How to Facilitate Business Process Control through SCM

Janifha Evangeline | Saturday, 03 April 2021, 02:43 IST

Every product that reaches an end-user constitutes the cumulative effort of multiple enterprises and organizations, which are collectively referred to as the supply chain. According to recent reports, the global supply chain management market is anticipated to reach USD 37.41 billion by 2027. Factors bolstering the market growth of SCM include the growing awareness of cloud SCM and reducing ownership costs, among organizations. Other factors driving the growth of this sector include the rising need for an efficient method to build and manage supply chain processes and activities by organizations and the need for mass production and connected supply chains to cater to the growing population.

When it comes to enabling business process control, there are several challenges that come in the way. Let us try to assess how SCM can address them.

Unfortunate & Unforeseen Delays

Procurement of materials and products may be easy; however, the delivery of goods may not always be on time, especially when items are sourced from different countries, delays like these are very common owing to time differences and a variety of shipping time frames. Therefore, one of the solutions to this is to always have buffer stocks and this can be achieved through an efficient warehouse management system, as through this you are able to find out when exactly the company needs to have certain materials delivered as well as create a time cushion in terms of delivery to ensure everything runs smoothly.

The recent blockage of the Suez Canal by container ship – ‘Evergreen’ highlights that the strangest things can happen in the supply chain.  

The foretaste of the resumed passage through the Suez Canal has the maritime cargo industry bracing for the next phase of the crisis. Data from project44 – a supply chain visibility organization shows that consumer goods will be delayed since the canal incident has led to worsening congestion at ports.

While project44 has published cargo data and route information that highlights where exactly the post-Suez competition for docking capacity will be the most intense, ports such as Jeddah, Rotterdam, and Singapore are most likely to be overwhelmed. Vessel data released by project44 details the retail value of the cargo stuck in transit, currently at over USD 83 billion.

However, with reroutes further complicating scheduling, boats currently sailing and making their way around Africa will join the competition for limited discharging capacity at ports where supply chain breakdowns will take place in the weeks ahead.

“Just because your cargo is moving again doesn’t mean you can breathe easy”, says Jett McCandless, CEO of project44.

“Understanding and monitoring port congestion over the next few weeks will inform us about how large the shockwaves from this incident are going to be. As this saga unfolds, it will take on increasingly global proportions,” he adds.

Albeit this is not the first time the Suez Canal closed it down to traffic, the massive traffic jam holds up nearly USD 10 billion in global trade each day that passes through the canal and this creates a huge bottleneck with over 300 other vessels waiting to get through or bypass the canal by adding over 3000 miles and two weeks to their trip to go around.

JLL’s Global Head of Supply Chain & Logistics Solutions, Rich Thompson, told SCMR that the recent blockage of the Suez Canal by a large container ship highlights the fact that the strangest things can happen in the supply chain and often do.

“When it comes to global trade, ocean shipping accounts for 80 percent of the movement of goods and there are only two ‘shortcuts’ – the Suez Canal completed in 1869 and the Panama Canal completed in 1914,” he adds.

Meeting the customers’ needs through customized solutions

While supply chain management is centralized on the needs and requirements of the customers, it is about providing the right quantity and the right quality of the product for the right amount of money and all these should be done in perfect timing and setting as well. Though it looks simple, it is not as simple as it seems. This is because customers have diverse and numerous preferences and the sellers should always adjust to the customers’ requirements. And what makes a huge difference is that the ability of companies to offer unique solutions to their customers. Therefore, organizations that excel in this area are the ones that make an effort to learn and invest in new technologies.

Improving cost control by executing plans efficiently through constant monitoring

Due to economical constraints, the raw materials, energy, and labor costs have increased rapidly, however, for operations to continue production and offer the customers good quality items at affordable prices, certain kinds of adjustments should be made to keep the operations running. Therefore, one of the best solutions to this would be improving cost control by executing your plans efficiently through constant monitoring. And this can be done through efforts in providing warehouse efficiency.

Tracking shipments at every step of the supply chain is highly essential and plays a major role in the risk management part of the supply chain activities. One such innovation and implementation of tracking shipments by using technology is mentioned below.

First-of-its-kind supply chain platform that resulted in USD 88 million in savings

770000 people died from HIV-related causes in the year 2018, with the largest percentage of victims in Africa, as per the report from WHO. Although anti-retroviral drugs are available for HIV patients to stay healthy and live a long life, only 62 percent of HIV-affected patients receive these drugs.

In the year 2017, one of the best-known computer companies in the world along with an International development Contractor came together to organize and administer one of USAID’s largest projects. The project was worth nearly USD 10 billion and its mission was to deliver health supplies for HIV/AIDS, malaria, and reproductive health to more than 60 countries, worldwide.

In concert with a consortium of partners, both the companies co-created a first-of-its-kind platform that facilitates tracking shipments at every step of the supply chain, which allowed the International development Contractor to manage orders up to 24 months out.

This platform has resulted in persuasive data visibility throughout the supply chain and since it is based on cloud technology, these capabilities are available worldwide and can be accessed from anywhere anytime.

Till today, this project has delivered enough anti-retroviral treatment to offer 3.9 million years of treatment for HIV/AIDS and enough anti-malarial drugs to treat around 122.6 million infections. Furthermore, this platform has resulted in an on-time delivery rate of 90%.

Going forward, there are two major trends that are going to cause significant impact in the supply chain design and performance.

Demand-Driven Approach

A large number of organizations have moved away from focusing efforts on plant-level production planning and are actually in the process of adopting more of a demand-driven focus intending and trying to influence and manage demand more efficiently as sources and capacities for manufacturing have increased. What is highly imperative to adopting a demand-driven model is in actual fact rationalizing what your organization is best at selling, developing/manufacturing, and delivering and aligning the sales force with that exact mindset. What can really help any organization in creating a more customer-focused mindset, without sacrificing operational efficiency is the “demand-driven approach”. Eventually, a demand-focused approach towards planning can not only improve demand planning and management efforts but also help overall costs and customer service efforts to a greater extent.

Globalization

While the business landscape is becoming more global, improvements in communications and globalization are radically impacting and changing the way businesses are managed and transacted, today, even on the most local levels. Also, no other area of a business is more affected by the trend to a global business environment than the supply chain.   

As new technologies bring in more visibility into the supply chain, the segment is becoming more transparent, making way for plugging the loopholes in a more efficient way. This is in turn making supply chains more robust and flexible. If the revolutionary interventions continue at this pace, we will see a complete overhaul of supply chains sooner than later.    

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