Supply chains around the world is evolving. External pressures, technology trends and internal evolution are encouraging companies to look for different ways so that their future supply chain could be structured, both in terms of capacity and capabilities.
Emerging technologies like drones, autonomous intelligence and robotic automation are transforming the whole process of warehousing and transportation. This is also improving the supply chain visibility. The Internet of Things, Big Data and data transparency is improving the ability to gain visibility on the real-time status of their supply chain network, thus giving us the ability to not only rapidly respond to problems but more importantly, anticipate and prevent them more effectively. Available data will be used to draw insights on both short-term and long-term improvements to the supply chain.
Another development which is taking place in the field of Supply Chain is on-demand warehousing and on-demand logistics which will allow organizations to be more flexible.
There is an ongoing shift away from traditional retail to direct-to-consumer shipping. Considering that 40% of the brands are now selling directly to the consumer, and that those DTC sales are projected to reach $130 billion by 2025. This requires a supply chain with different capabilities than those in place today.
These trends are changing the way in which organizations are looking at supply chain. They are constantly keeping track select metrics like warehouse utilization levels, actual customer service level, cost to serve/profitability of product categories, and use of stop-gap measures to determine if there is an ongoing impact on revenue growth and operating margin.
It is important to ensure that Operations tracks and has visibility on these metrics across their organization’s supply chain, as these metrics will provide an indication that negative business impacts may be imminent. Operations should not only track and generate reports on the metrics, but it should also have the channels to communicate these metrics and their resulting impact to the business to the organization’s C-suite.
Sales and Operations Planning (S&OP) is a crucial initiative that many leading organizations are implementing to ensure even wider visibility on customer impact. The next evolutionary step in S&OP is to leverage real-time visibility to align better on expected and incoming demand, which better equips the organization to shape and serve that demand.
These metrics must be monitored often to plan necessary changes to the supply chain, as the lead time to these changes could range from a few weeks to several years based on the level of network upgrades needed.