With the eminent Presidential change in the United States, U.S. retailers and manufacturers are gearing up for the changes that will be brought upon by the proposed taxes on imports. The surge in import taxes will deem an increase in consumer prices, anywhere up to 15%. The compound effect of increasing prices means organizations will need to discover new ways to reduce supply chain costs and the cost of goods sold. In the U.S., this will likely result in a surge in domestic manufacturing and significant changes to existing supply chain networks.
If we take into consideration the present day sea and airfreight industries, we are witnessing historically low freight prices. The 5th largest global shipping company, Hanjin, went bankrupt. Maersk split, and then proceeded to acquire Hamburg Sud. Regulations are constantly changing; SOLAS VGM, Samsung Note 7 and lithium batteries are just a few examples. The world’s supply chains are now under constant change and strain.
Today’s customers are more informed, and demand faster responses and 100% accurate information. More so, organizations, particularly retailers and manufacturers, need to grow shareholder value and profitability. Global e-Commerce growth is expected to be a healthy 12%+ in 2017. This is on the back of a strong holiday season in the U.S. that saw a 17% growth in e-Commerce sales.
By integrating supply chain management, planning/scheduling, transport/warehousing, order/fulfillment, and customer systems with those of our supply chain partners, we are able to meet the ever-changing demands of our customers. Enabling a faster pace of digitalization and innovation in the supply chain starts by using systems and process integration as the impetus to drive growth.
1. Changing Product Lifecycles
Customers are driving and determining trends, design, and delivery channels. We’ve been working with a global retailer that receives design information from social and in-store consumer feedback. This real-time integrated feedback is relayed to designers, sourcing professionals and down the line to suppliers and factories. Business to Consumer (B2C) markets are changing dramatically with the growth in e-commerce and cross-border purchases. To drive growth, one needs to capture data from the Omni-channel, CRM, product development, sales, distribution and pricing systems in real-time.
2. Real-Time Integrated Processes
Similarly, in the Business to Business (B2B) world, improving new product success rates and getting a product to market is critical to the survival of all companies. Consider chip or drug manufacturers, where the investment in plant or discovery/research could be years away from the initial production date. Integrating processes in real-time through the discovery, research and clinical trials phases can shorten the product lifecycle by months.
In the case of manufacturers, where the product lifecycle is much shorter, integrating ERP, CRM, product price and catalogs, service, and Product Lifecycle Management (PLM) systems enable them to create new product lines and retool quickly to meet changing demand and to create new business lines or channels. High-tech/electronic manufacturers need to quickly adapt and change in order to stay ahead of their competitors. To do this, manufacturers must capture data directly from customer service and PLM systems. They put this into context so that they can innovate faster than their competitors.
3. Real-Time Visibility of Supply & Demand
Real-time visibility of supply and demand allows us to implement lean manufacturing, optimize supply chains and meet the delivery requirements of our customers. Disruptions can now be easily managed and we can provide proactive real-time feedback on events. Real-time visibility allows you to see fluctuations in costs, supply and capacity enabling you to quickly make informed decisions to stay ahead of the competition.
If we go back to the Tsunami in Japan some years ago, the global impact and downstream effect on the automotive industry was significant. General Motors was forced to close plants in the US due to the inability to supply car components out of Japan. Managing demand and sales forecasting can be a challenge if information is out of date. If catastrophic events do occur, you must be able to react quickly.
4. Real-time visibility across selling, order fulfillment, pricing, rates and product
Real-time visibility across selling, order fulfillment, pricing, rates and product improves customer success and retention. Again integrated systems play a significant role in collating data from e-commerce sites (online stores), order fulfillment, sales and inventory systems. These systems could be run by your organization, 3PL’s, distributors or other sales/logistics channels. Such visibility gives one a competitive advantage and allows them to quickly respond to customer demands. As we consider the growth in e-commerce globally, by 2018 more than 50 percent of commerce sites will deliver a customer experience by integrating technologies from more than 15 vendors. In the future a complete digital commerce user experience will involve up to 50 discrete technologies.
5. Industry 4.0 and the Internet of Things (IoT)
Industry 4.0 and the Internet of Things (IoT) are paving the way for an evolution in integration and integrations requirements. This, along with 5G (5th generation mobile networks) will allow us to integrate, manage and transact all types of data from sensors, smart labels, digital twins, machines, robots, digitalized content in real-time, in any format. Such data allows deliveries to be made to factories, warehouses, consumer front doors or trunks of our car exactly when they are asked. No more missed deliveries or second drops. Machine to Machine (M2M) integration and robots along with integrated supply chain networks creates smart factories. This real-time contextual integration across Industry 4.0, IoT, traditional IT platforms and manufacturing execution systems means greater production outputs and quality. But even more importantly, reducing the total cost per ton or thousand produced and therefore the overall cost of goods sold.
6. Supply Chain Analytics
If we now integrate in real-time, it means we have accurate, clean data that can be analyzed in real-time. Supply chain analytics is the force behind supply chain optimization. Leveraging proactive business activity monitor (BAM) across specific business processes allows you to analyze performance in real-time, predict disruptions to supply or demand and adjust processes on the fly. We are seeing supply chain analytics being used specifically in logistics where numerous metrics monitor performance of entire lane/s or your 3PL, order fulfilment, warehousing and/or carrier partners. Similarly, logistics companies are using this to provide supply chain control towers to monitor overall operational performance, and more importantly, provide performance metrics to their customers. Where we are seeing this become more relevant is in cross-border shipments, and with products that are perishable or expensive. A company shipping perishables wants to know the temperature of their products whether they are in a reefer, in a warehouse or in a box. In other words, it doesn’t matter where they are.
7. Personalized Pricing Strategy
Arm yourself with 2000 price books and go out there and sell to all different types of customers. Now through integration with finance, accounting, customer relationship, e-commerce, pricing and product systems we can optimize margins and profitability by customer group or segmentation and do just that. This personalized pricing strategy and profitability by customer allows us to determine what product and services to target towards a certain customer. Furthermore, it determines what are the most effective sales channel and method of delivery. This whole price strategy is made possible through integration of systems. The methodical sales process allows for more precise sales forecasting and demand planning; in turn creating a more efficient manufacturing and supply chain environment.
8. Emphasize Data Security
Ever considered the investment that Microsoft Azure and AWS make in IT system security to support the 1000’s of customers using their cloud. Yes, it is in the billions I am sure. Therefore, as we consider the SaaS (modern) and legacy (traditional) applications that we use today, it is our legacy applications that are more vulnerable. Typically installed on premise or in localized data centers they are more exposed. The importance of real-time data integration limits exposure to one platform, while pushing data securely to many applications. It is not one application does all. The days of a single global instance of SAP are diminishing. Retailers and Manufacturers have a myriad of business applications for all aspects of their business. Data security is critical. Real-time integration and moving data to more secure sources or environments heightens the level of security. Elements of blockchain will allow for secure data sharing across wide supply chain networks ultimately providing greater data security.
Contextual integration is the core of greater visibility and speed within your supply chain network. I recently heard a large global toy manufacturer state that their integration projects are 6 figure projects that typically run longer than 6 months. Such projects do not aid speed to market, quick product development, supply chain visibility or the ability to optimize or analyze. The most troubling fact is at the end of the project the data is not 100% clean or received in real-time. The key to moving forward is to leverage new state of the art, modern integration platforms that complement your current integration investment, traditional IT systems, work with your existing cloud application investments but provide speed, agility, scale and can be quickly deployed. By having this new level of real-time supply chain integration, you will experience the speed and agility required to gain the competitive edge. Even more importantly, your customers will appreciate personalized experiences. Ones that you can be proud of.