The future of supply chain management technology, with AEB
Written by Claire Umney (pictured, right), General Manager, AEB (International) Ltd
As the UK emerges from the economic slump, overall investment opportunities and capabilities for UK businesses have improved. Companies are looking to manage their logistics and global supply chains more efficiently while preparing for future growth. Supply chain technology trends are continuously shaped by new business areas, production methods, outsourcing strategies, workflow changes, environmental impacts, globalisation, etc., just as much as by new technologies, platforms and communication standards.
Meeting the industry’s increasing demand for accessibility, mobility and visibility of business services and all involved transactions requires comprehensive IT support to provide all relevant supply chain information at the click of a button, connect all involved supply chain partners and integrate all relevant processes from procurement to fulfilment – ideally through one overarching platform.
End-to-end supply chain systems support various areas of global logistics, they go along the entire logistics process to pick up the ‘thread’ at one end - for example, at the order in the ERP system - and follow it through to the other end. They optimise both logistics operations and inventory management while also facilitating customs and compliance functionality as part of international movements. They provide even greater benefits in terms of process efficiency and cost savings - especially considering that the data flow from procurement to fulfilment can be used for logistics operations and regulatory compliance at the same time.
There are some key areas that, going forward, will increasingly guide decisions on implementing new supply chain technology:
Software must be capable of responding to the requirements of e-commerce and multi-channel sales. Due to the increase in online orders, international shipping and returns, today’s logistics systems must be able to react quickly to different order channels and process order distribution smoothly and efficiently.
Visibility is about making information e.g. orders, shipments, transport units, vehicles, etc. available to supply chain partners at any given time, for any given process, in any given area of the supply chain. Visibility solutions should include reporting tools, which strongly assist in managing daily operations (e.g. with weekly volume reports on inbound traffic for loading dock resource planning), as well as in strategic discussions, e.g. when negotiating annual carrier contracts based on on-time performance results. Improving supply chain visibility benefits all areas of the supply chain and provides the backbone required to achieve more efficient management of inventory and transport resources, which in turn improves responsiveness to requirements, including e-commerce and multi-channel challenges.
Transport and inventory management
This area represents a key component in annual operating costs. Implementing IT systems offers benefits including: streamlined operations, more efficient resource management, better on-time performance, loading dock transparency, effective inventory management, faster replenishment, freight cost transparency, consolidated transports, optimised routes and long-term carrier relationships, resulting in performance improvements, significant cost reductions and potentially lower carbon dioxide emissions.
Of course, with supply chain management IT, there is no ‘one-size-fits-all’ solution. What represents a must-have for one company might be irrelevant for another. It all depends on the individual operations and specific business requirements.
However, companies are increasingly moving away from ‘patchwork’ system landscapes to discover the benefits of comprehensive supply chain management systems for managing both logistics and global trade processes - from initial sales order to final delivery - in one system. Powerful modular solution suites offer many options for businesses, allowing step-by-step implementation of required functions - one business area at a time - and providing smooth integration into existing system landscapes, or even replacing them altogether.
There are some technologies that, overall, are considered of high relevance for future supply chains, such as cloud solutions and mobile devices:
Even though security concerns are under consideration yet again, cloud computing has become an integral part of today’s supply chain management solutions portfolio and remains of interest. Their main benefit is that they address companies’ investment capability and functional requirements at various stages of their development, and apply to a number of business areas in global logistics. Mobile computing and mobile devices have gained greater importance in recent years due to their ability to efficiently support supply chain processes ‘on the go’. Their technical advancement has shown significant development in their scope of capabilities, but their most valuable feature continues to be the ability to integrate into ERP and operational systems to gather and share data in a variety of forms and formats.
Comprehensive, sophisticated supply chain management systems meet the requirements of supply chains in the twenty-first century: adaptability, collaborative ability, transparency, compliance and speed in all processes. Streamlining processes and cutting costs in the long run are all vital for future business growth. By choosing the right software solution, supply chain managers can future-proof their business and gain a competitive advantage.
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector