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Bridging the Gap between Strategy and Execution in Supply Chain

Bridging the Gap between Strategy and Execution in Supply Chain

by Hariesh Manaadiar, Founder at Shipping and Freight Resource and Features Editor – OceanFreight at CargoNOW

Supply Chain became one of the words of the decade around 2020-2021, driven primarily by the other word of the decade – “COVID”.

Supply chain became a household word awakening consumers everywhere thanks to the coverage by the global and industry media about supply chain disruptions like port closures, container shortages, insane freight rate hikes, imbalance in supply and demand, job losses, seafarer conditions and many more that COVID brought about.

While COVID-19 did indeed create a lot of disruptions to supply chain, it also did the industry a favour but elevating its profile and demonstrating the importance of supply chain and how it affects businesses and consumers alike on a day-to-day basis.

It highlighted not just the intricacies in the industry and the vulnerabilities in its current state, but also the opportunities in this space.

 

Introduction to Supply Chain Optimization Technology

Supply Chain may be best described as the complete process in a product cycle, from sourcing of raw materials, its production, packaging, distribution till the delivery of the finished products to the shelf.

In order to achieve this, supply chain is dependent on a wide network of suppliers, transporters, warehouses, distribution centers, carriers and logistics services providers all working together from the creation and sale of a product till its delivery.

Supply chain management is the management of all the above supply chain activities in developing and running supply chain effectively, efficiently, and optimally.

This management may involve product development, sourcing, production, logistics, and all the system needed to coordinate and delivery these activities.

In today’s hyper-competitive and sensitive supply chain and trade environment, businesses are increasingly turning to Supply Chain Optimization Technology to gain a crucial edge and achieve optimization and efficiency.

 

What is Supply Chain Optimization Technology.?

Supply Chain Optimization Technology is a combination of a range of technologies designed to optimize every stage of the supply chain process.. Supply Chain Optimization Technology leverages sophisticated algorithms, data analytics, and automation to streamline processes, improve visibility, and allow businesses to make data-driven decisions..

Sounds complicated and wordy.? Not actually.

Let us break it down how these technologies can practically revolutionize execution of supply chain strategies.

Some of the key Supply Chain Optimization Technology applications currently available are:

  • Advanced Analytics: By harnessing the vast datasets that are collected from all of the activities above, businesses can identify trends, predict demand fluctuations, and optimize inventory management. This empowers businesses to anticipate shortages and/or surpluses, ensuring products are available when and where customers need them.
  • Machine Learning (ML): ML algorithms continuously learn and adapt using which businesses can identify patterns and anomalies in real-time. This allows for proactive responses to supply chain disruptions, minimizing delays and ensuring smooth product flow.
  • Artificial Intelligence (AI): AI takes ML a step or two further with the capability to not only identify patterns but also suggest optimal courses of action. AI can be used to automate regular and day to day tasks like route planning and optimization for transportation, reducing costs and improving delivery schedules.
  • Internet of Things (IoT): By integrating sensors throughout the supply chain network, businesses can provide customers real-time visibility into inventory levels, equipment status, and product location. This allows for proactive maintenance and prevents potential bottlenecks before they occur.
  • Blockchain: This secure, distributed ledger technology offers increased transparency and traceability within the supply chain. Blockchain can verify the origin and movement of goods, enhancing trust and reducing the risk of counterfeiting.

The Benefits of Supply Chain Optimization Technology Implementation

The potential benefits of implementing Supply Chain Optimization Technology are far-reaching with a key potential to significantly impact a business’s bottom line.

Key advantages include:

  • Increased Efficiency: Automate mundane tasks, freeing up personnel for more strategic roles. Streamlined processes lead to faster order fulfilment and reduced operational costs.
  • Improved Visibility: Real-time data from across the supply chain provides a holistic view of operations. This allows for better decision-making, quicker responses to disruptions, and improved customer service.
  • Enhanced Agility: Empower businesses to adapt to changing market conditions. By predicting demand fluctuations and optimizing inventory levels, businesses can ensure they have the right products in the right place at the right time.
  • Reduced Costs: Optimized processes, minimized waste, and improved logistics lead to significant cost savings. Help in identifying and mitigating potential risks, further enhancing financial performance.
  • Sustainability: By optimizing transportation routes and inventory management businesses can reduce their environmental footprint. Additionally, increased transparency can ensure ethical sourcing practices.

As businesses implement and integrate advanced analytics, AI, and automation into their supply chains, they will achieve unprecedented levels of efficiency, agility, and sustainability.

 

Strategy vs Execution gap

While the benefits of Supply Chain Optimization Technology are undeniable and it is rapidly evolving with innovative technologies and applications emerging all the time, there is also a significant gap between supply chain strategy and execution.

While businesses invest in innovative Supply Chain Optimization Technology solutions in some cases businesses fail to effectively integrate them into existing operations.. This may be compared to having a beautifully written symphony score but lacking the skilled musicians to bring it to life.

The disconnect between supply chain strategy and execution often stems from unclear objectives, ineffective communication, and insufficient accountability and also because strategic plans may be overly ambitious or lack specificity.

 

Bridging the Strategy vs Execution gap

Business can bridge this gap and ensure a successful implementation following the below principles.

  • Change Management: Implementing Supply Chain Optimization Technology requires a shift in workplace culture. Training is essential for all employees, from warehouse staff to executives, to help them understand how these technologies can improve their daily tasks.. This might include workshops, online courses, and open lines of communication to address any concerns or worries about the changes..

For example, when a company introduces an automated warehouse management system, it is crucial to train warehouse staff on operating the new technology.. This ensures the system is used effectively and helps employees feel confident and capable in their updated roles..

  • Data Integration: Effective implementation and usage of these technologies relies heavily on data. Companies must ensure that data flows seamlessly across all departments and systems to feed these technologies with the necessary information for optimal performance. This often means breaking down data silos, setting up clear data governance, and focusing on data quality initiatives.

Consider a company optimizing its inventory management using these technologies but are facing inconsistencies in product data between its ERP system and warehouse software.

This discrepancy can lead to inaccurate forecasts and stockouts. By investing in data integration tools and setting data quality standards, the company can ensure accurate and consistent data flow.

  • Metrics and KPIs: Establishing clear metrics and Key Performance Indicators (KPIs) is crucial for measuring the success of Supply Chain Optimization Technology implementation. These metrics should align with the company’s overall goals and help track progress and pinpoint areas for improvement.

Relevant KPIs might include:

  • Inventory turnover rate: Measures the efficiency of inventory sales and replenishment.
  • Order fulfilment cycle time: Tracks the duration from order receipt to completion.
  • Transportation cost per unit: Calculates the cost to transport goods.
  • Percentage of on-time deliveries: Assesses the reliability of delivery processes.
  • By monitoring these KPIs and analysing the generated data, companies can continuously refine their strategies and enhance supply chain performance.

 

  • Collaboration: Effective implementation of Supply Chain Optimization Technology requires teamwork across the organization, from top management to frontline employees. It is vital to promote a culture of open communication, breaking down departmental barriers and encouraging cross-functional teams to unite towards shared objectives.

 

For instance, if a company is implementing a new forecasting system, close cooperation is needed between the forecasting team, sales department, and marketing team. The forecasters must understand the sales projections and marketing plans to create accurate forecasts.

Conversely, the sales and marketing teams should know the forecasting system’s limits and capabilities to set achievable goals and strategize effectively.

 

Conclusion

The future of successful supply chain belongs to those who embrace innovation and bridge the gap between strategy and execution. While Supply Chain Optimization Technology offers a powerful suite of tools to navigate the complexities of the modern supply chain landscape, its true potential lies in its effective implementation.

By investing in change management, data integration, KPI development, and enhanced collaboration, businesses can create a truly optimized supply chain that is efficient, agile, and sustainable.

As technology continues to evolve, we can expect even more sophisticated technology solutions to emerge.. Artificial intelligence (AI) will likely play an increasingly prominent role, further automating tasks and enabling real-time decision-making.

 

About the Author

Hariesh Manaadiar
Founder at Shipping and Freight Resource and Features Editor – OceanFreight at CargoNOW

Hariesh Manaadiar is a subject matter expert in the field of shipping, freight, logistics and trade active in the industry for over 35 years. Hariesh shares his knowledge and experience through his Shipping and Freight Resource which he founded in 2008.

He has a Masters in Shipping and Logistics, is a Fellow of the Institute of Chartered Shipbrokers, qualified in Digital Trade Strategy and Digital Supply Chain Management and holds a Diploma from the London School of Journalism.

 

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