Are you wondering how to gain a competitive advantage? According to Gartner (a market research firm), “Supply chain planning (SCP) is the process of coordinating assets to optimize the delivery of goods, services, and information from suppliers to customers by balancing supply and demand.” SCP considers every stakeholder, from raw material suppliers to end users, to establish an integrated plan to improve the company’s production, sales and operations. And develop key performance measures to ensure efficient and cost-effective operations.
Efficient supply chain planning achieves three goals: reducing production costs, increasing sales, and strengthening supplier relationships. In the ’70s and ’80s, companies like Walmart and Dell crushed their competition by gaining a competitive advantage in supply chain and logistics. Monsters like P&G leverage digital technologies across the supply chain to gain competitive advantages. Today, every business has the ability to leverage technology to increase operational efficiency. Here are six examples of where your company can use supply chain planning as a competitive advantage.
Real-time Supply Chain Planning Strategy
The recent worldwide COVID-19 pandemic has shown how the business environment can change in a very short time. How a business handles rapid market changes will determine its longevity. Supply chain analytics solutions can bring real-time data from every part of the business, from POS terminals to mines where raw materials are extracted. Companies can analyze large volumes of contextual data for accurate forecasting and modify plans according to rapidly changing market demands.
Changes in demand expectations should be reflected in suppliers’ requirements. A contingency on the supplier side should change demand factors such as the price of products. The technology to enable this exists, but companies need to create a strategy to manage to change business parameters and adapt to new requirements.
Large Collaborative Supply Chain Strategy
A large business has a large list of suppliers, vendors, and distributors. These stakeholders should not work in silos. To maximize supply chain value and ensure customer satisfaction, all participants must work in a collaborative environment (rather than competing in the marketplace).
The success of a company turns into success for its suppliers. Building and maintaining strong relationships with suppliers is equally as important as maintaining customer relationships. Just as a company must satisfy its customers, it must also ensure the success of its suppliers and distributors. Therefore, an effective supply chain management strategy should consider all stakeholders of the company along with strategic changes implemented with supplier, dealer and distributor purchasing.
Advanced Supply Chain Automation Solutions
In November 2019, McKinsey reported findings from the latest McKinsey Global Survey on AI adoption. Participants answered questions about 33 AI use cases across eight business functions and their impact on costs and revenue. “Adding all use cases, 63 percent of respondents report increased revenue from AI adoption in business units where their company is using AI; respondents of high performers report revenue growth nearly three times greater than that of other companies. 10 percent,” the report says.
In supply chain management, 14% of respondents reported cost reductions from AI adoption of more than 20%, 16% saw cost reductions between 10% and 19%, and 31% saw cost reductions of less than 10%. In terms of revenue increases, 13% of respondents said revenue growth from AI adoption was greater than 10%, while 22% of respondents said revenue growth was between 6% and 10% and 28% revenue 5% or less He said he saw the increase.
In total, 44% of respondents saw cost savings in AI-enabled business units, and AI adoption reduced costs for those business units by an average of 10% or more. “The two functions where the largest shares of employers report cost reductions in individual AI use cases are manufacturing and supply chain management. Responses in manufacturing show that some of the most significant savings come from optimizing efficiency, energy, and efficiency,” explains McKinsey. Respondents are more likely to save money on spend analytics and logistics network optimization.”
Automation solutions such as collaborative mobile robots reduce picking errors, reduce the time required to fulfill an order, and reduce the walking distance for employees. These advantages enable warehouse workers to work more efficiently and get more done in less time. For example, collaborative robots like Chuck by 6 River Systems guide workers through each task by navigating to appropriate picking locations and displaying items and quantities to be picked up, keeping them on task. Chuck uses artificial intelligence and machine learning to prioritize work based on current conditions on the warehouse floor, group similar tasks together, and optimize picking routes in real-time. 6 River Systems’ solution increases the business of human partners by improving resource use and increasing productivity 2-3x for better cost efficiency.
Implementation Of A Continuous Process Of improvements
The implementation of disruptive technology can lead to improvements in the supply chain. But as the name suggests, it is devastating and can be a costly endeavor. On the other hand, agile process improvements aim at the continuous and gradual improvement of processes.
The full impact of the agile process cannot be experienced on the first day. Over time, small incremental improvements turn into big changes. The advantage of an agile mindset is the low cost and low disruption required to implement incremental changes. Because those involved in the process lead agile developments, employees have a greater sense of ownership in the process and are more likely to embrace change. “Staying agile through disruption requires countermeasures of cost, strategy, and capability,” explains Gartner. “The best performers challenge conventional thinking during disruptions, and the most successful take risks in those turns. Supply chain leaders prepare for turns and lead systems, processes, and decision-making with agility.”
Consider cost drivers and business impacts in-depth
To achieve maximum supply chain value, you need to be aware of supply chain cost drivers and their business implications. Rising costs are symptoms of troubled cost drivers. Address root causes rather than surface symptoms to build a robust and cost-effective supply chain.
For example, labor costs may increase in a warehouse. However, this may only be a symptom of an underlying cause, such as an increase in aggregation errors or suboptimal aggregation paths. Replacing workers with lower-paid workers is to treat the symptom without addressing the root cause and may make the situation worse. Collaborative mobile robots enable warehouse workers to work more accurately and efficiently by addressing root causes by improving picking accuracy and optimizing picking routes in real-time to reduce unnecessary walking. Warehouse workers do more work in less time for a net positive effect on labor costs.
Short-term cost savings should not be achieved by sacrificing long-term goals, but companies today can benefit from technologies such as warehouse automation and artificial intelligence with a rapid return on investment. Collaborative mobile robots are a smart investment that can be easily integrated into your existing infrastructure for a lower upfront investment compared to traditional automation solutions such as conveyor systems. In fact, 6 River Systems’ solution can be implemented in eight weeks, and companies see a return on investment in as little as five months.