The digital transformation of supply chains has been evolving since 2010, but COVID-19 has accelerated the process noticeably.
The pandemic has shown clear disadvantages of almost complete dependence on only one supplier for certain categories of products and raw materials. Companies were not prepared for such challenges, which led to supply delays due to production closures. At the same time, the demand for some categories of goods fell sharply, while for others it unexpectedly increased. The latter include antiseptics, cleaning products, and toilet paper. Thus, the already completely unstable supply chain was broken by extremely unpredictable demand. The lack of complete and up-to-date data has knocked off the demand model. But it didn’t refer to companies whose work was based on artificial intelligence and machine learning.
Supply Chain Transparency and Automation
When it comes to risk management, knowledge is power. The sooner you know about the risk, the more options you have to solve the problem, and the less you will have to pay to fix the problem. It turns out that the more information you collect about what is happening in your end-to-end supply chain, the better it is for you.
One of the highlights of supply chain risk management in the past year has been the boom in technology tools to help increase supply chain transparency.
For example, electronic check-in (ELD) equipment and cargo tracking devices have turned goods and semi-finished goods into connected IoT devices, virtually eliminating the need for phone calls asking “Where is my truck?”.
New data aggregation services have improved access to historical and real-time data, from carrier rates to weather conditions and more.
AI-powered analytics tools make it easier to see patterns across large datasets and enable quick adaptation to change.
The transparency of the supply chain leads to tremendous benefits. For example, most of the inventory in supply chains is an insurance buffer against unexpected spikes in demand or out of stock. Thus, deeper transparency in supply chains allows you to safely reduce and sometimes even eliminate stocks and make supply chains more flexible. This means that by leveraging modern technology, it is possible to ensure a return on the investment spent on maintaining a high level of customer service while reducing inventory holding costs.
This transparency helps to further automate the business. After all, supply chain automation isn’t just about autonomous trucks and robots in a warehouse. When you combine a rapidly growing dataset with powerful processing capabilities, you have the components to automate many of the decisions that take place in the supply chain. And in many cases, this reduces costs, increases efficiency, and minimizes the likelihood of human error.
For example, what happens when a delivery truck breaks down on the road? In an outdated supply chain, this causes a crisis – forwarders call carriers, trying to negotiate the freight of a new car for almost any money. But in an automated supply chain, this task can be immediately redirected to an electronic transport and cargo search platform, and a new carrier can automatically accept an order at a market price.
What used to be a crisis is now just another deal. The difference between a manual process and an automated process is huge, both in terms of efficiency and stress.
How Will the Changes Affect Logistics?
DHL experts have analyzed the challenges faced by various industries and see the following picture for the near future:
- Logistics professionals will be driven by the sustainability of supply, not cost. Keeping the chains intact will be critical.
- Changes in consumer behavior will require the adaptation of traffic flows and warehouse networks to new realities. Digitalization will affect those processes in cargo transportation that have not previously been reached.
- The need for effective management of the life cycle of contracts with suppliers will create the need for digitalization and automation of this area.
- Information systems will have to support the option of remote work of employees with documents and data.
- Leaders in the supply chain rankings, according to Gartner, are among the first to adopt digital technologies, and some of them continue to develop supply chains even in difficult economic conditions because they see it as an opportunity for planning and flexible response in real-time to overcome fluctuations in demand.
Robotization of Document Processing
While industry leaders are adopting RPA, still 54% of companies in the world have not switched from paper to electronic workflow, which leads to long order processing, lack of transparency in the supply chain, and suboptimal decision making.
The robotization of document processing removes the routine from a person and allows you to establish transparent communication with counterparties. By the way, it has become one of the most demanding engineering outsourcing trends in 2021 – more and more firms are willing to transfer engineering work to companies which are specializing in this sphere. To come up with cooperation you need to visit an international engineering platform such as Engre – more than 1000 global engineering companies at Engre can provide a wide range of services for you. It is the place where businesses and contractors meet each other and launch the most successful projects.
The robotization can include reconciliations, creating invoices, and collecting statistics on inventory balances and sales. As a result, automation:
- Reduces personnel costs and labor costs
- Provides unattended shipments
- Reduces errors in logistics and optimizes the supply process
- Allows you to efficiently manage your warehouse and predict shipments.