Five ways the cloud is changing your supply chain management
Let’s start with one of the biggest benefits to supply chain management... utilising the power of the cloud reduces a company’s oper...
Let’s start with one of the biggest benefits to supply chain management... utilising the power of the cloud reduces a company’s operational costs! The automation of tedious back office tasks ensures that your labour force can be used to better effect elsewhere, and with an intuitive retail operations platform like Brightpearl you will also save money by avoiding returns. This can be achieved through the natural reduction in shipping times and duplicate orders that will come about when integrating with an automated shipping platform like ShipStation. Integrating an automated shipping platform with a Warehouse Management System will likely significantly lessen your processing cost per order. In a complicated marketplace the solution is relatively simple; the more you automate, the more you can do with your staff, the more your processing costs decrease.
With so many moving parts it is imperative that your supply chain is consistent throughout the user experience, and a lot of this hinges on the ability to integrate across multiple platforms. The cloud makes Electronic Data Interchange possible, EDI standardizes and automates things like invoices and purchase orders, which can then be shared electronically between trading partners. When you integrate EDI with ERP and accounting systems it removes the need for masses of manual data entry, breaks down data silos and eliminates human error. If EDI is utilised within the shipping process it can also facilitate improved shipping rates by integrating with a number of systems, such as those of 3PL providers, once integrated it can then determine the least expensive way to fulfill an order.
Data Analysis for Business Intelligence
Data is power. Advances in cloud technology have lead to the ability to collate and analyse data at a speed far beyond manual human capability, which can give the retailer that all important edge within their market. This data can be used to dictate strategy on everything from warehouse management to customer retention, how much stock of a particular item should they order? Do they have serial returners in their customer database that they should exclude from discounts and promotional materials? Last year, Brightpearl conducted a study of more than 200 US & UK retailers and over 40% of the retailers surveyed saw an increase in intentional returns which they indicated had a strong impact on their margins. This real-time data collation is now key to anyone that wants to stay competitive within their industry, with the analysis of customer behaviour, businesses can tailor their strategy to give the optimal experience for the customer without compromising their profit margins.
The beauty of a cloud-based solution is that it can grow along with your business in a highly cost effective manner. If production needs to be increased tenfold in a small time frame, then you aren’t bogged down worrying about whether or not you have that processing capability, no doubt your provider will have a pricing structure that makes it easy to expand. In addition to this, the ability to analyse data will provide you with the information to fix inefficiencies within your supply chain, therefore contributing to your growth. The cloud has put an end to costly overheads and works on a much more efficient ‘pay and play’ basis which allows for sustainable growth, at your own pace.
Convenient now, but built with the future in mind
Consumers don’t want convenience so much as they expect it. Visibility at every step of their purchase, speedy updates, ease of use and total accessibility have become the norm. Wait time is now following, a recent survey conducted by Brightpearl found that over 70% of online shoppers would search for an item elsewhere if it was unavailable, rather than wait any length of time for it to come back into stock. So it is becoming increasingly necessary to get the product in front of the customer as quickly as possible, and this starts in the warehouse. Automatic warehouse routing and automatic fulfilment are the key drivers behind getting an order processed and delivered to the customer as quickly as possible. According to a report from Alix Partners, the maximum delivery time that the average US shopper will contemplate is now only 4.5 days, and with the advent of Amazon’s one day delivery we can expect to see this figure continue to drop. Delivery time is contingent on how quickly a business can locate, package and fulfill an order - make use of the cloud to automate this process, before you get left behind.
By Derek O’Carroll, Chief Executive Officer of Brightpearl.
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”