It’s no secret that today’s global supply chain is more complex than ever. It has become a digital ecosystem of suppliers, logistics companies, customers and other value chain partners that stretch across the globe. The supply chain relies on the synchronized movement of thousands of interrelated parts to meet growing customer demand for better, more innovative products and on-time, low cost delivery. The connected supply chain uses disruptive digital technologies to deliver end-to-end supply chain visibility and improved business operations. Let’s take a look.
According to the World Economic Forum, there are more than four trillion consumer products made, shipped and sold globally every year. Yet end-to-end traceability of each item through its lifecycle journey – from raw material to manufacturing to the consumer to recycling, resale or disposal – is still hugely challenging for the vast majority of goods.
However, 100% visibility across the supply chain is essential, not just to know where goods are in transit but in order to improve many elements of business operations including agility, inventory management, product development and pricing, and customer service. Senior decision makers need to understand what products customers are ordering, where they are ordering them, how the products are treated in transit and when they want them.
All that information lies within the supply chain but the modern supply chain is complex and global. It’s an ecosystem of companies, their suppliers, partners and customers. Each has its own way of doing things and their own IT infrastructure and applications supporting their individual business processes. Even within a single organization, this has resulted in disparate siloes of information.
But, we’re not talking about single organizations. In the supply chain, we’re talking about digital business systems that need to connect literally hundreds or thousands of trading partners. In one example of the need for a connected supply chain automotive manufacturer, Volkswagen, was found to have 5000 suppliers and each of those suppliers had an average of 250 suppliers working for them. This meant that the auto company actually had 1.25 million suppliers, most of whom it didn’t know it was working with!
This lack of transparency is not just a risk in terms of the level of operational efficiency and revenue. It hampers environmental, sustainability and ethical initiatives that are a growing part of day-to-day supply chain management. Recently, MIT revealed the scale of the problem. It found that only a few companies were investing in supply chain visibility yet 81% of a poll it cited said they didn’t have full visibility of their supply chain, and 54% admitted having none at all.
The major supply chain disruption caused by COVID-19 demonstrated that companies with fragmented and unconnected supply chains fared worse. Those with a connected supply chain could build resilience into their supply chain operations. Bain & Co. suggests there are impressive bottom line benefits from this level of supply chain resilience. Product development cycles can be cut by up to 60% and output capacity expanded by a quarter.
Margi Van Gogh, Head of Supply Chain and Transport for the World Economic Forum said recently: “Visibility, traceability, and interoperability are essential to connected, agile and more resilient supply systems now and well beyond the immediate COVID-19 crisis.”
Connected supply chain definition
So what exactly do we mean by the connected supply chain? It’s a means of connecting everyone involved in the supply chain, drawing together disparate systems and partner networks to ensure that information can flow end-to-end across the supply chain whenever and wherever it’s needed. A truly connected end-to-end supply chain has the aim to reach 100% visibility in real time, which creates an integrated view across the company, including its suppliers, dealers, manufacturers, logistics partners, and customers.
It’s very important to understand that the connected supply chain is not just about supply chain visibility and integration, it is about one single defined system. All the parts of this system talk to each other, sharing data and insights, and providing business benefits to everyone involved. Building responsiveness and resilience into the supply chains allows the organization to better predict and react to changing market demand through the improved utilization of the big data it creates.
It should be clear that the connected supply chain is a program of digital transformation. It relies heavily on the new and disruptive digital technologies that are appearing today. Using new technologies like cloud, the Internet of Things (IoT), big data, B2B integration, AI and predictive analytics enable complete connectivity and transparency to drive smarter, more flexible and more agile ways of working across the entire trading partner community involved in the supply chain.
The goal of the connected supply chain
Once upon a time, the supply chain was seen by many as a cost center – a necessary evil required to conduct business. Those days are long gone. The supply chain is now a major strategic driver and area of competitive differentiation. But that only succeeds if all parts of this complex machine work in harmony with each other.
There are really three goals a company looks to achieve through the connected supply chain:
Supply chain visibility
By connecting all trading partners together and enabling the secure and effective flow of information, every part of the supply chain can be tracked and monitored. With full visibility and transparency, it’s easier to increase efficiency, react quickly to supply chain shocks and, most importantly, improve customer experience.
Demand-driven supply chain
The connected supply chain doesn’t just provide a treasure trove of information for real time operations, it delivers the data needed to fully understand what customers want. Armed with this information, companies can move from a supply to demand-driven business. The organizations can see where spikes in demand are occurring and also use the patterns and trends in demand to accurately forecast the amount of inventory they need at every specific part of the supply chain.
Supply chain optimization
This supply chain data enables a process of continuous improvement and optimization. The manufacturers can improve efficiency, increase business agility and reduce costs. In addition, it has a much clearer view of its suppliers and their suppliers. The connected supply chain allows for much greater supplier performance management at all levels including ethical and sustainability performance metrics.
Technologies that enable the connected supply chain
There are a number of digital technologies that are pivotal to the connected supply chain. These include:
Perhaps the foundational element of the modern, connected supply chain is the Internet of Things (IoT) technologies. The increasing power and reducing cost of IoT sensors and other devices allows for real time visibility across supply chain operations. The connected supply chain aggregates IoT sensor information from pallets, containers, forklift trucks and multi-modal transport into a central IoT platform. Monitoring the position and condition of a shipment as they move through the supply chain provides a consistent view of where the shipment’s location and condition. It’s IoT solutions that enable new levels of track and trace capabilities are the first step on delivering on the goals of the connected supply chain.
With IoT supply chain managers have access to all the data they need to optimize the performance of their supply networks. However, there are IoT challenges. As well as a lack of IoT standards, there is the question of how you deal with the huge amount of data it creates.
B2B integration platform
One essential component for any connected supply chain is a central B2B integration platform. As the supply chain is a connection of external partners potentially spread throughout the world, it’s achieved through a series of B2B relationships. Whether connecting with various cloud infrastructures, working with processes and applications that span international boundaries, or interacting with customers and suppliers, it is critically important to have robust B2B functionality driving these transactions.
This B2B integration platform must not only be able to support robust systematic B2B workflows but also the cooperative workflows and data-driven workflows. Some leading B2B platforms – such as OpenText Business Network – include both an IoT platform and an Identity and Access Management platform to ensure that the widest variety of data can be moved and shared securely around the supply chain network.
Artificial Intelligence (AI) also plays a huge role in turning supply chain data into insight to drive improved decision making. It allows all the information to be brought together in one place to help with planning and forecasting. Applying machine learning not only helps facilitate advanced analytics, it enables business processes within the connected supply chain to become increasingly automated. AI is pivotal in removing complexities while providing the basis for predictive analytics that can help drive supply chain performance, identify and predict customer demand, and reduce costs along the supply chain.
Benefits of IoT-driven supply chain connectivity solutions
There are a large number of tangible benefits from developing a connected supply chain.
Improve end-to-end visibility
Use IoT sourced data for end-to-end visibility of shipments of highly connected supply chain assets across multi-modal 3PL providers.
Automate supply chain processes
Connected supply chain solutions provide real time monitoring of inventory levels and consumption patterns to automate replenishment processes with suppliers.
Create repeatable best practices
Identify, analyze and mitigate supply chain disruptions to understand supply chain trends and create repeatable best practices that eliminate bottlenecks.
Control and govern supply chain performance
Manage supply chain performance via a role-based interface. This enables workflows and downstream applications with real time notifications to deliver extended insights of shipments and assets.
Achieve faster ROI
Introduce digital, IoT-driven track and trace in a phased approach for quick investments benefits, while transitioning to more complex track and trace capabilities as the connected supply chain matures.
How to connect your supply chain
While the move towards supply chain visibility has been slow, there are an increasing number of organizations beginning pilot projects. There are two points to consider when setting out on the journey to a connected supply chain. The first is to ensure that you leverage digital technologies that can connect your organization with your customers and partners. The second is to understand that you will not be able to reach full connectivity in one step. Instead, it’s much better to take a phased approach.
OpenText has created a solution set that lets an organization move effectively to the next stage of maturity of supply chain connectivity. These solutions are:
With the entry-level Shipment Track, companies can use IoT-driven track and trace to connect shipment and assets throughout the supply chain. All shipment and product movements can be monitored in real time. Data from sensors and other IoT devices can be augmented with other supply chain data, such as warehouse and transactional information, to provide more granular visibility.
Building upon Shipment Track, Shipment Monitor delivers condition-based monitoring to supply chain operations. Every aspect affecting goods in transit can be monitored in real time, including temperature, humidity, location and product condition, so that immediate corrective action can be taken if an exception of aberrant conditions is reported. This provides much greater control of the shipment of perishable and high value goods with high levels of transparency and supply chain efficiency, while reducing the waste and damage of products in the supply chain.
The most complex solution, Shipment Insights, combines IoT data management with AI and machine learning to bring end-to-end visibility and continuous improvement to all parts of the supply chain. Moving beyond simple track and trace, this holistic solution uses the captured data to apply predictive and prescriptive analytics to areas, such as supply chain planning, route optimization and predictive maintenance.
As the world emerges from the COVID-19 pandemic, the need for resilient and adaptable supply chains has never been so stark. Building a connected supply chain isn’t just a ‘nice to have’, it’s now essential to give organizations the flexibility and agility they need to withstand the next disruption.
At the World Economic Forum states: “Building an adaptive supply chain system requires all the stakeholders across the supply system – including, manufacturers, shipping providers, port operators, trucking providers, distributors, retailers, and recyclers to name a few – to recognize we are all part of the same ecosystem and to work with technology providers and regulators to make that system of supply a truly connected one.”
To find out more about the OpenText range of intelligent and connected supply chain solutions, visit our website.