Designing Resilience Within Supply Chains Of The Future

Modern products incorporate critical components or sophisticated materials that require specialized technological skills to make. Often, it is difficult for a single firm to possess the breadth of capabilities necessary to produce every part of the supply chain by itself. For instance, automakers aren’t equipped to create the touchscreen displays in the entertainment and navigation systems or the countless microprocessors that control the engine, steering, and functions such as power windows and lighting.

Manufacturers in most industries have approached suppliers and subcontractors who narrowly focus on one area of production, and at times, those specialists have to rely on many others. To maximize effectiveness, it is critical to evaluate both internal operations and the extended supply chain that includes suppliers and customers.

The post-COVID 19 global SCM market size is expected to grow from USD 23.2 billion in 2020 to USD 41.7 billion by 2026, at a Compound Annual Growth Rate (CAGR) of 10.3% during the forecast period. The lockdowns imposed as a result of the COVID-19 outbreak shut down economies impacting every aspect of the supply chain. This has also caused various industries to move their normal manufacturing processes to manufacture essential medical supplies, PPE kits, etc.

Industry 4.0 Developing Resilience Within SCM Market

Industry 4.0 is leading digitization across the industry right from manufacturing of a product to delivering the product and everything in between. It encouraged enterprises to adopt the new-age technologies like IoT, Artificial Intelligence, Machine Learning and Big Data for the process visibility and predictability. Also, the cloud technologies enabled businesses to connect across the world and helped them to monitor the different stages of the chain with smart integration between the machines.

As per the International Research Journal of Engineering and Technology components for developing a Industry 4.0 Strategy include Mobile devices, Internet of Things (IoT) platforms, Location detection technologies, advanced human-machine interfaces, authentication and fraud detection, 3D printing, smart sensors, big analytics and advanced processes, multilevel customer interaction and customer profiling, augmented reality/ wearables, Edge and on-demand availability of computer system resources, data visualization and triggered "live" training, cyber physical system, big data, cognitive computing and robotics.

In the aftermath of the pandemic, organisations have had to swiftly adapt digital interventions to carry on with supply chain management. When asked about the impact of pandemic on supply chains, Manish Kumar, Founder of KredX, said “The onset of the pandemic has brought about a survival need for companies to go digital. In the case of manufacturing and heavy industries where digital adoption had been far lesser to begin with, the pandemic and subsequent lockdowns impacted these industries negatively due to the restrictions brought about by these lockdowns. Companies that went digital before Covid faced a lesser impact vs others as was the case of ecommerce companies when compared with older companies that didn't go digital”.

Over the past two years, KredX has been disbursing loans to several brands, selling on e-commerce platforms such as Flipkart, Amazon and Myntra, through its revenue-based financing (RBF) product, with a focus on consumer brands and software-as-a-service (SaaS) businesses through its network of lenders.

Automation, within all aspects of SCM, has become more essential than ever. Manish stated that companies which leverage IOT technologies to remotely monitor their production confronted lesser interruptions during the lockdowns. KredX has been able to solve working capital challenges for several logistics players in the market as they need to take care of fuel and toll costs despite credit periods of 90+ days.

Anshuman Agarwal, Cofounder of Increff opined that Industry 4.0 has led to the development of Industrial Internet of Things (IIoT) applications that build a clear focus on the enrichment of operational efficiency and uses insights to constantly innovate and optimize. He said, “The future of the supply chain is the complete end-to-end digitization, making processes more tech-driven, agile and efficient. It is time for advanced digital maturity and higher business performance complying with the new norms of social distancing and hygiene. These changes are neither cheap, nor fast, but require immediate attention”.

Integration of technology is also reducing the time taken to complete a task. For one of the leading e-commerce giants in the Middle East, Increff increased operational efficiency and reduced manual efforts through automation. The brand was able to reduce order creation to packing hour SLA from 23 hours to 6.8 hours within a month of implementation.

Mitigating aftershocks within Supply Chains

As per a recent report by GEP, a global leader in digital supply chain transformation, any gaps in supply chain risk management can lead to supply chain disruptions, lost sales, and unnecessary costs. Going digital enables companies to track the entire supply chain in real time, such as finding out the exact location of goods (on order, in transit, or in a warehouse). Advanced solutions easily track inventory by combining updates from supply chain partners with IoT data. This improves order accuracy and ETAs (minimizing out-of-stock situations), enhances lot and batch control, optimizes inventory, and lowers associated costs.

Actions taken now to mitigate impacts on supply chains from coronavirus can also build resilience against future shocks. Supply chain managers across the world are now analysing how they must safeguard their operational viability, after confronting the strain from a historic supply-chain shock. Organizations should build models that size the impact of various shock scenarios and decide how much “insurance” to buy through the mitigation of specific gaps, such as by establishing dual supply sources or relocating production.

An employee mobility provider, WhistleDrive forayed into the urban mobility market backed by a 5,000-truck fleet and a portfolio of 20 medium and large clients in 2020. Prior to the pandemic, the company was an urban mobility service, which provided a technology enabled fleet for corporates. With revenue dipping below break even margins, they had to quickly initiate a new line of service helping businesses digitise their supply chain operations. By March 2021, revenue of WhistleDrive crossed their pre-Covid numbers with month-on-month growth clocking all-time high.

CEO Rakesh Munnanooru mentions, “We could see many first-timers using technology to manage their operations. Especially in logistics, the back-bone of the Supply Chain process, we could see the technology adoption taking us more than 3 years ahead of time. From planning the routes to generating the trip reports, technology helped us with automation enabling us to provide 100% digitized and contactless trips”. WhistleDrive has been able to impact an extensive range of sectors, which include, FMCG, Grocery, Ecommerce, Retail and Manufacturing.

Evolution of SCMs in Future

Technology stored and deployed in the cloud makes it easier for all parties attached to the supply chain and logistics method to be able to see information. Real time traffic data that could affect shipping and receiving of components of parts for product manufacturing or end user receipt of products.

While the internet of things (IoT) is providing us deeper insights into individual processes, AI looks at the aggregate, delivering a holistic 360 view of the business. It is imperative to look at supply chains in its entirety, and not as a standalone but as an end to end ecosystem in itself.

The demand for robotics goods-to-person (G2P) services is expected to expand rapidly. Automation is enhancing productivity and improving storage density within warehouses, helping brands in better utilization of space. With the immense potential that technology could bring into the value chain, there will be a lot of innovations happening in the intra-city logistics. With the recent government reforms and the interest from the enterprises, use of digital intervention for last-mile deliveries is going to be very high.