Visibility through data: a modern solution for supply chain
There’s no question that data is critical for organizations that want to better understand their business challenges and opportunities.
With data-backed insights, organizations can make more informed decisions that drive business performance. In fact, a study by Microsoft found that 51% of business leaders have a data strategy in place to drive revenue streams and productivity.
Data-backed insights are proving to be particularly important in the supply chain industry. As supply chains become increasingly complex—sometimes involving as many as 100,000 suppliers for multinational organizations—business leaders struggle to maintain visibility into what transpires from shipment source to destination. Below, we examine the impact of low visibility, and how that impact can be blunted with modern applications of IoT solutions that transmit data.
The need for visibility
Visibility is the operative word for supply chain stakeholders, informing logistics decisions that enable businesses to operate more efficiently, prevent product loss and increase profits. Unfortunately, visibility is a central challenge for supply chain managers today, with 94% of companies admitting that they don’t have full visibility into their supply chains.
Low supply chain visibility can be detrimental because it can prevent organizations from efficiently identifying occurrences of:
Disintermediation and data ownership: Supply chain managers must have complete visibility into the entire supply chain, no matter how complex, to ensure accurate shipment locations and time estimates for buyers. This information must be direct from the source, accurate and trustworthy. Otherwise, supply chain managers risk trusting a third-party source to handle this critical information.
Unfavorable container conditions: Without visibility, supply chain executives cannot monitor critical container conditions, such as temperature. This lack of visibility can cause the integrity of goods to be compromised—resulting in a slew of problems for a brand, ranging from compliance issues to customer mistrust.
Theft and other security issues: Not only can products simply be misplaced, but theft is a huge problem in the supply chain—representing $30bn in lost revenue for American companies each year. Without visibility into the shipment’s location, supply chain executives are left without a way to identify and prevent theft or other security issues.
Visibility through data
The good news is that visibility can be enhanced with IoT solutions that track shipments’ whereabouts and conditions up and down the supply chain. A Forrester report found that in 2019, 85% of firms will use data collected by IoT solutions to gain visibility into their business processes. This data can give supply chain stakeholders the insights needed to track assets, monitor container conditions and enhance security.
To ensure assets are tracked throughout their entire supply chain journeys, supply chain managers can have IoT-enabled sensors placed inside the container during the loading process to allow real-time geo-localization from the initial departure warehouse to its final destination. When connected to a global 0G network, these sensors can deliver information about container whereabouts across far-reaching distances. As shipments pass through checkpoints—whether that be the distribution plant four states away or across an ocean—the supply chain manager can watch the shipment progress and communicate accurate delivery estimates.
Communicating accurate delivery estimates is extremely important in providing optimal customer experiences and establishing customer trust. Today’s consumer not only expects fast delivery, but also accurate delivery estimates, according to Temando’s State of Shipping in Commerce report. These expectations can be challenging for businesses to set without visibility into the supply chain—which is why more than half of retailers don’t offer delivery date estimates.
With better tracking, businesses can not only better set delivery expectations with customers but can also get ahead of glitches in fulfillment processes. Data collected by IoT-enabled sensors can help businesses identify abnormal shipping behavior or weak links in their supply chain. Armed with this data, businesses could identity patterns of mistakes or mishandling that could lead to a change in their chosen supply chain partner or warehouse.
If, for example, a sensor reveals that a shipment is stuck in a warehouse for weeks at a time, supply chain managers can proactively reach out to the correct logistics provider to push them to move the product. This data can also be used to test different shipment routes to determine which are most efficient.
Monitor container conditions
IoT-enabled sensors can not only communicate the location of shipments but can also deliver updates on container conditions. For supply chain managers tracking perishable or fragile items, this is especially important. Imagine, for instance, a shipment of popsicles. If the temperature of that container is not properly maintained, the popsicles could melt and become a sticky, misshapen mess upon arrival. Outcomes could be more dire if containers of things like pharmaceutical products are not properly maintained, leading to a serious public health crisis that could devastate a brand’s reputation and drive costly legal fees.
Through IoT-enabled sensors monitoring container conditions, supply chain managers can be alerted to issues—and reconcile them—before they become catastrophic. Additionally, supply chain managers can track this data over time to identify where issues tend to arise, so they can remedy where there are likely to be more broken processes.
Detect security issues
In addition to using IoT-enabled devices to help mitigate the risk of mismanaging or misplacing goods, companies can also use the IoT to protect against theft, as certain cargo assets, like trucks or ships with valuable goods, have an increased risk of being stolen.
IoT-enabled sensors can help protect products on the road and in warehouses. Companies can set specific geographic parameters on the IoT sensors they attach to their products. This makes it so the sensor will immediately send an alert if a thief were to move the goods outside the geographic area that was previously set. The devices continue to transmit this critical location information seamlessly to enable quicker and easier recovery for the authorities and insurers.
Additionally, when companies track their shipments, they can determine if they are being transported safely. IoT-enabled sensors can monitor for dangerous driving conditions to ensure both their security of their drivers and products.
Even when products aren’t on the move, they are still at risk for theft. Warehouses have reported thieves that overwhelm alarm systems using mobile phone jammers, making it easy to enter and steal substantial amounts of goods. However, if that security system were connected to the same network that the IoT-sensors are connected to, buildings wouldn’t encounter this problem. A 0G network operates on radio signals that cannot be jammed, therefore reducing the risk of further monetary loss.
With the potential to revolutionize industry leaders’ understanding of their complex supply chains, data-backed insights provided by the IoT delivers crucial visibility into once obscured segments of a shipment’s journey. With greater visibility up and down the supply chain, organizations can set themselves on the path to operational efficiencies, superior customer experiences and a stronger bottom line.
For more information on procurement, supply chain and logistics topics - please take a look at the latest edition of Supply Chain Digital magazine.
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.”