Month: October 2022

Confronting the data stream is challenging for companies in any industry, and the retail segment is no exception. With the retail domain frequently evolving, the players in the industry are coming across various uncalled challenges. Thus, this brings the firms to a situation where they need to streamline their processes with new and innovative decision-making strategies to stand in the competition.

Also, there is a continuous data flow across the supply chain, multiple consumer touchpoints, and digital sources like social media. So, controlling this immense data influx has become a significant challenge for the retail sector as they are over-reliant on manual intervention.  This is where the role of AI in retail supply chain comes into play.

For instance, a Fortune 500 multi-national conglomerate manufacturing and selling semiconductor chip, implemented machine learning and automation and was able to harmonize and auto-verify 80% of the data with the master data for improved retailer collaboration. Consequently, the company can minimize the manual efforts in processing data significantly, thus making data more accessible and decision-making more timely and effective.

However, one of the most significant challenges of retail lately has been the data generated across businesses often exists in silos, along with skills shortages and a lack of data-driven decision making.

Due to this fragmentation, data consolidation becomes a major hurdle for firms to overcome. Hence, retail supply chain solutions become even more crucial for managing the supply chain more effectively, reducing return rates, enhancing store management, designing better products, and targeting customers more successfully.

Limitations in traditional supply chain

Traditional retailing has a long chain of mediating channels like wholesalers, distributors, and retailers. As a result, it becomes difficult for firms still following the traditional approach to directly connect with the customers due to the chain of mediators. Also, with the retailers promoting their products in their stores, their branding and marketing get confined to stores only.

Traditional retailing may or may not have an online presence, as most of their sales are made through stores, and they have an element of uncertainty in gaining consistent sales and revenue. The disconnect with customers can impact customer retention, as the traditional approach caters only to the mass market.

Traditional retailers are not involved in direct sales, and therefore, it becomes difficult for them to identify and act upon unfulfilled customer needs. As the traditional retail business models incur more costs due to middlemen and their commissions,  there are more chances of potential losses for the companies if they are targeting a mass market.

Going beyond conventional data processing model

COVID-19 has compelled many retail firms to shut down physical stores due to the escalating uncertainties for the future. These sudden shifts due to the pandemic and the limitations of the traditional model have forced retailers to look for other options to survive in the e-commerce market.

Consequently, they have prioritized the digital-first and omnichannel approach. Therefore, retailers focused on physical stores and direct engagement over omnichannel strategies have struggled to react quickly. As a result, firms that quickly reimagined their omnichannel approach, besides adapting to the shifting consumer behaviors for establishing a unique customer experience, are recovering faster from the hiccups.

Hence, to remain relevant in this current landscape, retailers should build AI in supply chain to process data more efficiently to serve customers better. However, firms must focus on specific goals across five actions which are:

Due to this shift in customer behaviors, e-commerce sales in apparel, department stores, and beauty products have grown by nearly 10% points, on average, since the commencement of COVID-19. Hence, e-commerce penetration in grocery domain that has soared from 2% to 3% before the crisis, rose to 8% – 10% during the peak period of the pandemic. ¹

Importance of supply chain solutions in retail

A retail company has various challenges like prolonged fulfillment times, elevated fulfillment costs, and the incompetence to offer competitive shipping options and prices. Hence, streamlining supply chain and implementing technologies like AI in retail supply chain will nullify the current supply chain challenges.

Hence, applying supply chain solutions such as TradeEdge enables companies to manage back-office operations efficiently by bridging the data gaps, thus boosting productivity and profit margins.

Also, implementing retail supply chain solutions can improve efficiency considerably, especially in the transportation domain, where online vehicle tracking (and, therefore, packages) helps lower indecision and take corrective actions whenever and wherever needed. Thus, real-time supply chain solutions play a crucial role in the Last Mile Delivery (LMD) segment in retail, where geo-coding, real-time traffic, and dynamic route planning facilitate accomplishing better efficiency and service levels.

Benefits of AI and automation in retail supply chain

Automating labor-intensive tasks: AI in retail supply chain facilitates time-consuming tasks such as processing orders, generating essential documents, and paying out invoices that free humans to invest time in more value-added tasks.

Eliminating human errors: Tasks performed manually are prone to errors. Therefore, by removing the intervention of humans, automation lowers the risk of errors like duplicating orders and wrong data entry from inventory.

Increasing visibility in supply chain: Supply chain visibility involves a lot of connectivity, communication, and responsibility from both merchants, suppliers, and service providers. Hence, digital automation automatically records and informs data in near real-time, allowing the involved parties to access important information when required, track inventory, and communicate promptly through the supply chain. Thus, improved supply chain visibility can help firms quickly detect and resolve bottlenecks to avoid further delays and disruptions, thus increasing overall efficiency.

Increasing customer experience: With retail supply chain solutions automating and streamlining supply chain, the customers are bound to reap the benefits. Thus, an automated supply chain gets accurate orders fulfilled and delivered to customers quickly, which helps you provide high customer satisfaction. Thus, most retailers are reliant on effective management strategies that enable them to handle several delivery options and keep their customers satisfied with service.

Conclusion

The retail industry is under pressure as margins are stressed from all sides, from greater costs for overseeing e-commerce supply chains to elevated investments to meet the new competitive ecosphere and the steadily increasing labor costs. Hence, implementing AI in supply chain will reform retail business approaches and the wider value chain, thus forming companies with fewer layers and an improved, trained, and trusted workforce vested by real-time data and analytics.

To make up for the lost time and investments and reach the pre-pandemic growth level, companies need to balance operational efficiency and cost with better supply chain resilience through a supply chain digitization model in their business processes.

According to a Gartner survey, just 21% of respondents said that they currently have a very resilient network, which suggests good responsiveness and visibility to quickly shift sourcing, manufacturing, and distribution activities around. It also indicates that boosting resilience will be a precedence for the majority of firms as they recover from the existing crunches. Resilience can be increased by steps such as alternative factories, dual sourcing, and more generous safety stocks.

However, balancing resiliency and efficiency is a tough ask in most cases as enhanced resilience goes hand in hand with supplementary costs. Hence, it is apt for supply chain leaders to embrace digitization in supply chain to develop superior resilience within their networks.

How is a digital supply chain approach different from a traditional one?

With technology advancing and revenue pressures rising, companies are transitioning from traditional supply chains to digital supply chains. However, the benefits of digital supply chain management continue to develop and expand in most industries.

In traditional supply chains, analysis provides insights to make the correct decision based on a responsive approach. This step includes an assessment of the current stock levels in the organization and past production requirements to identify promptly the needs of the incoming supply of components. Also, external data like distributor stock levels and delivery dates have to be curated physically, affecting the costs, and impacting the data relevance.

On the other hand, in a digital supply chain, purchasers can make timely decisions with the assistance of real-time data that provides accurate insights. However, these decisions are taken by utilizing a supply chain management platform such as TradeEdge, which gives an all-inclusive view of the supply chain that can empower businesses to make more timely and accurate procuring decisions.

However, to generate better visibility, faster payment, and cheaper options, the digital supply chain has made the traditional supply chain even more effective due to lateral information sharing and cross-functional involvement.

A traditional supply chain enables firms to know where the shipment has been according to information from the courier. Currently, the authentic location of a shipment is obtainable, at times, through GPS technology.

What is supply chain digitization, and how does supply chain digitization work?

Supply chain digitization is substituting the identified manual or analog processes throughout the e-commerce supply chain by implementing digital solutions. Hence, digitization in supply chain management includes the application of innovative and groundbreaking digital products and services into various supply chain channels to modernize and simplify processes, increase management, and boost visibility.

The digitization of supply chain is a transformational process with an emphasis on integrating digital technology solutions into various supply chain activities. Essentially, digitization enables companies to optimize supply chains by tackling the key challenges and bringing about a supply chain 4.0, which is much faster and more accurate, cost-effective, and adaptable.

Though the particulars fluctuate from business to business, digitization in supply chain works mainly around three core domains which are:

Why is supply chain digitization important?

Most companies are still scrambling to sustain the flow of products, finances, and information in the supply chain, as disruptions can no longer be deemed as isolated events. Not too long ago, logistics ran on a traditional model (paper) that led to uncalled errors, , and thus the industry is moving towards supply chain digitization in the logistics domain as well. Companies that were not keen on automation are beginning to invest in technology solutions, focusing on resilience and agility to sustain unexpected disruptions.

Post-pandemic, businesses have been confronting volatile out-of-stock situations, abandoned trucks, and a visibility dearth within their supply chains. Also, with the modern-day supply chain posing a multitude of new challenges to cope with rising costs and the difficulties caused by new sales and distribution channels, the companies are finding it tough to oversee the operations competently. Subsequently, it is imperative to enhance the demand and distribution visibility, incorporate new channels, and customize the control process over speed and quality of delivery in the first and last miles of the supply chain.

Following this, productivity can be improved by deploying technologies to facilitate collective execution by combining processes across the shipper and vendor firm to provide end-to-end visibility and procure improved control through transactional execution. Thus, with digitization in supply chain, companies can better align their core resources to continue operations without hiccups to steer through the disruptions.

Bigger companies should endorse the idea of digitization while startups must facilitate new business for smaller firms and the messy processes of supply chain through cloud-based solutions. This two-way approach will only fast-track the digitization in supply management that will streamline the process for a collective execution between the parties involved, thus these initiatives leading to cost reduction.

Some common pitfalls supply chain companies can avoid:

Benefits of supply chain digitization

Quicker demand forecast: In order to provide a quicker and more precise customer demand forecast,, predictive analytics utilize the internal data (demand), external data (comprising market trends, weather, etc.), along with machine status data for the spare-parts demand.

More adaptable: Real-time planning enables companies to react flexibly to the shifting supply and demand. Also, real-time production volume data from machines help businesses to react energetically to the moving requirements or constraints.

More precise: Digital operations provide real-time, end-to-end clarity through the supply chain by applying AI and machine learning to automatically detect risks and exceptions that change the supply chain dynamics. With these resources, the systems can deal with a majority of decisions without the intervention of humans.

More efficient: Strategic planning and automation enhance supply chain efficiency. For instance, robots are handle the warehouse process from receiving phase and unloading to the packing and shipping stage.

Automation prospects: Lowering manual tasks curtails the burden of clerical work, thus freeing the staff from repetitive tasks and enabling them to focus on more value-added tasks.  Automation also lessens human error; thus, the revenue lost can be gained by fixing those errors and speeding up the process of invoicing, leading to quicker payments.

Builds cohesive and connected processes: Digitizing the supply chain generates more opportunities for connecting the contrasting systems, thus allowing communication across the entire company, and creating a single source of authentic information.

Using data for decision-making: According to Gartner, 25% of supply chain decisions will be made across intelligent edge ecosystems through 2025. Decisions need to be made quickly, and agility is vital in the transportation and logistics industry. A digitized supply chain enables gathering and analyzing an immense amount of data with less effort and time than analog systems.

What are the current trends of supply chain digitization?

Digital twins: ‘supply chain digital twin’ implies a virtual simulation model of a real supply chain that enables a company to analyze the detailed performance and efficiency of a supply chain and forecast how it will function in the future. Smart digital twin prototypes offer real-time and actionable insights into both planned and accomplished work and sales orders, supply and demand, value chains, product life cycles, and more.

With digital twins, companies can create a distinct picture of their internal and external business operations. Through this, the involved firms can reimagine what the complete supply chain cycle could look like, and thus the technology can improve communication across processes.

Democratization of technology: Technologies like artificial intelligence and machine learning, and big data offer a full range of abilities to all the participants within a supply chain network without exception. Consequently, tech-democratization unravels the potential of the staff, making them a core component of the digitization effort. Thus, the staff can select the workflows that can be automated, thus allowing them to focus on more value-added tasks.

Introduction of multiparty systems: The pandemic compelled companies to redesign their supply chain communications and partnerships model. Hence the role of supply chain collaboration became significant, leading to an increase in sales.

Multiparty systems enable individuals and companies to take advantage of the shared data infrastructure, efficiently work, and share data in a single unified ecosystem. These systems include distributed ledger, blockchain, database, and tokenization. With multiparty systems, supply chains firms can inculcate better resilience and flexibility, get new approaches to serve their customers and the market.

Conclusion

Organizations have recently realized the importance supply chain digitization in business processes and are therefore turning implementing technologies such as artificial intelligence, machine learning (ML), and big data rampantly in the present digitized global marketplace. A prediction by Gartner suggests that over 75% of commercial supply chain management application vendors will provide embedded advanced analytics (AA), artificial intelligence and data science by 2026.

Hence, it is quite apparent now that companies have realized the significance of digitization in supply chain and have subsequently begun to incorporate such solutions that can add value at multiple levels of the supply chain in the future.

The global e-commerce market sales is expected to reach 8.5 trillion by 2025. The rise in power of e-commerce marketplaces like Amazon and the blend of advanced technologies like chatbots, AR, AI, and Big Data are some of the few examples of ongoing E-commerce trends that serve one objective – building incredible customer experiences. From a business perspective, e-commerce shortens product lifecycles, which significantly impacts supply chain management. Following the global health crisis, the heightened demand for online retail necessitates agile, adaptable, and innovative e-commerce supply chains to quickly and efficiently deliver products to customers in the shortest time possible.

E-commerce supply chain – an overview of challenges and opportunities

The e-commerce supply chain is a network of processes involved in moving products from the manufacturing facility to the buyer’s desired shipping location. Customers prefer delivery of ordered items on time. And to accommodate that, e-retailers need to have a proper infrastructure in place and the required personnel to deliver goods on time. This is where e-commerce ventures struggle and the challenges can be categorized into four segments:

However, with the advent of new technology solutions, e-commerce owners are finding ways to address the above-mentioned challenges. A few examples of such innovation would be manufacturing and distributing items geographically closer to the end user, circumnavigating physical store locations to ship goods directly from fulfillment centers to customers, and omnichannel sales and marketing for a unified customer experience across all channels. These new approaches will, in turn, significantly reduce the E-commerce supply chain but present ample opportunities for encashment.

What matters for a successful e-commerce supply chain management?

Even though brick-and-mortar retail sales increased by 13% in 2022, online purchases continue gaining traction alongside physical stores. That places a lot of pressure on the owners to match up with the rising demands for e-retail shopping. But what does it mean for e-commerce supply chains?

To answer the question, e-commerce suppliers and distributors face tremendous pressure to meet buyer expectations for one-day delivery. And since the online market is spoiled for choices having multiple e-stores selling similar products, lowering the expected delivery date is one of the critical factors to staying ahead of the competition. The concept of a just-in-time delivery model arises from the need to accommodate one-day delivery and prevent unnecessary inventory stockpiling and overhead storage and warehousing costs. Proper inventory management, increased mobility and visibility of storage, seamless picking and packing, and adequate transportation are key factors defining a successful eCommerce supply chain management.

What is e-commerce supply chain management?

ECommerce supply chain management focuses on the seamless procurement of raw materials cost-efficiently, manufacturing items in the required quantity and quality, and distributing them at the right time. And the whole concept comprises functions such as managing supply can demand, tracking inventory, warehousing, order entry, and management, distribution, and delivery to end users.

Benefits of supply chain management in e-commerce

Ensuring stock availability: For an E-commerce enterprise, the end goal is to deliver products to customers within a stipulated time. To meet this requirement, the former must maintain a regular flow of stock available to ship to customers following order placements. Owners can either source from other manufacturers or support an in-house production team to manufacture the required quantities.

Planning strategic shipment of goods: Shipping final goods to customers requires much planning beforehand. Therefore, it is advisable to plan ahead to ensure the smooth processing of customer orders. And the strategic shipment of goods forms an integral part of eCommerce supply chain management.

Maximizing order fulfillment: An e-commerce business should aim to increase the number of orders fulfilled daily. And that is the ultimate objective of eCommerce supply chain management.  Ensuring every customer’s order is fulfilled is possible only when the above-mentioned objectives are duly met.

Meeting delivery targets: The promise of convenient delivery on time differentiates an E-commerce business from its brick-and-mortar store. And the latter has to keep up with the same promise. Hence, delivery targets are decided and are based on the number of orders fulfilled, pin codes serviced, and accuracy of delivery information shared with customers.

Adapting to market trends: An efficient e-commerce business is constantly evolving. And its supply chain management entails owners staying up-to-date with what competitors are offering and what customers demand. This allows for maintaining an agile and flexible E-commerce supply chain that keeps owners a few steps ahead of their competitors.

Ensuring transparency of operations: Supply chain management offers complete visibility of orders and their various stages of fulfillment. From supply and production to warehousing and distribution, owners should be able to track every movement of all processes, and customers should be able to see the movement of orders, from ordering to shipping.

Enhancing CRM: All of the above-mentioned points boil down to one crucial aspect – maintaining healthy buyer relations. And e-commerce supply chain management is directly connected to customer relationship management. SCM oversees the timely delivery of goods and fulfilling buyer requirements, which in turn serves to keep customers happy. In order to enhance CRM, the business should stay attuned to changes in various demands of the products and services. With an integrated eCommerce supply chain, companies can easily keep up with users’ requirements and feedback directly.

Reducing overhead costs: A fully optimized e-commerce supply chain aims to eliminate various intermediary stages of distribution, retailers, and many more. This is being done to reduce unnecessary overhead costs and streamline the whole process.

Adopting omnichannel practices: An omnichannel e-commerce approach can deliver stellar customer engagement. It creates various customer touchpoints, much to the convenience of the end users. A well-structured eCommerce SCM facilitating omnichannel engagement provides higher customer satisfaction.

The five key stages in the e-commerce supply chain

Planning: Here, data is collected from various touchpoints in the supply chain and evaluated to determine the inventory needed to meet market demands.

Sourcing: In the e-commerce supply chain, the suppliers and vendors play an influential role in helping e-retailers aptly meet customer needs. They supply the necessary raw materials, semi or finished goods for completing the following stages.

Manufacturing: The manufacturing stage is also crucial for businesses producing their goods. Here the raw materials are converted into finished items matching the quality expectation of buyers. However, those who outsource inventories from other suppliers can skip the stage and straightaway arrange for the goods delivery as per orders.

Delivering: Here, shipping and logistics are primary players, ensuring the timely delivery of goods in the right conditions to end users.

Handling returns: Also known as reverse logistics, this stage involves processing returned goods from customers and recalling damaged or expired items from warehouses back to suppliers.

Key metrics to track e-commerce supply chain

Inventory turnover: It reflects how efficiently an organization can move its inventories over a given period of time. This metric highlights the inefficiencies of E-commerce supply chains and their buying practices and helps gauge the actual demand for one or all of its products.

Perfect order rate: This metric measures the company’s ability to complete the delivery of orders without facing any issues. The ratio of perfect order completion to total orders received reflects the supply chain’s in-house operational efficiency and agility.

Inventory accuracy: A regular comparison of physical inventories stored in the warehouse to the numbers shown on the database prevents unexpected surges in inventory or logistic costs and backorders.

Shipment time: For the e-commerce supply chain, shipment time is essential. Delayed delivery can impact the brand reputation since the success of an online business is directly connected with timely and safe deliveries.

Reasons for returns: This metric provides valuable customer insights into what they want. This is measured against the products delivered to them to understand the gaps in the process.

Cash-to-cash cycle time: This valuable KPI measures the time difference between when a business pays its suppliers to purchase inventory and when it receives money from its customers in exchange for goods sold. It estimates the cash required to fund day-to-day operations and highlights the overall funding needs of the business.

Ten strategies to improve supply chains for e-commerce businesses

By optimizing your e-commerce supply chain, you are implementing the best strategies to maximize sales and revenue. And to achieve the mentioned objective, you have to ensure that you are selling the right items at the appropriate time and to the right audience.

There are a few helpful tips to improve the proper functioning of your -commerce supply chain:

The future scope of e-commerce supply chains

The evolving demands of customers and the rising volatility of markets will continue to pressure ventures to look for more agile and flexible supply chains powered by technology. The future is hard to predict. But with the direction in which the market is heading, there will be more intricate challenges to overcome, followed by increasing market competition. Agility and flexibility will be the critical criteria for e-commerce businesses to ride the changing tides successfully.

The food and beverage industry (F&B) comprises organizations that process raw food materials, package and distribute them to various centers. Its product line includes fresh, prepared, and packaged food and alcoholic and non-alcoholic beverages. Following the pandemic, the e-commerce sector dealing with food and beverages gained considerable traction. As a result, the industry grew by over 500 billion compared to the previous year. However, it did face a major setback during the COVID pandemic and the recent economic meltdown. In order for them to attract more customers and increase profit margins, F&B companies need to rely on accurate demand forecasting methods to timely predict changing customer purchasing behaviors.

Key market trends for the F&B industry for demand forecasting

The food and beverage industry has transformed dramatically since the global health crisis hit the world. The pandemic triggered a shift in buyers’ consumption patterns towards packaged and organic goods. Given the historical records, affordable comfort foods usually thrive in stress-induced conditions, so also convenient purchases like online buying. Even though other industries have already made inroads, the F&B industry is just emerging as a digital staple. But to predict the change and prepare aforehand raise the importance of efficient demand forecasting methods in place, allowing companies to change their product line in time to meet demand with adequate supply.

Unfortunately, legacy methods of forecasting demand fell short of meeting the sudden upsurge in panic buying during the initial phase of the pandemic lockdown. Nevertheless, the inventory shortage was an eye-opening phase, compelling F&B companies to turn to tech-enabled demand forecasting methods.

Current challenges faced by the F&B industry supply chain

Changing customer purchasing behavior is just a fraction of the major challenges faced by F&B companies today. And much of it originates in their supply chain. The food supply chain is an intricate network of producers, manufacturers, distributors, logistics providers, and other parties. They work under relentless pressure to get products to the market – quickly, safely, and in the best possible conditions. And the whole network is troubled by critical challenges, namely:

Poor food shipping traceability: The ability to track the food product through all supply chain stages is now a customer demand rather than a request. Knowledgeable buyers want to know where the products/ingredients are sourced from. Such information can bridge the brand integrity and loyalty gap.

Communication silos: Since each sector in the food and beverage supply chain work separately, communication silos are an everyday reality. Poor communication can create challenging hurdles such as delays in moving products, unavailability of certain ingredients, food contamination and spoilage due to poor transportation and distribution. And a single missed deadline can create a domino effect, and customers have to bear the brunt.

Order complexity: Food and beverage orders are no longer simple as they used to be. Courtesy of changing consumers’ buying preferences, demand for a broader range of options, driven by various trends and some health concerns, is increasing.

Supply chain costs: Maintaining a massive network of suppliers and distributors adds to the overhead expenses for F&B companies. That inadvertently reflects on the actual price of the end product. The challenge is to find alternate sources at reasonable rates to prevent loss of business.

Changing regulations: Regulations are drawn to protect customers. But they do increase costs and inconvenience for companies.

Competitive market: Last but not least, the F&B market is spoiled for choices, with new products entering the market every day. With so many cheaper alternatives available, surviving becomes a daily challenge for F&B companies. And they need to be prepared to stay ahead of their competitors.

Most of the above-mentioned challenges can be addressed with tech-enabled demand forecasting and efficient supply chain management solutions.

The importance of accurate demand forecasting in the F&B industry

Demand fluctuations dominate the food and beverage (F&B) industry. For instance, an F&B company dealing with perishable goods must project accurate inventory to meet demand since their food items have a limited shelf life. As a result, there are risks of overstocking goods that can’t leave the shelf before they exceed their life span. Furthermore, when the supply of goods does not align with consumer demand, companies suffer from time, money, and resource wastage.

Demand forecasting based on real-time insights captured from internal and external sources can improve projection accuracy significantly.

Accurate forecasting of upcoming demand helps F&B companies to match their inventories accordingly and make informed decisions about pricing, market potential, and business growth strategies. It evaluates various influential factors like upcoming demand, market change, supply shortages, or disruption in the distribution channels to make apt estimations. This prevents stockpiling or inventory wastage situations for the industry.

What is demand forecasting, and how does it help the efficient functioning of supply chains?

Demand forecasting involves using predictive analytics to evaluate historical data and estimate customers’ future demand for a product or service. As stated earlier, it helps businesses make informed supply decisions by estimating the total sales and revenue for a given period.

Demand forecasting plays a pivotal role in effective supply chain management as it ensures timely replenishment of stocks, enhances capacity management, and fosters optimal sales and revenue. Demand forecasting also improves decision-making and accelerates prospective plans for growth and expansion, enabling the production of the required quantity of inventories within the stipulated time to prevent resource or stock wastage.

It is critical for advanced supply chain planning and inventory management so that manufacturers can determine the number of ingredients required to meet demand. Furthermore, data and insights captured during forecasting immunize companies from future uncertainties, delays, and fluctuations in demand. Besides, F&B companies dealing with multiple items can adequately allocate ingredients and resources for the production of items depending upon their individual demand. Hence, information on demand for each product is necessary as it helps prevent stockout situations, missed customer orders, poor service levels, and loss of business.

Improving demand forecasting with new-age technology

It is quite hard to predict the future demand for products. Just like the global pandemic, which resulted in unprecedented challenges for all, external factors influencing customer buying behavior are hard to estimate even before they occur. Global economic meltdown, rising inflation, and ongoing war are unpredictable elements that can disrupt every industry worldwide. In addition, companies increasingly rely on global supply chains to ensure a steady flow of required items at lower prices. And one disruption at a supplier end can be a significant roadblock for the company. Therefore, demand forecasting should not only predict customer demand for goods but also provide adequate information about what is happening at the supplier-distributor end or what can happen in the coming days.

Many industries are gradually shifting towards more tech-enabled efficient demand forecasting solutions to get an accurate picture of the future. For instance, Machine Learning (ML) is one technology capable of adapting to changing market conditions. When ML capability is integrated into demand forecasting software, the accuracy level of predictions increases manifold. The Internet of Things (IoT) is another powerful tool that works with demand forecasting to notice any shift in buying patterns or the market/industry. Demand forecasting powered by intelligent technology allows:

Conclusion

AI-enabled demand forecasting is a pivotal success factor, especially for the food and beverage industry. As stated, it prevents unnecessary wastage of resources and ensures a steady supply of inventories to meet demand, regardless of market disruptions or a sudden surge in demand for other items. Moreover, since the whole industry is embarking on a radical transformation, innovative demand forecasting solutions are needed more than ever to survive the market competition and stay ahead of the curve.

The pandemic impacted global supply chains, underlining the associated risks and resiliency gaps for most companies.  However, as the effects of the pandemic continue to affect the global supply chain, the question is how should the companies seek to build resilience within their supply chains going forward? This is where the role of strategic supply chain planning comes in.

Current state of supply chains

Although the pandemic continues to disrupt the supply chain landscape with new and unanticipated obstacles to productivity and profitability, some organizations are combating the volatility by making sales through inventory and focusing on their working capital.

Global suppliers and manufacturers have largely been put to the test, thus confronting immense stock shortages, shipping delays, and prolonged backorders on their most profitable inventory items. Research by Gartner suggests that 50% of supply chain companies will invest in applications that support AI and advanced analytics capabilities through 2024.

Here are some of the current global supply chain challenges.

What do you mean by supply chain planning and why is it important?

Supply chain planning is the practice of anticipating the future demand for goods and arranging for materials and other components for timely production, marketing, distribution, and sales. It balances supply and demand to scale sales and revenue opportunities for businesses cost-effectively. The core objective of this planning is to optimize the overall performance of the supply chain to achieve desired levels of cost, service, and sustainability.

As customer demands are shifting, a well-established supply chain execution strategy is essential to design a company’s short and long-term business plan to build agile, resilient, and adaptable supply chains. An efficient supply chain planning strategy can help companies to reduce costs, enhance customer service, and strengthen business targets, besides assisting stakeholders to understand historical data and inventory status.

Supply chain and procurement stakeholders must deal with many unpleasant surprises, such as rising supply chain costs, raw material shortages, transportation strikes, and natural disasters. However, the effect of these shocks can be curtailed through competent supply chain planning.

Steps for strategic planning for supply chain

Benefits of supply chain planning process

Helps realize the historical data: To ensure that their goals are achieved, companies must understand where they have been in the past. This infers that an organization should determine amount of raw materials from the suppliers and the cost of the previous year. The supply chain firm needs to assess the reliability of the suppliers in terms of promised price and on-time delivery and find out the discrepancies in the last year.

Helps in knowing inventory status: To meet customer demand at a viable profit, every firm needs to be aware of their completed inventory or their raw materials in the supply chain. For identifying this, platforms like TradeEdge can be utilized that enable businesses to find out the exact location of their current inventory stock by communicating with vendors in real-time.

Adapt to shifting customer demands: Companies need to be able to identify fluctuations in prices, delivery, and customer demand promptly to generate profits. With the technologies evolving rapidly, organizations with a supply chain strategy can make active adjustments per their cloud-based systems’ daily report.

Adapt to changes in internal product design and management: Innovative products must be manufactured at an appropriate cost for a company to be beneficial. By applying an efficient supply chain strategy, the designs can be optimized for manufacturing and long-term supply levels.

Other key benefits include:

Conclusion

A strategic approach to supply chain planning can help organizations stay ahead of market competition. It is a tactical business strategy that optimizes the manufacturing and delivery of goods on time, effectively meeting customer requirements. In addition, data-driven supply chain planning lowers production costs, mitigates possible risks, increases sales, and effectively manages relationships with suppliers and vendors.