Supply chains have traditionally followed a linear path, manufacturing products and sending them through warehouses and distribution centers to consumers. However, the age of the internet and omnichannel sales has created vast opportunities to change how the supply chain functions, creating more cohesive, collaborative, and circular supply chains. The predictions for 2016 hinted at these trends, but recent reports suggest the need to alter the common perception of a functioning supply chain is growing stronger. In fact, the final two posts in this series will focus on how the supply chain is adapting to work in a more unified manner from collaboration to visibility.
Collaboration Continues to Grow More Important.
More companies were taking steps before 2016 to improve collaboration across entire supply chains. This was an effort to lower overall costs, increase share of wallet, improve word-of-mouth advertising via business-to-business channels and develop long-term relationships, and these benefits continued to be a hallmark of this year’s collaborative relationships. More importantly, the steps for creating a collaborative relationship were further defined, reports PLS Logistics, to include the following:
- Work together to create common-ground.
- Create more win-win opportunities.
- Select partners based on abilities and value.
- Establish joint-performance management systems.
- Collaborate over large time scales.
- Invest in the people and infrastructure of both companies.
Unfortunately, problems with collaboration continue to exist. Per Bill DuBois of Kinaxis, data extraction and access continues to be kept in silos, process and function goals conflict, and teams continue to be isolated. However, the solution to these problems lies in distributing the workload evenly, including access to data sources and sharing of information. While reassignment of workers to global locations is necessary, creating a single source of data storage and access may be key to increasing collaboration in the future.
Risk Management Evolved in 2016.
2016 opened with fears of a complete shutdown of the beloved Mexican restaurant, Chipotle. The company had seen dozens of people sickened from food-borne illnesses, and even locations that had reopened were struggling. However, Chipotle rose above the ashes and continues to be a major company today. Essentially, the importance of resiliency has shown that companies can overcome problems and risks, but they do often cause widespread losses in the short-term.
This is a prime example of business continuity risk, but risk can take many forms, reports Wayne Caccamo of Supply & Demand Chain Executive. With relation to inventory management and product complexity, new technologies, such as 3D printing, are enabling more efficient inventory management and control. While printing foods does not seem to make sense, printing of parts on demand can help reduce storage costs, eliminate concerns about overproduction or understocking and enable continued complexity of products. This goes back to using technology to mitigate risk, as explained by Patrick Burnson of Logisitcs Management.
For example, the need to respond to labor shortages during times of disaster can send a company into chaos. However, knowing more about available labor workers and where they come from can give a company the resources needed to overcome the immediate challenges, securing the future of the company and promoting resiliency.
The Circular Supply Chain Leaves Linear Processes Behind.
The world is changing, and more people are considering what happens to products at the end of their lifecycles. Rather than simply tossing malfunctioning products into the trash, the push to recycle, reclaim and reuse products and their raw materials is becoming a core function of the supply chain. In a sense, the ideas behind reverse logistics are becoming essential to all supply chain networks, creating a circular supply chain.
The idea of reusing products as part of reverse logistics in the supply chain is not new, explains Edge Environment. However, the process of implementing sustainable business solutions includes figuring out how to handle, value, store, collaborate with others and still maintain standard operating efficiency. Consequently, the Ellen Macarthur Foundation is working with more than 100 companies to evoke the transition to a circular supply chain. In other words, global supply chain leaders are helping to shape the future of circular supply chains. However, other third-party organizations, including the U.S. Chamber of Commerce Foundation, are also pushing this ideal.
Sustainable business practices are a core value of 90 percent of supply chain executives, reports UPS, and as many as 50 percent of executives are already working on creating circular, sustainable solutions in their companies. Moreover, the cost savings from creating nationwide circular supply chains in the U.S. could surpass $1 billion by 2025, reports Kevin Brow of CIO Review.
Today’s supply chains function in tandem with one another, and more emphasis is being placed on long-term outlook than ever before. Concerning the importance of circular supply chains and resiliency, cross-functional supply risk councils are taking advantage of technologies, cloud computing, and collaboration to create multiple solutions that can be implemented at a moment’s notice. Ultimately, these three factors are giving supply chains the opportunity to survive times of despair and problems and ensure their futures.
In the next post, we will take a closer look at how specific cloud-computing technologies, wearables and data analytics are shaping today’s supply chains.