In an age where technological advancements are reshaping industries, supply chain management has emerged as a pivotal focus for businesses aiming to stay competitive and resilient. The integration of cutting-edge technologies and digitization has become imperative to navigating the complexities of modern commerce successfully.
To delve deeper into the subject of digitizing supply chains, HCLTech Trends and Insights engaged in a discussion with Ashish Kumar Nandy, Vice President of Supply Chain and Fulfillment Technology at Radial, the B2C eCommerce fulfillment solution provider. With over two decades of experience in leading digital transformation initiatives within supply chain and fulfillment domain, Nandy has overseen a vast array of technology implementations spanning more than 30 distribution centers globally.
Digital transformation in supply chain management requires enhancing operational efficiency, building resiliency and saving cost. It involves providing real-time visibility of inventory and shipments, automating tasks to reduce errors, utilizing predictive analysis to optimize inventory levels and improving communication between stakeholders.
With the global digital supply chain market size projected to reach $13.5 billion by 2027, key factors like the increased adoption of artificial intelligence, blockchain and IoT are major drivers enhancing supply chain visibility, transparency and automation.
Nandy explains: “In today's world, where consumers expect fast and error-free service, simplification is key. The move from legacy systems to state-of-the-art technologies is essential. However, it's not always easy, particularly in the case of warehouse management systems that may have a long implementation period due to user comfort and learning curves. But the benefits of embracing the latest technologies are undeniable.”
The key challenge is unifying disparate systems. Companies are striving to move away from working in silos and toward a single platform. Technologies like blockchain play a crucial role here, offering enhanced tracking, traceability and unification. However, defining a strategy for unification remains a formidable task.
Unifying various aspects of supply chain management, from procurement to customer care, requires a focus on accuracy, reliability and transparency. Creating a tech-agnostic platform that promotes data collaboration and traceability is crucial. While the transition to a unified platform may involve working in a hybrid mode for some time, the end goal is to establish a single source of truth for the supply chain.
Enhancing resilience and visibility in supply chain operations
In a world characterized by volatility, uncertainty and disruption, building resilient supply chain operations is paramount. Nandy shares his insights on how organizations can achieve this: "Resilience in supply chains is about being able to respond to operational disruptions swiftly and effectively. This requires flexible contingency planning and forecasting, from material sourcing to logistics and final product delivery."
The most resilient supply chains go beyond merely resisting and recovering from disruptions; they anticipate and avoid them. Nandy emphasized the importance of diversification in various aspects of the supply chain, from vendor selection to transportation carriers, warehouse locations and even payment processing.
"Diversification is key to building resilience. Relying on a single vendor, carrier or location can be risky. Organizations must diversify supplier base, carrier options and even warehouse locations to ensure continuity in the face of disruptions,” he adds.
This diversification approach extends to payment processing and fraud prevention. Ensuring that transactions can proceed smoothly, even in the event of a service outage or cyber-attack, is crucial. Robust fraud prevention systems are a must to safeguard against cyber threats. "Information security is vital as cyber-attacks are a constant threat. Having stringent security measures and the ability to quickly isolate and recover from a compromised system is essential," continues Nandy.
Automation is another key element of building resilience. Logistics operations are increasingly turning to flexible automation. According to Gartner, 75% of large enterprises are expected to adopt intralogistics smart robots in their warehouse operations by 2026.
Investing in automation technologies can help organizations maintain productivity even during labor shortages or unexpected disruptions, as witnessed during the COVID-19 pandemic. Nandy elaborates: "Automation can mitigate workforce challenges. Leveraging technologies like automated storage and retrieval systems can reduce reliance on human labor, offering stability during disruptions."
Highlighting the transformation of a renowned apparel brand, Nandy recounts: “One of the most significant achievements we've witnessed with digitization is the transformation of a well-established American apparel brand, with a history dating back to the 1800s. Traditionally, they relied on a single distribution center serving hundreds of retail stores. However, when the pandemic hit and store closures became necessary, they needed a rapid shift in their approach. With the aid of technology, they successfully turned their retail stores into satellite fulfillment centers using advanced order management systems. This enabled efficient fulfillment of e-commerce orders, not only helping them survive the pandemic but also optimizing their store network and reducing long term cost.”
Today, this practice has become the norm in the retail industry. However, at that point, the brand's ability to pivot and implement these changes rapidly set them apart.
Harnessing emerging technologies for supply chain optimization
Data analysis and advanced technologies such as AI and machine learning play a crucial role in identifying potential supply chain disruptions and proactively managing them. Blockchain is also emerging as a technology that can enhance supply chain resilience by providing enhanced traceability and security. "Blockchain can unify the supply chain, offer transparency and traceability end-to-end. It allows supply chain managers to oversee contracts, partnerships and supplier relationships seamlessly,” he adds.
In industries like agriculture and farming, IoT adoption has accelerated. For example, in the transportation of goods like fresh produce, maintaining the right temperatures throughout the supply chain is crucial. Temperature-controlled containers equipped with IoT sensors ensure that the appropriate temperature levels are maintained throughout the journey from farm to store. These sensors continuously transmit data, providing real-time information about the cargo's condition. If there's any deviation in temperature or equipment malfunctions, immediate corrective actions can be taken. This eliminates the need to wait for a shipment to reach its destination only to discover that a significant portion of the goods are spoiled, which can lead to substantial financial losses.
Technologies like blockchain, cloud databases and modern databases have made data integration more accessible. Organizations are effectively leveraging big data in the supply chain. While data has always been available, the ability to mine and utilize it has significantly improved. Blockchain, in particular, is making strides in this area, ensuring data integrity and security. AI and machine learning are constantly learning from the data, which is the foundation of transformation.
“What's remarkable is that these technologies not only provide guidance but can also make decisions on our behalf. For example, they can advise us on vendor performance based on data analysis. If a vendor consistently fails to deliver accurate orders, AI and machine learning algorithms can recommend reconsidering the relationship with that vendor or implementing stricter quality checks. They can also suggest increasing the frequency of quality audits for specific products. Automation, especially in the form of robotic process automation (RPA), can take these recommendations and enact them, fundamentally changing the way we operate and make decisions,” says Nandy.
Addressing cybersecurity and other challenges
Despite the immense benefits, new-age technologies also introduce challenges and risks. One major concern is the quality of data. Many organizations still rely on legacy systems, making it challenging to integrate and extract meaningful data. This can lead to inaccurate or incomplete information, affecting decision-making. Another significant concern is cybersecurity.
“As we increasingly depend on cloud computing and interconnected systems, the risk of cyber-attacks grows. If our systems were to go down due to a cyber-attack, it could disrupt operations significantly. Protecting these technologies and the data they rely on is paramount. The more we expose ourselves to the cloud and external networks, the more vulnerable we become to potential threats,” explains Nandy.
Organizations must be prepared to navigate system outages. Once organizations become reliant on automated systems, reverting to manual processes during an outage can be challenging. Maintaining resilient systems that can withstand cyber threats and quickly recover from failures is a complex but necessary task.
Data security is crucial, especially in an environment where sensitive customer information is involved. Diligence in safeguarding this data and ensuring it remains secure is critical. Compliance with data protection regulations is an ever-present concern.
Critical KPIs for supply chain success
Nandy highlights several critical key performance indicators (KPIs) that hold significance in the realm of supply chain and fulfillment:
- Inventory accuracy: Ensuring that the inventory levels recorded in the system match the actual physical inventory is crucial. This prevents issues like overselling or stockouts, which can harm customer satisfaction and profitability.
- Order accuracy: Achieving a high level of order accuracy ensures that customers receive the correct items in their orders, reducing returns and improving customer satisfaction.
- On-time delivery: Meeting delivery commitments and shipping orders on time is essential for customer satisfaction and can impact reputation.
- Shipping accuracy: Ensuring that the right items are picked and packed in the right quantities is crucial to minimize errors in the fulfillment process.
- Fulfillment rate: Measuring the percentage of orders that are successfully fulfilled on the first attempt, avoiding split shipments and additional costs.
- Wave allocation accuracy: Assessing how well the system allocates orders to waves or batches for fulfillment can optimize workforce efficiency and shipping costs.
- Return rate: Monitoring the rate of returns and understanding the reasons behind them can help identify areas for improvement in the supply chain.
These KPIs serve as essential tools for organizations to evaluate the effectiveness and efficiency of supply chain operations while identifying areas for improvement.
The path forward
In a world marked by rapid changes and increasing complexity, digitizing supply chains and enhancing their resilience and visibility are no longer optional but essential for businesses to thrive. The insights provided by Nandy shed light on the strategies and technologies that can empower organizations to build resilient supply chain operations that can withstand disruptions and navigate the challenges of the modern business landscape effectively. As the digitization of supply chains continues to evolve, staying informed and proactive is crucial for success in this dynamic environment.