Ivalua exclusive: How a smart approach to procurement can alleviate CEO concerns
Whether it’s Brexit or deteriorating US-China...
A plethora of factors are set to shake the geopolitical foundations of the world in the months to come.
Whether it’s Brexit or deteriorating US-China trade relations, the supply chain landscape is prone to drastic shifts. This uncertainty was reflected in PwC’s annual CEO survey, where – of the 1,378 CEOs interviewed across 91 countries – top concerns included over-regulation (35%), trade conflicts (31%) and geopolitical uncertainty (30%).
Each of these issues threaten the stability of the supply chain, and if the associated risks such as non-compliance fines, materials shortages or dramatic changes to supply routes can’t be mitigated, organisations could face severe and sudden disruption to critical goods and services. However, organisations are not powerless, and taking a smart approach to procurement can mitigate the potential risks across the supply chain and help businesses to navigate the turbulent times ahead.
Stay adaptable to roll with the punches
Given these unstable political and economic circumstances across the globe, it’s no surprise to see that 45% of CEOs are looking to make a change in their supply chain to ensure products and services continue to be delivered effectively. However, considering that supply routes to regulations can shift at the drop of a hat, deciding on exactly how to prepare the supply chain effectively can be a challenge.
Instead of attempting to predict the future, organisations should be taking practical steps to navigate change as and when it appears by building flexibility into the supply chain. By implementing smart procurement technology, organisations can quickly assess supply chain options and risks, ensuring that everything from source to end-user has the means to change with little warning. By taking a digitised approach, organisations can create a single source of the truth across the supply chain, making it easier to manage existing suppliers and assess the impact of sudden changes. This means organisations can adapt to sudden changes like policy changes, regulatory compliance and materials shortages as and when they occur without disrupting the flow of goods and services.
Organisations need to get musing before they moving
As globalisation continues to rise across the supply chain, organisations are shifting their growth strategy to alternative territories. Sometimes, the benefits are clear, as growing manufacturing powers across the globe can provide opportunities for organisations to innovate, save on bill of materials or even source new components. However, in today’s unstable geopolitical climate, going global isn’t always the best option. Organisations will need to weigh the potential benefits against the risk of future tariff changes, rising import costs and changes in the movement of goods, which could have a stronger impact in the long term.
For example, following the increased tariffs on Chinese imports in the U.S., a wide range of firms have been pushed to relocate at the last minute, which is set to cause great disruption for some time. Without visibility into the supply chain, affected companies will have a hard time deciding on the best course of action.
In order to make informed decisions, organisations need to have 360-degree visibility across the entire supplier base, including international prospects. This means pulling information from suppliers, internal stakeholders and third parties to ensure organisations can weigh up their options effectively and accurately. This will help organisations identify a sustainable long-term strategy to sourcing that supports innovation and balances cost with risk. Flexibility will also be a core factor here, allowing organisations to move critical elements of the supply chain with minimal disruption.
Reducing risk from regulatory restraints
In an increasingly regulated world, firms in every sector are facing continual changes in requirements. With more and more compliance measures coming into force, companies need to improve and better-control key functions such as data flow. Whether it’s GDPR or modern slavery, regulations bring with them a process overhaul, and organisations need to know that every company across the supply chain is taking heed. If not, they risk falling foul of fines that can seriously impact the business. For example, earlier this year, e.l.f. cosmetics agreed to pay almost $1 million because suppliers had used third party vendors in North Korea, falling foul of OFAC North Korea Sanctions Regulations.
In order to maintain compliance, organisations must work collaboratively with suppliers to manage compliance, evaluate performance and measure risk effectively. They also must have seamless access to relevant 3rd party data, such as the OFAC list, to validate supplier compliance. Having the ability to collaborate with stakeholders and access 3rd party data in real time through a single platform is vital, especially when dealing with increasingly dispersed supply chains. By allowing for communication and data sharing across a regularly updated cloud platform, organisations can work together with stakeholders across the supply chain so that regulations are met and all parties are aware of what’s required to avoid fines.
Get smart to avoid being on the backfoot
It’s clear that uncertainty and sudden change will be present for some time. As such, taking a smarter approach to procurement has become a must have for organisations looking for flexibility, visibility and greater collaboration throughout the supply chain. This will allow organisations to mitigate risks effectively as and when they appear, reducing the potential damage caused by current and emerging economic, political and regulatory challenges. Without the technology in place to achieve this, organisations risk responding to major changes after the fact, leaving them permanently on the backfoot.
RAIN RFID, IoT and AI are key to a proactive supply chain
Across supply chains around the world, we have seen leading companies rely heavily on technologies like AI and IoT during the pandemic. These digital solutions have enabled businesses to accurately capture and ultimately use their own first-party data to drive efficiencies and protect increasingly fragile bottom lines.
However, what is less commonly known is the increasing role of RAIN RFID technology in supporting IoT solutions. By using RAIN RFID to capture item data and then feed that data into AI systems, businesses can identify inefficiencies within the supply chain and make informed decisions.
What is RAIN RFID?
In short, RAIN RFID is a powerful IoT technology that enables itemised data collection. By applying small, battery-free tags to items, organisations can identify, locate, and authenticate each of those items, scanning up to thousands of items simultaneously with a variety of devices, including hand-held, fixed and wearable readers.
RAIN RFID solutions dramatically improve the operational capabilities of an organisation by ensuring they have exactly the right items, in the right quantities, at the right locations, at the right time. During the pandemic, RAIN RFID solutions have been key to limiting disruptions in retail and manufacturing supply chains, most notably by increasing inventory and asset visibility and improving the management and flow of goods.
Three ways RAIN RFID helps solve supply chain concerns
RAIN RFID is used to streamline processes, maintain real-time inventory, increase productivity, and help manage labour shortages. We see three key ways RAIN RFID helps solve supply chain concerns:
- Automate shipment verification: Today, significant labour is required for multiple, manual barcode scans during the shipment process. RAIN RFID tags can be read automatically without a direct line of sight, erasing the need for workers to pause, locate a barcode, and scan it. By using RAIN RFID, supply chain leaders can automate their shipment verification process and improve warehouse efficiencies by up to 25%.
- Deliver real-time visibility: Retail Systems Research says that 76% of supply chain survey respondents reported that real-time inventory visibility was their leading focus for improving performance. When supply chain managers lack information about the status of assets and shipments moving into and out of warehouses, confidence and productivity suffer. By using RAIN RFID, supply chain leaders gain real-time visibility into an item’s identity, usage, and location. With this information, they can quickly find inventory and assets, and reduce the cost of asset investments.
- Improve order accuracy: Today, companies rely on redundant manual checks to verify that the right cartons are loaded onto the correct pallets. By using RAIN RFID, supply chain leaders can automate pallet build verification to streamline the process and increase order accuracy. In fact, a recent study by Auburn University found that RAIN RFID can help an organisation achieve up to 100% order accuracy, eliminating claims costs and unhappy customers.
RAIN RFID can increase value of AI-powered analytics
In today’s AI-driven, rapid decision-making business environment, RAIN RFID is uniquely capable of making systems more effective. This is because it provides item identifiers for tracking and locating billions of items, from clothing to food, pharmaceuticals, tools, packages, pallets, and more.
It also works without line-of-sight, providing visibility into places and processes not previously available. The data provided by a RAIN RFID system can give AI-powered solutions the ability to see individual items throughout the supply chain, understand how the entire supply chain is functioning and identify which areas can be improved.
As companies accelerate digital transformation, we expect to see a rise in interconnected data as investments into new technologies and IoT surge. But as the volume of real-time and accurate data about the movement of goods rises, so too do the demands on operations teams to make sound business decisions quickly and with confidence, often using AI-powered systems that thrive on improved data to make better decisions.
As an example, over the past several years, Delta Airlines transformed its customer experience by investing in technology including real-time RAIN RFID bag tracking and automatic check-in via the Fly Delta mobile app. Delta is now leveraging this set of investments in their implementation of an AI-driven platform that analyses millions of operational data points, from luggage movement to aircraft positions to flight crew restrictions to airport conditions. This system simulates operating challenges and creates hypothetical scenarios that help Delta’s professionals make critical operational decisions that improve the overall customer experience.
The need to drive digital transformation rapidly during the pandemic has made supply chain and logistics professionals increasingly tech savvy. As we prepare for a post-pandemic era, companies’ increased know-how and awareness of solutions like RAIN RFID, IoT and AI will play a key role in evolving the industry’s approach to solving supply chain issues from reactive to proactive, setting them up for future success.