CS Ellis: Four ways to digitise the supply chain
Digitisation can make your organisation's supply chain far more efficient, cost-effective, and, above all, customer driven. While all the while ensuring that your business remains at the very forefront of the evolutions in the industry.
If you think that terms such as IoT, AI and big data are just buzzwords, you'd be wrong to distance them from your supply chain and logistic operations. Once these associated technologies come together, they're capable of creating a digital supply that's more efficient, cheaper and more productive than any supply chain management techniques you've undertaken previously.
Of course, that’s not to say that digitisation has not posed new challenges for many organisations, which have suddenly found themselves in a position where they need to adapt quickly in the face of global trade shifts and changing customer expectations. COVID-19 and Brexit are just two such examples.
However, significant changes will always create enormous challenges, particularly when an area as vital as the supply chain is concerned. Turning good ideas into real value, without risking the chain's integrity, needs to be thought about very carefully.
To start turning these great ideas into tangible value for the business, you should consider these four options to begin turning your operation digital.
#1: Incorporating Track and Trace Technology
The demand for real-time supply chain updates, particularly in the face of the COVID pandemic, is at an all-time high at the moment. It's not enough for an organisation to know when orders left their premises in the hope that shipments will arrive at their destination in one piece.
#2: RFID, Bluetooth and 3D Printing
(RFID) and Bluetooth tech are now considered the minimum requirements for a business that seeks a more efficient supply chain – these help track inventory movement throughout a warehouse or factory and are beneficial during the picking and packing process.
3D printers can generate the readable sensor tags that are tracked by Bluetooth or RFID technology. By attaching these to inventory you can monitor the location, temperature, and humidity level of a product – this is obviously especially key when it comes to dealing with perishable items.
When combining these technologies, organisations gain greater visibility over the entire supply chain range, including transportation networks and cargo handling.
These days automated robotic solutions working alongside your workforce is no longer consigned to the annuls of a good sci-fi novel.
In many scenarios, implementing automation solutions can reduce and improve the division of labour. With less reliance on human intervention in roles that can be completely automated, it means that you can use human experience to improve other areas of your organisation.
#4: Embracing Industry 4.0 Evolutions
A modern supply chain can be broken down into siloed stages which incorporate marketing, development, manufacturing and distribution until it finally reaches the end-customer.
Digitalisation brings down the walls around these seemingly separate entities and creates a completely integrated ecosystem that gives all the players involved a completely transparent picture of what is happening. Therefore, every touchpoint from manufacturing and logistics to suppliers and the consumer will have some notion of the goings-on at every point along the way.
As per the Forbes article, 9% of businesses with the most sophisticated digitisation levels are moving ahead of the pack in terms of reaping the most significant rewards.
So, the question is, can your organisation risk falling further behind?
IHS Markit/CIPS: UK Manufacturing PMI near-record high
UK manufacturing trends
For the UK manufacturing sector, growth of output and new orders were both reported by IHS Markit and CIPS as among the best seen over the past seven years, which in turn has led to a strong increase in employment. Despite this, the sector continues to face supply chain delays and input shortages, which resulted in increased purchasing costs and record selling price inflation.
UK Manufacturing IHS Markit/CIPS Purchasing Managers’ Index® (PMI®)
Seasonally adjusted, IHS Markit/CIPS Purchasing Managers’ Index® (PMI®) rose to 60.9 in April, which was an increase compared to March (58.9) and above the estimated 60.7 for April.
Increasing for the eleventh consecutive month, the latest readings are the highest since July 1994 (61.0). The output growth for April has been attributed to the loosening of lockdown restrictions, improving demands and a rise in backlogged work.
“The manufacturing sector was flooded with optimism in April as the PMI rose to its highest level since July 1994, bolstered by strong levels of new orders and the end of lockdown restrictions opened the gates to business. It was primarily the home market that fuelled this upsurge in activity though more work from the US, Europe and China demonstrated there were also improvements in the global economy. This boom largely benefited corporates as output growth at small-scale producers continued to lag behind,” said Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply.
In addition to expanding production, total new orders rose for its third consecutive month, which was attributed to a revival of domestic market conditions, stronger client confidence, parts of the economy reopening and improving global market conditions.
While new exports rose in April, the rate was reported as weaker in comparison to new orders. “Companies reported improved new work intakes from several trading partners, including mainland Europe, the US, China and South-East Asia. Large-sized manufacturers saw a substantial expansion in new export order intakes, compared to only a marginal rise at small-sized firms,” said IHS Markit/CIPS.
UK Manufacturing’s outlook
Remaining positive at the start of the second quarter, 66% of companies forecast that output will be higher in a year's time, which is attributed to expectations for less disruption related to COVID-19 and Brexit, economic recovery, improved client confidence and new product launches.
“Further loosening of COVID-19 restrictions at home and abroad led to another marked growth spurt at UK factories. The headline PMI rose to a near 27-year high, as output and new orders expanded at increased rates. The outlook for the sector is also increasingly positive, with two-thirds of manufacturers expecting output to be higher in one year’s time. Export growth remains relatively subdued, however, as small manufacturers struggle to export,” said Rob Dobson, Director at IHS Markit.
Adding to comments from IHS Markit and CIPS, , Managing Director of Freight and Logistics at Accenture Global said: “While today’s figures are positive overall, the worsening supply situation is still a concern, with rates of both input costs and selling price inflation running far above anything previously seen. Shipping delays and material shortages are driving huge backlogs of uncompleted work and the surge in manufacturing orders is leading to many firms struggling to boost operating capacity to keep up with demand. With business expectations becoming even more optimistic as the economy rebounds, the big question will be whether firms will be able to cope with the surging inflows of new orders.
“As ongoing supply chain issues are still at large, companies with wide international footprints should look to reassess their logistics strategies by running supply chain stress tests and simulations in order to respond quickly to upswings and variability in demand. A flexible and resilient supply chain will be a key way for businesses to remain both competitive and stable as we emerge from the pandemic”