Imagine a perfect world, where all the systems and departments work in-sync. A customer places an order and it gets delivered with accuracy and speed, meeting her expectations and delighting her; making her pick you in future, rather than the competitors. Imagine, that happening with all the orders placed in your business, be it online or offline. Why do many businesses still consider this a utopian fantasy?
So many variables and touchpoints have now come into the picture that fulfilling each order requires a copious amount of integration among departments, transparency across processes, optimum efficiency at all levels, and sensitivity towards customers’ demands. Delivering a product within a predefined timeframe is no longer valued; the customer demands delivery scheduling at a particular time of the day and wants it to be completely trackable at any point. The customer wants flexibility to change the preferences at any moment and the seller has to oblige. If anything goes off-track, it not only causes loss of that one sale and marred customer expectations, but it also dominoes into negative reviews, tarnished brand image, and probable loss of future sales as well.
Retailers today have all the technology, know-how, best-practices, and talent in their hands, yet they struggle at maintaining excellence in order fulfillment. Let us take a look into what stops us from creating that perfect order every time.
Disconnected heterogeneous systems
We are living in an era of ever-rising customer demands. If they select you to spend their dollars, they expect you to go the extra mile in all possible ways to provide an exclusive experience. In order to meet those demands while remaining competitive, it has become essential for businesses to adopt a variety of digital processes and applications to manage the various parts of the supply chain effectively. However, due to the complexity and the global nature of the supply chain, there is no particular solution to cater to the entire fulfilment process.
Fulfilling a single order requires involvement of geographically dispersed manufacturers, contract manufacturers, third-party suppliers, transportation carriers, third-party logistics, inventory management, procurement, demand management, returns management, customer relationship management, and the list goes on. Ultimately, these heterogeneous and incoherent processes that are solving only a slice of the problem, are not able to work together and deliver that unique experience that customers are longing for. Businesses suffer huge losses when the supply chain systems malfunction. In 2017, BMW had to stop production of its 3-Series cars and delay the production of 1,2, and 4-Series in three countries as the supplier could not deliver the steering gears needed for production on time. An integrated system with complete visibility of all its parts and supply chain collaboration can prevent such events from happening or keep the manufacturer a step ahead in planning for such incidents.
Bottlenecks within each system
Today’s supply chains have to maintain a delicate balance across all its parts, as any problem in one can potentially knock-down the whole system to its knees. Let’s consider a scenario where all the systems are working in-sync and are integrated. What if a certain system runs into some technical issue and stops performing as expected? For instance, the inventory management system starts malfunctioning and stops updating the records for a few products. The whole sales cycle would be impacted as replenishment orders would not be placed on time, there would be delays in new order fulfillment, the managers would not know the status of those items, and so on. The entire path would face challenges if there is a bottleneck, even in one system. We have often seen that the cause of the problem is extremely hard to pinpoint and as a result, businesses have to deal with delays and losses.
Difficulty in locating the root of the problem
The biggest problem that most supply chains face is the incongruencies among units. If there are various types of technological, organizational, informational, analytical, functional and process silos within an organization, then problems are bound to occur. Each business or process head bothers only about his deliverables and KPIs and might not have a holistic view of the whole system. This makes it extremely difficult to find the cause whenever some incident happens. It is important to understand that all the parts of the supply chain are inter-connected and one cannot function effectively if there’s a problem with the other. Hence, such silos have to be broken down to achieve true digital transformation.
Lack of proactive ways to avoid delays
In any system, problems are bound to occur time and again, but the amount of impact they have depends on how proactively such issues are handled. For instance, the starting point could be a foreseeable delay in delivery. So, if we already know that a shipment might not arrive in time, then we have to proactively plan how it should be managed, what else can be done to save time, what other activities to indulge in now so that the delay can be managed later, what other processes would be impacted due to this delay and how they can be managed in a better way so as to reduce the overall effect on the bottom-line. Proactively identifying and managing such incidents require complete visibility into the process and all its implications. If certain issues are recurring, then the business should develop the ability to predict them in advance and take anticipatory steps.
Errors creeping in due to manual intervention
Even after having all the supply chain management systems and a central control tower in place, when an incident occurs, there is always a team of subject matter experts that has to dive in and take charge. Often, the time between identifying a discrepancy and resolving the issue lasts for days to months. So, although the issue was detected automatically, the human element is required to evaluate its ramifications, and build operational, strategic and executional plans to minimize the impact. This manual intervention not only increases the dependency on SMEs, but also introduces the risk of errors due to lack of experience, dearth of complete information, or differences in opinions.
There is a need to automate as many processes as possible in order to reduce human intervention and prevent issues from happening. For instance, automated orders can be created when the inventory levels reduce to a certain amount. Retailers are increasingly finding out more and more functions of the supply chain that can be automated in order to free up resources. Harvard Business Review published in an article that, “Within 5-10 years, the supply chain function may be obsolete, replaced by a smoothly running, self-regulating utility that optimally manages end-to-end work flows and requires very little human intervention.”
The road ahead for supply chain management
For a long time, businesses had minimal visibility on the trading partners for decision-support, but today, with the use of modern technologies, AI, machine learning, system integration, and analytics, the supply chain control towers have transformed into a center for 360-degree visibility, proactive decision-making, insight generation, prescriptive analytics, and action. The effects of those actions are autonomously monitored, managed and controlled in order to optimize the entire system from top to bottom. Such a system depends on visibility, transparency and the highest level of collaboration among all stakeholders, technologies, operations and functions. SCM technologies have shifted from offering “decision-support” to “decision-making with action”.
According to a report by Gartner, “By 2023, at least 50% of large global companies will be using AI, advanced analytics and IoT in supply chain operations.” Technology is slowly replacing humans in supply chain management and getting better at it with each passing moment. By implementing the right technologies, setting up seamless processes, banishing information silos, and using predictive analytics to stay a step ahead of any challenge, retailers and manufacturers can create a self-sustaining ecosystem of creating that “perfect order” every single time.
This article was authored by Sunny Nandwani, Founder and Managing Partner at Acuver, a leading supply chain management IT solutions company.