee unprecedented situations and disruptions that may cause adverse effects on the entire business.

By implementing the Internet of Things (IoT) solutions, you get improved transparency and gain more control of your operational activities. Telematics devices can help companies mitigate such risks as delays, product losses, events that compromise the quality of goods, and other concerns that arise during transportation or inventory management.

In addition, IoT is used to identify vulnerabilities in the supply chain management system by applying machine learning, cryptographic hardware monitoring, and other techniques to alleviate the results of unexpected malicious events.

Reduced Overhead Costs

The precise demand forecasting allows companies to cut the overhead expenses associated with overstocking. When there is an excessive amount of inventory in your warehouse, you pay extra for their storage. Thus, knowing the demand, you keep the right number of products with higher velocity and generate more revenues.

Adopt automation solutions to reduce these costs. For example, a warehouse management system (WMS) can improve your order shipments’ speed and increase the efficiency of business operations. The integrated WMS solution elevates warehouse productivity by 25%, saves space utilization by 10-20%, and leverages stock more effectively by 15-30%.

global supply chain reevaluate warehouse

The automated tools like sorter and conveyor systems can also contribute to inventory optimization, by increasing the pick rate by five times, compared to manual picking 60-80 units per hour. Therefore, the value of WMS software is that it aids business executives in controlling inventory, handling day-to-day activities regarding inventory shipping, storing, and sorting.

Sooner Achieving of Positive Cash Flow

All advantages described above drive companies’ leaders to make decisions faster and more accurately as disruptions occur, easier manage warehousing, inventory, and transportation issues, better forecast demand. Moreover, they also contribute to achieving positive cash flow (CF).

For example, partnerships with trusted suppliers mean fewer disturbances and more satisfied consumers. This also allows you to issue invoices and get paid faster. Digital solutions foster budget savings, reduce wasteful spending, minimize overhead expenses, and contribute to a faster return on investment (ROI).

Challenges in global supply chain management can turn into benefits if having the right instruments at hand. Consider integrating dedicated SCM software with warehouse and transportation management functions to have a flawless supply network.

Reshaping Future Via Modern Global Supply Chain Solutions

Global supply chains have become highly complicated and crucial for many businesses to stay competitive. Such interconnected and sophisticated nature of cross-border supply chains makes them vulnerable to multiple risks, including cybersecurity threats, delays, unforeseen events like COVID-19, and many other adverse impacts.

supply chain vs digital supply chain networks

Luckily, emerging global supply chain techs can drastically increase visibility across the entire chain, making it agile and resilient. According to Forbes Insights, almost two-thirds of surveyed companies see the benefits of leveraging new technologies, like IoT, AI, ML, robotics, and Blockchain. These disruptive technologies can give businesses great visibility and control across all logistics processes. Let’s discuss each in more detail.

Internet of Things

IoT is a buzzword of the recent decade or even more. Technology is rapidly developing along with the expansion of its use cases. Currently, the telematics market consists of 95% hardware. This trend will change, accompanying a decrease in the physical devices and the concurrent growth of software. By 2026 the IoT market will reach nearly US$11 billion, with software representing 80%.

Essentially, IoT collects tons of data that has to be analyzed. That’s why supply chain managers have to find ways to exploit it in the most effective way. For example, not so long ago the IoT data was crucial for route optimization, risks mitigation, better demand planning. Today’s IoT devices are used to gather information on individual drivers, their health state, the conditions of tires on a vehicle.

More than 4 out of 5 industry experts see the most significant value from IoT transformation in fleet management, namely in route planning.

AI and ML

The applications of breaking through techs like Artificial Intelligence and Machine Learning are vast, some of them we are going to explore in this section.

Accurate and Fast Decision Making

Big trucking carriers usually have to handle thousands of repetitive and complicated tasks requiring a lot of input data to make the right selection. For example, to pick a reliable carrier, a company needs to seek through numerous possible providers and routes, which can take nearly 5 minutes. With AI & ML instruments, managers can narrow the choices to several seconds making the most appropriate choice.

Autonomous Vehicles

Vendor of autonomous carriers TuSimple revealed their plans to bring driverless trucks to market by 2024. Driverless cars aren’t aimed to replace the truck driver but rather solve the problem of driver shortage by increasing the efficiency of the existing driver fleet and improving overall driver safety. With self-driving trucks, human engagement, as well as the associated expenses, can be substantially minimized.

Drones for Last-Mile Deliveries

The pandemic has added value to contactless activities. That’s why drones operated by AI can become more in use. In warehouses, drones can be used to pick up inventory because they do this faster, replacing possibly forklift trucks or conveyors.

Drone delivery can dramatically improve and ease the last-mile deliveries, which often happen to be the most expensive for customers. Besides, companies like DHL, Amazon, and Google are testing drones for lightweight consumer goods deliveries.

Blockchain

The smart contracts available with Blockchain streamline the complicated logistics processes that generally involve several third-parties because of distrust among stakeholders in the transaction. Therefore, people across the globe can instantly start collaborating and do commerce.

Another advantage of this tech is the full transparency of a product lifecycle, from the manufacturer to the delivery to the door. Blockchain allows tracking every step of complex supply chain networks, enabling both buyers and sellers to be aware of their goods’ quality and conditions.

Although implementing Blockchain into the supply chain is a challenging task, when realized, it will be a powerful instrument for effective SCM. Moreover, the Blockchain integration into the SCM system positively affects the market and drives even faster growth through the period 2019-2023.

Benefits Of Transformational Technologies

According to the Penske survey regarding the state of the supply chain through 2023, the business leaders say the following are the most important reasons to adopt the technologies as mentioned earlier.

benefits of transformation technologies

Elevated Performance and Speed

More than half of respondents report better productivity rates in their supply chain teams with the use of Blockchain, AI, ML, and telematics devices. These techs enable greater visibility, better route planning, and improved forecasting of future customer demands.

It’s important to understand what is happening in the supply chain, and this can only be done if we have the visibility of our supply chains. So maintaining this visibility is important, keeping a track of your goods is also very important.
Sushant Pandita,
Global Program Director at Maersk

Transparency and Accuracy

Blockchain and IoT can offer real-time tracking of any parcel, up to its identification number. It is also easy to monitor the goods conditions as well as possible handoffs (when a task is delegated to another person and becomes most vulnerable). Also, 57% of executives reported that accuracy was a vital driver of value, which can be achieved via better transparency.

Employee Satisfaction

Almost 50% of surveyed said they lack staff, namely fleet drivers and warehouse operators. At the same time, employees are reported to feel happier with their jobs as they receive the right resources to optimize their work. That means companies that embrace new technologies not only add value to the business but are able to better retain their employees.

Customer Satisfaction

Another crucial benefit is customer satisfaction. 53% of the company’s leaders harness technology to improve customer experience. Using drones, for example, makes deliveries cheaper and leads to higher customer loyalty. Also, the real-time parcel tracing contributes to a trusted relationship between seller and buyer.

Reliability and Flexibility

More than half of the interviewed executives see the improved uptime (the time the system works without interruptions) and flexibility. This is mainly possible thanks to IoT devices, supported by AI and human involvement. With a more precise understanding of vehicle functioning, fleet managers will be able to mitigate or prevent the transport’s potential failures.

Primary Global Supply Chain Strategy for a Better Management

All changes that have already happened and continue to disrupt the global supply chain management have forced businesses to adapt and respond quickly.

For a lot of the trucking companies, the cause is that there are some significant challenges in keeping their networks in balance. These companies are also having to adapt very quickly, to address the shifts that have happened so rapidly with kind of a downturn in manufacturing an upturn in healthcare and food and supplies.
Andrew Slusher,
CEO of SMC3

The best and the most strong organizations survive thanks to the carefully designed supply chain strategy. The Oracle suggests some tactics to achieve better SCM.

global supply shain strategies

1. Perform accurate demand forecasting to know the market better and react to the changes immediately.

Precise forecasting and emergency planning can provide a full picture of your business processes and immediate response to disruptions like natural disasters, political movements, communication problems with suppliers, and other factors that may affect production and logistics activities.

Leaders can also revise their pricing and advertising strategies to adapt to demand, promote new products faster, accelerate revenue streams, or even increase margins for a popular product with insufficient market supply.

The most important here is to be ready to use unprecedented events in your favor and mitigate the possible adverse effects so that your company stays on top and succeeds.

With the rise of ambitious technologies such as Blockchain, IoT, robots, the supply chains become more resilient, flexible, visible, and easy to manage.

2. Develop a responsive and flexible supply chain with accurate planning and integrated solutions at hand. 

Once company leaders have a better vision and can instantaneously reshape the demand and risk, the next step is to build supply chains that match to ever-changing industry events. Organizations must deploy robust planning tools and constantly regulate operations to ensure the adaptiveness of SCM.

The new model of global supply chain management addresses new changes and rapidly responds to them, which allows you to minimize or even reduce breakdowns across the whole network.

The integration of edge tools, like autonomous cars, interconnected devices for warehousing and inventory management, Blockchain smart contracts, AI-based drones, give businesses:

  • Outstanding visibility.
  • Better collaboration across the entire chain.
  • Easier prediction of sourcing and supply events.
  • Just-in-time production.
  • Real-time transportation tracking.
  • Effective warehousing.
  • Accurate decision-making.

3. Align product development with supply and manufacturing operations to speed up successful innovation.

Embracing innovations helps corporations to be competitive. But to succeed, the goods must be designed cost-effectively, in the proper place, and at the right time. Product management should be optimized with suppliers, manufacturers, and transportation procedures. The actual budget has to be properly analyzed to keep balance across the full-cycle business.

Besides, innovative products and competitiveness are closely connected to the choosing and maintenance of suppliers and techs. If a company can control the information, people, operations, and decisions associated with the product lifecycle, it can become an industry leader.

4. Foster green initiatives within global supply chain management to enhance the company’s reputation and overall business.

Organizations that strive to be socially and environmentally friendly have a better reputation, achieve significant competitive benefits, fine-tune production and communication with suppliers, and achieve higher employee engagement. Sustainable efforts in SCM may bring many new opportunities:

  • Executives need to integrate a green approach into their SCM as a core element of logistics. Adopting green initiatives can bring supply chain processes to the next level, from cost-effective alternative sources of power to better company image.
  • Then, executives should address the problem with excessive energy consumption and setting real-time visibility. This enables the decrease of carbon emissions, conscious use of power sources, less waste with recycling materials, and route optimization.
  • Businesses can stay afloat and outrank rivals by continually improving via regular assessments, audits, and new skills. Through regular compliance audits and defining best practices, a company can easily keep supply chain operations eco-friendly.

5. Ensure a regular supply of products that can be easily predicted.

Without a stable supply of goods, companies won’t be able to reach the appropriate service levels. This might lead to dramatic losses and, which is more serious, supply shortages.

That’s why responsible managers must improve operational performance to ensure flawless supply chain activities. With reliable SCM software, a company has all production processes synchronized and integrated with the demand-planning procedures.

Summary

Hopefully, the article has given a profound understanding of the global supply chain and the way it works. Today, the supply chain software development is a key to fighting off the logistics challenges. Here we mean adopting technologies that have proved to be efficient in enhancing the global supply chain management, such as:

  • Autonomous vehicles and drones to reduce costs and fill in driver shortage gap.
  • IoT devices for 24/7 live tracking of warehousing, transportation or inventory management.
  • AI-driven tools to replace manual and repetitive tasks that decline human involvement.
  • Blockchain smart contracts for instant and secure collaboration between international stakeholders.

To step up the transformation within supply chain management, one needs a reliable IT partner. Innovecs specializes in providing custom supply chain and logistics software to clients from all over the world.

It has been great working and building our professional and personal relationships with such a great group of people. Our company has truly benefited from this software as it has increased our visibility over our inventory, enhanced our ability to add new technology and adapt to a growing industry. I look forward to continuing our cooperation with Innovecs.
Joshua Holi,
EWM Implementation Manager at US Cold

Our tech team is highly skilled in developing software for projects of varying complexity. Innovecs is ready to collaborate with growing startups that require custom SCM solutions, based on disruptive techs like Blockchain or AI. Or if you are a large organization requiring integrated supply chain solutions, Innovecs is here to help.

You may also like:
June 24, 2022
Real-Time Supply Chain Visibility: Best Solutions To Keep Shipping Operations Transparent
Article updated on June 24, 2022 Lack of B2B interaction and inventory visibility can become a real challenge, especially under the tight competition between companies striving to achieve “one-day delivery” for more customers’ satisfaction. Custom or ready-made software solutions can boost the ability of the stakeholders to access real-time data relevant to the order process, inventory, delivery, and potential supply chain disruptions. Coca-cola, Best Buy, Walmart, Kraft Heinz, and many more industry giants are using visibility tools. In today’s competitive markets, companies are tasked with being notified of every product movement in their supply chain operations. Whether it’s an ocean container, pallet/skid, truck in transit, or drone delivery there is a growing need to keep track of every shipment in real-time. The end-game is to offer the best service and make sure customers are extremely satisfied with 5-star recommendations. At Innovecs, we have been part of the supply chain and logistics world since 2012. We have helped companies automate their warehouses, integrate with ports and carriers, create online freight marketplaces, and manage their transportation systems. In this article we are going to break down the nuances of real-time visibility to uncover the following: Why achieving visibility in your supply chain is a challenging task The importance of real-time visibility for your business The benefits of having a strategy in place Technologies that can drive visibility across all supply chain stages
Article, Logistics, Big Data & Highload, Blockchain, Machine Learning
LET’S TALK