Intelligent supply chain for retailers – a key to exponential business growth - Brillio
Sneha Kumar November 21, 2022

The focus on supply chain management globally over the past decade has been on optimization to minimise costs, reduce inventories, and increase asset utilisation. However, the recent events have demonstrated the vulnerability of supply chain to global shocks.

The massive shifts in demand and supply brought on by the closing and reopening of economies, along with significant monetary and fiscal changes particularly in advanced economies, contributed to the unprecedented decline in economic activity during and post the COVID-19 pandemic. Global suppliers of goods are finding it difficult to fill the increase in orders due to the sharp rise in demand. Unusual supply chain disruptions (caused, for example, by the pandemic’s waves and adverse weather) have also contributed, restricting activity and trade growth, and ultimately driving up costs.

More than four in five retailers (82%) surveyed by The Economist Intelligence Unit say that Covid has had a significant disruptive impact on their supply chains. The US experienced the greatest impact, with 94% of retailers reported that their business was seriously impacted, compared to 78% in Asia Pacific and 75% in Europe.

Some of the most pressing concerns retail supply chains are facing are:

  • Changing Consumer Demand

Over the last two decades, the introduction of online communication has drastically transformed the connections between consumers, brands, manufacturers, and products leading to a rise in relevance and demand for high-quality, environmentally friendly items 

  • Increasing Distribution Complexity

As the online marketplace has grown, retailers have access to numerous marketing outlets – A company’s own brick and mortar stores, its website, other physical retail partners, or any number of third-party online merchants may all sell the same goods.

Supply chain logistics management that leverages the potential of each of these opportunities while limiting risk is a constant balancing act that necessitates considerable preparation, inventive techniques, and adaptability.

  • Sustainability and Climate-related Risks

Climate change has several effects on supply networks. Transportation, employee health and safety, seasonal demand, and other strategic issues are already being impacted by increasingly unpredictable weather patterns and the frequency of extreme weather occurrences. A supply chain that incorporates risk mitigation and climate resiliency into its operations is the need of the hour. 

  • International Concerns

Large global supply chains are sensitive to changes in international relations by their very nature. Changes can be abrupt and sudden, resulting in risk factors that are difficult to forecast, from negotiation breakdowns to new trade agreements. Rapid adaptability to these types of broad changes will be a critical component of supply chain management and strategy.

  • Challenges In the Transportation and Logistics Industry

In addition to the global economy’s quick recovery, the shift in consumer demand from services to goods and the resulting high import volumes, port closures caused by localised and asynchronous outbreaks of COVID-19 have also contributed to the severe disruption of global shipping of merchandise goods. As a result, since the end of 2020, shipping rates have soared, particularly from the major Asian ports to the United States and Europe.

  • Global semiconductor shortages

Shortages of semiconductors became apparent in the second half of 2020, and they are particularly severe in the automotive industry. Car manufacturers cut back on their chip orders during the Lockdown, but there was a noticeable increase in demand for chips for other electronic devices (mostly on account of the work from home model). In the second half of 2020, new automobile orders unexpectedly rose sharply, surprising manufacturers. With little remaining capacity in the semiconductor sector, chip production was unable to keep up with the strong demand, probably because of underinvestment in the years before the pandemic.

Why Intelligent Supply Chain Management?

Supply chain business intelligence is being aided by artificial intelligence, which includes machine learning and predictive analytics. Big data, logistics patterns, and business trends are all used in these technology solutions to inform and optimise the entire digital supply chain. Previously, parts of the supply chain were manual and inefficient, but intelligent supply chain management is vastly boosting accuracy and visibility.

How Can We Leverage Intelligent Supply Chain Management?

Some of the key areas where the power of an intelligent supply chain can be leveraged are:

  • Increased profit margins

On-time or advance payment of invoices can result in significant cost savings. Depending on the volume and scale of the organisation, timely invoice processing can increase discount rates and save hundreds of thousands of dollars, if not more, in costs. One day’s worth of processing time for invoices can cost some supply networks millions of dollars.

  • Identification of best suppliers

Supply chain intelligence enables accurate measurement and tracking of vendor performance by tracking and identifying the following metrics: which vendors are most successful at delivering orders on time; which vendors are most accurate; locating vendor problems at their root cause before they affect other operations; and identifying deviations from vendor agreements.

  • Real-time process correction of deviations

When processes stray from the “ideal” course, advanced supply chain intelligence technologies issue real-time alarms. Alerts can be set up for a variety of situations, from being informed if an invoice takes more than X weeks to complete to being alerted when an order takes more than X days to ship out. These notifications provide businesses the chance to solve process inefficiencies and variations right away, before they escalate into much bigger, more expensive problems.

  • Real time product tracking

Intelligent supply chain platforms allow timely, precise tracking of packages at every stage from shipment to delivery. Supply chain managers may track items in real-time using these technologies, which also let them predict transit durations, spot delays, intervene in real-time, and quicken delivery.

  • Predict Future Orders’ Influxes

Supply chain monitoring using neural networks delivers prescriptive analytics that aid in future projections. Innovative AI techniques assist predict when shipments may be delayed, identify potential improvements, and enhance capacity planning. Organizations can minimise safety stock and cut costs by using data-driven forecasts, all while concentrating on strengthening the supply chain.

  • Bottleneck Reduction

Inconsistencies in operational performance can have an impact on a company’s bottom line due to unanticipated increases in orders, insufficient inventory, shipment delays, inefficient distribution systems, and a variety of other factors. Having a complete picture of your process allows you to pinpoint exactly where bottlenecks are, which improves overall profit margins and improves customer experience.

Intelligent automation in the supply chain is expected to reach 79% in the consumer products industry and 85% in retail over the next three years, making it one of the key focus areas for companies. It is imperative to match their supply chain strategy with quickly evolving business strategies in this dynamic business environment as the key to improved decisions and actionable insights for a business’s exponential growth and ROI is an intelligent supply chain.

About the Author

 

Sneha Kumar

Working as a Consultant, Cloud Engineering Studio for Brillio with 4 years of industry experience in delivering value for a variety of digital transformation projects and assessments across several verticals worldwide. Focused on developing technology POVs, GTM strategies, and emerging tech use cases for various clients across industries such as BFSI, Retail, Telecom, Real Estate, and Hitech. Certified SAFe Product Owner.

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