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Supply chain innovation: benefits and examples

Supply chain innovation relates to the implementation of automated solutions — from robotics to warehouse management software — in stages such as manufacturing, storage and internal product transport.

Below, we highlight several cases and examples of innovative supply chain technologies. They illustrate just how digitalisation and automation are boosting companies’ logistics processes — a trend that will only continue to grow. McKinsey reflects this point in its study Automation has reached its tipping point for omnichannel facilities. It states that the warehouse automation market is set to reach $51 billion by 2030, accounting for a compound annual growth rate of 23%.

Benefits of supply chain innovation

Implementing innovative technologies such as artificial intelligence (AI), machine learning and the Internet of Things (IoT) brings these advantages:

  • Improved productivity: new technologies ramp up supply chain throughput by ensuring a continuous flow of movements between different areas and operations. In logistics centres, machine learning enables the use of autonomous mobile robots to transport goods between the different areas of the building without the need for preset routes.
  • Error elimination: automated solutions reduce the probability of mistakes in process management and goods handling. They can also predict errors and inefficiencies in work and goods flows and prevent future bottlenecks in any logistics stage.
  • Integrated management: the programs operating in the supply chain are connected. Businesses can exchange information in real time and guarantee full traceability of goods. Moreover, they can monitor the entire life cycle of their products: design, production, storage and distribution to end customers.
  • Flexibility in response to demand peaks and disruptions: digital solutions and technological systems increase the capacity of warehouses and production centres to react to possible disruptions. Likewise, the supply chain is capable of automatically scaling operations up or down to ensure efficiency in demand peaks and reduce resources in times of lower outbound order volumes.

Supply chain innovation examples and success stories

Examples of supply chain innovation show how new technologies meet customer needs while optimising operations to maximise effectiveness.

Simulations

Supply chain simulation is a virtual representation of all the logistics processes a product goes through, from its production to its delivery to the end customer. Simulation provides companies with relevant information to identify the strengths and weaknesses of all processes so that they can control and improve them instantly.

Through three-dimensional renderings of product movements and storage systems, businesses can see how their logistics facilities will operate prior to commissioning. Furthermore, once the storage system is implemented, simulation helps detect inefficiencies and risk scenarios — as well as improvement opportunities — to facilitate strategic decision-making.

A success story that reflects the benefits of warehouse simulation is that of IKEA ComponentsThe Mecalux Group employed simulation software to create a virtual representation of all the elements inside IKEA Components’ automated facility in Malacky, Slovakia. The simulation confirmed that the warehouse design met the company’s logistics requirements. The design included, for example, the installation of stacker cranes for pallets capable of performing the required goods-in/goods-out cycles. Upon completion of the simulation, the Easy M software generated a report specifying all possible movement flows, workload distribution and downtime durations in the IKEA Components facility. The analysis was supplemented by an animated 3D representation of the entire designed warehouse, which displays the unit loads in motion.

Simulation is an example of supply chain innovation used in IKEA Components’ center in Slovakia
Simulation is an example of supply chain innovation used in IKEA Components’ centre in Slovakia

Cloud computing

With cloud computing technology, businesses no longer have to concern themselves with deploying or maintaining the equipment that runs the software. And this goes for any program, whether it’s a warehouse management system (WMS)manufacturing execution system (MES), or enterprise resource planning (ERP) software.

The fast implementation and cost savings offered by cloud computing are prompting more and more companies to opt for this framework when digitalising their management practices. With this system, they can control their inventory and connect to the software’s functionalities from any device with an internet connection.

Organisations that manage their logistics processes with cloud computing technology rely on logistics programs (e.g., a WMS) in the software-as-a-service (SaaS) model. Machine tool distributor Yamazen, for instance, uses the SaaS WMS from Mecalux in its Illinois facility to provide top-notch customer service. By implementing Easy WMS in the cloud, Yamazen has optimised all its logistics processes, particularly order processing. With SaaS-based management, the business always has access to the latest system updates. “Eliminating server maintenance tasks is a huge advantage for our IT team,” says James Hansen, Executive Vice President of Yamazen.

Yamazen has deployed cloud computing technology in its Illinois warehouse
Yamazen has deployed cloud computing technology in its Illinois warehouse

AI

AI applications in logistics are new technological innovations that are driving supply chains forward. Advanced AI algorithms empower machines, robots and software to make intelligent decisions without the need for human interaction.

One of the benefits AI can bring to logistics is the ability to forecast consumer trends. AI leverages big data to make deductions about users’ consumption intent, thereby predicting demand behaviour. This functionality allows for a predictive logistics strategy capable of avoiding stockouts and overstock in addition to enhancing customer satisfaction.

Another success story of AI and logistics can be seen in the area of internal goods transport. AMRs (autonomous mobile robots) are devices capable of performing tasks and moving through a facility independently thanks to AI and machine learning technologies. We can find an example of this technological innovation in the warehouse of Normagrup, a leading player in Spain’s emergency lighting market. The Mecalux Group equipped the company’s centre with a mini-load system connected to its production lines by autonomous intelligent vehicles. Every time operators assemble a kit, Easy WMS notifies the software that runs the AMRs. This program then designates a vehicle to pick up the kit and bring it to the corresponding production line swiftly and autonomously.

The AMRs in Normagrup’s facility employ AI to transport goods
The AMRs in Normagrup’s facility employ AI to transport goods

Supply chain innovation: today and tomorrow

According to Accenture’s study Supply chain workforce of the future, intelligent machines present supply chains with a unique opportunity: “Technologies like AI, digital twins, the IoT and the cloud allow companies to predict and monitor the impact of almost every action. The result? A new level of visibility and speed that fundamentally changes the way companies engineer, plan, source, manufacture, supply, service and reclaim/recycle goods,” say the authors.

Supply chain innovation is now a reality. And it will continue to be a driving force in the coming years with new technologies that — just like simulation, cloud computing and AI — will disrupt the market to further refine all supply chain processes.

For years, the Mecalux Group has spearheaded technological innovation projects, applying their results to revolutionise warehouse management. The Group’s end goal is to maximise its clients’ efficiency and profitability. Want to know how you can optimise your supply chain with Easy WMS and our other logistics solutions? Don’t hesitate to contact us. One of our expert consultants will advise you on the best digital solution for your facility.

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5 Innovative Supply Chain Management Trends In 2023

The supply chain is far from a static model. It is constantly evolving and innovating to meet the challenges of new market trends. At Kenco, our supply chain leaders aim to keep an ear to the ground at all times, predicting these emerging trends and proactively finding solutions for our customers. Below are five supply chain trends in 2022 and how we’re tackling them with innovation.

1.     Purpose-driven logistics

We’ve seen increasing market recognition and support for brands that strive for a higher purpose, whether it’s social, health, or environmental sustainability related. Consumers want to see values like these in the brands they choose to buy from, and that trickles down into those brands’ supply chains. As a result, many companies are prioritizing delivering value to all stakeholders in the supply chain: customers, employees, suppliers, and communities.

At Kenco, there are countless examples of how we’re creating a more purpose-driven supply chain, but here are some key investments:  

We’ve had customers indicate that even if the ROI of these technologies were merely breakeven, the positive impact on warehouse employees would be reason enough to invest. It’s important for shippers to work towards purpose-driven logistics to positively impact people and drive transparency and lean operations.

2.     Proactive, data-driven logistics

The advent of big data, artificial intelligence (AI,) and machine learning means, in the long term, supply chains will become leaner, greener, and more predictive. According to the MHI 2021 Industry Report, 31% of respondents say predictive analytics are already in use, and 48% say it will be in use in the next five years. These technologies provide decision support with prescriptive action to respond before an issue arises, addressing issues such as labor shortages, inventory balancing, demand forecasting, dynamic slotting, and transportation failures and prevention.

DaVinci AI, Kenco’s proprietary tool that marries open-source AI/ML tools with a myriad of data sources, helps drive data-driven logistics for our customers. The technology provides dynamic, autonomous volume and labor predictions, pick path optimization, and a digital control tower to increase visibility across trading partners, transport modes, product flows, and inventory. Our customers have seen hundreds of thousands of dollars in savings in single facilities as a result of leveraging DaVinci AI.

3.     Labor and space constraints

With an ongoing labor shortage and real estate capacity at historic lows, the need for automation and dense storage solutions are greater than ever. To reduce the impact of these trends, Kenco has invested in solutions like AutoStore’s Robotics Shuttle system, an automated storage and retrieval system that packs individual SKUs at a high density and uses robots to retrieve them.

The system saves space not only with high-density storage, but its automation eliminates the need for the majority of handling equipment, freeing up even more space and reducing costs. In our distribution center where AutoStore’s system is deployed, we expect to see $9 million in savings over a five-year period. Along with other innovative solutions to combat labor and space shortages, Kenco is also committed to maximizing our current workforce and investing in employee engagement to retain labor.

4.     Agile, resilient global supply chains

As disruptions and shifts in consumer customization demands accelerate, companies need dynamic supply chains that can pivot quickly with fewer capital obligations. To meet this trend head-on, third-party logistics companies need to provide agility, flexibility, and resiliency while serving efficiently.

At Kenco, we have long prided ourselves on innovation as a service (InaaS). In 2015, we strategically invested in our Innovation Lab, a working test lab to pilot emerging technologies for customers and allow them to be agile through us while we test the market and deliver viable solutions. With customer-specific pipelines, we provide the full breadth of innovation lifecycle management, from testing to implementation to continuous improvement.

In the search for resiliency, customers are often overwhelmed by the market offerings around emerging technologies and automation and fear making the wrong investment. We remove the fear with our proven pilot programs and ROI-driven proof of concepts.

5.     The shift to direct-to-consumer in consumer packaged goods and grocery spaces

The covid-19 pandemic has pushed more retail and grocery shoppers online, creating sustained demand for flexible and food-grade e-fulfillment solutions. As a result, big CPG brands want to skip the middleman and have direct contact with customers, much like Amazon or Walmart. In the battle for consumer attention, retailers and grocers need expertise and flexibility to help them succeed. Kenco has implemented several e-fulfillment innovations, including a physical layout in pods, a comprehensive technology stack that integrates with Shopify, PayPal, etc., and autonomous robots.

Additionally, we utilize Logistiview’s augmented reality glasses, which, when worn by an associate, clearly highlight the right and wrong locations and products to pick, ensuring both picking, packaging and shipping accuracy for our shippers. Kenco is also working with a camera vision AI/ML startup that can audit the packaging process while the associate is performing the tasks. The technology can place the correct quantity of items in the optimum configuration, monitor the correct usage and placement of dunnage and protective materials, ensure the proper closure and sealing of the package, and validate label placement. This provides customers with high shipping accuracy and assurance of undamaged product arrival in the hands of their consumers.

The Bottom Line

To stay ahead of the competition in this quickly changing market, businesses need a supply chain partner with insight into what’s next and the expertise and boldness to challenge the status quo. Kenco is charting a new path for 3PL services, creating cutting-edge solutions that help businesses transform their circular supply chain strategies and drive success. To learn more, visit our Supply Chain Innovation page.

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India in the Global Organic Food Supply Chain

Agriculture

India is a predominantly agrarian economy with agricultural sector as its backbone. This sector provides livelihood for about 70% of the country’s population. India is expected to achieve the ambitious target of doubling the incomes of its farmers by 2022. 

Before the 1940s, agricultural production in India was mostly organic in nature as they neither had access to chemicals like fertilizers and pesticides nor had the know-how to use them effectively to increase crop production. It was the developed countries who had started the use of chemical fertilizers, pesticides and insecticides to increase farm yields. While agricultural production in developed European countries grew exponentially after the use of chemical fertilizers and pesticides, they also witnessed a decline in the quality of the agricultural produce and soil. However, the developing nations were quick to take a leaf out of the developed nations’ books to ensure food security for their own people and thus began actively using chemicals to boost agricultural production. 

The 1960s in India saw the beginning of a ‘Green Revolution’ in the country in which farming in India switched significantly towards more chemical-intensive techniques. While this shift was extremely helpful in increasing the yield of grains and ensured food security for the larger populace, it also meant deteriorated quality of crops due to the addition of numerous harmful chemicals in them.

The recent times have, however, seen a shift by consumers who are now moving towards organically produced food. Organic products are broadly defined as those food products which are produced without the use of synthetic external inputs such as chemicals, fertilizers, pesticides, synthetic hormones or genetically modified organisms. The reasons for this paradigm shift are said to be twofold:

  1. Increased awareness among consumers, farmers, policymakers and environmentalists about the ill-effects of chemicals in agricultural produce.
  2. Growth in the price premium on the exports of organic produce in developed countries.

As a result, we are witnessing that across 170 countries, the total land under organic farming has gone up from 11 million hectares in 1999 to 50.9 million hectares in 2015. In the last few years, the demand for organic food in India has seen a massive growth especially in the urban, developing economies. Globally, India ranks 9th in the world in terms of its agricultural land under organic farming in 2015. According to a recent study, India’s organic food market was estimated to be worth around US$0.36 billion in 2014. While this sector is highly unorganized currently, it has a huge potential to grow at a rate of more than 25% annually.

Furthermore, the government of India has been a key supporter of curating the right schemes in order to promote organic farming in the country. Since 2015, the government has been promoting organic farming under two dedicated schemes namely, Mission Organic Value Chain Development for North Eastern Region (MOVCDNER) and Paramparagat Krishi Vikas Yojana (PKVY).

Organic farming in India has also been supported under other schemes such as Rashtriya Krishi Vikas Yojana (RKVY) and Mission for Integrated Development of Horticulture (MIDH) and Network Project on Organic Farming. Third-party certification of organic farming is promoted by Agriculture Processed Food and Export Development Authority (APEDA), Ministry of Commerce, Government of India. The country’s apex institution for food safety and security, the FSSAI has come out with the ‘Jaivik Bharat’ framework to promote organic farming. This globally recognised third-party certification process is controlled by APEDA. 

While the demand for organic products in the market is going up, the supply side factors are also catching up fast. Taking advantage of the e-commerce boom in India, many companies are using this route for boosting their sales and presence in the market. There are more than 25 e-commerce platforms which sell organic food online in India in addition to many general grocery stores like BigBasket and Peppertap which now stock organic produce as well.

India has also seen the entry and growth of specialist organic brands such as ISayOrganic, JoyByNature, Ekgaon and Organic Shop. There are also a number of initiatives like Navdanya which help local Indian farmers with better business opportunities in the organic farming sector. Moreover, many entrepreneurs have also turned their farms into weekend retreats and use their home-grown organic produce as an input into making and selling their own products.
The organic food industry in India falls under the high scale, high margin opportunity bracket. Therefore, this sector has seen increased investments such as:

  • SEAF India Agribusiness Fund and Sarona Capital’s investment in Khyati Foods
  • Ventureast and Peepul Capital’s investment in 24 Letter Mantra
  • Nexus Capital’s investment in Suminter India Organics; Fabindia’s investment in Organic India
  • SIDBI Samridhi Fund’s investment in Natureland.

With India’s rich farming history, increasing demand and governmental support, the country may well be on the path towards making a mark in the organic produce domain at the global level. Hence, what remains to be seen is this: will India become the next major player in the global organic food supply chain? The current evidence suggests a yes!

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Organic farming

Let’s talk about organic farming. This is an agricultural system that utilizes green manure, compost, biological pest control and crop rotation to produce crops, livestock and poultry. It’s a system that cultivates resources to conserve biodiversity and support ecological balance. Some of the primary aspects of organic farming are to augment the soil’s biological activity, enhance the fertility of the soil, and use green manure, cover crops, animal manure, and soil rotation to disturb the habitation of pests and diseases. Synthetic chemical fertilizers, antibiotics, herbicides or pesticides aren’t used in organic farming. The goal within organic farming is to manage agricultural production in the best natural way. Organic farming contributes added protection to the soil which in turn is crucial for exceptional productivity.

Organic farming isn’t about increasing or maximizing a greater yield of productivity, but rather ensuring the sustainable production of high quality healthy food while maintaining crop and livestock diversity and respecting the environment. Organic farming contributes to energy conservation through making extensive use of direct solar energy and saving other energy sources taken directly from the earth’s resources. It also contributes to the reduction of water and air pollution in that pesticides, herbicides, synthetic chemical fertilizer residues do not enter the air or water which reduces the costs for the state to pay for water treatment. Organic farming contributes to the overall health of the population since organic produced food improves the health of those who consume it which positively impacts the states’s expenses and costs of healthcare. Sustainable farming creates an environment that attracts tourists which can improve the state economy. Small farms become more integrated into the system since they are involved in production and the education system which encourages a reduction of unemployment and decreases social exclusion of the rural population. The initial costs of organic farming may be higher, but its impact are cheaper and more efficient in the long term.

Farmers in organic farming need new sustainable mechanization to help ease and reduce hard labour, relieve labour shortages, improve agricultural productivity and timeliness of operations, advance the efficient use of resources, boost market access, and assists in alleviating climate related hazards. According to a report from the World Bank, demand for food will increase by 70% by 2050; at least $80 billion annual investments will be needed to meet this demand. They say that agriculture finance empowers poor farmers to increase their wealth and food production to be able to feed 9 billion people by 2050. In order for farmers to be able to do this, farmers need to have access to improved agricultural tools and sustainable mechanization. A UN report states, “Sustainable mechanization supports the development of food supply chains through improved agricultural practices for increased production and enhanced food security.” Sustainable mechanization applies to simple basic hand tools to more advanced and motorized equipment. It involves agricultural land preparation, reinforces timely seeding and planting, weed control, consolidates pest management, provides for precise fertilizer application and much much more.

Sustainable mechanization can increase the power supply to organic farming and that means more tasks can be completed at the right time and greater areas can be farmed to produce greater quantities of crops while conserving natural resources. Using sustainable mechanization can enable farmers to produce crops more efficiently by using less power.

One way to provide for this need is to match organic farmers with the right retail investors. Retailers have longstanding relationships with their customers which means they want to invest in farmers who can meet the supply and demand of their customers. Agriculture finance and sustainable investments in agricultural projects can ensure that the right retail investors are building worthwhile relationships with organic farmers who have access to sustainable mechanization. This will help to provide market-based safety nets, and fund long-term investment to support sustainable economic growth.

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How Industry 4.0 is Interwoven into Modern Warehouse Design

Companies are shifting towards faster, smarter and more sustainable productivity. Global supply chain warehouse professionals are being drawn in by the promise of Industry 4.0 as an industrial revolution seeking to increase productivity, reduce costs and accelerate go-to-market timelines. The U.S. and Canada currently sit at the forefront of this global revolution, according to Verified Market Research, where the market size is expected to grow to $317 billion by 2030.  

This shift begs the question: How can businesses adopt new technology and innovate effectively? The ultimate goal is to design warehouses that balance human workers with the use of automated technology. To realize the benefits of Industry 4.0 when designing your next warehouse, bear in mind these four principles: balance data and materials, make work joyful through beautiful workspaces, enable an operational vision, and achieve true machine collaboration through open architecture.  

Balancing Digital Transformation with the Material Demands of Warehouses  

Using new technology and digitization can make things run faster and save time. Intelligent software allows systems to talk to each other to accomplish specific tasks without the need for assistance from humans. Imagine machines having a little chat and making preemptive decisions based on their conversation, like fixing themselves or keeping things safe from cyber issues.

But here’s the thing; it’s a mistake to think that smart software alone can solve every challenge and make a warehouse highly productive. Boxes aren’t always the same — they can bend, move, and change shape. You shouldn’t only think in terms of ones and zeros. You need to consider the real, physical items involved in material handling. Even in the most tech-savvy warehouses, you have to understand the physical materials you’re working with. Are they different in size, quality or maybe a bit damaged? Can your autonomous systems handle the variations? One way to achieve high up-time and low capital investment is to minimize the variations in packaged materials. 

Automation likes consistency, so if you want smooth operations and reduced costs, try to make everything uniform for the machines. Striking the proper balance between the value of data and the value of materials to be handled is essential for planning the most productive floor layout. Data and materials are important factors to consider when planning a new warehouse layout, but the humans working alongside these systems are the most critical.  

Beautiful Spaces Inspire Workers, Drive Recruitment 

In a way, Industry 4.0 is creating the same shift in warehouses that office spaces underwent during the tech boom of the late 1990s and early 2000s. The explosion of tech startups led to more relaxed office spaces that focused on fostering innovation and creativity, leading to more open and collaborative workplaces. 

We saw another cultural shift in 2020, brought on by COVID-19. Workers shifted to remote work out of necessity, but that did not include warehouse workers who were deemed essential. Now, almost four years later, the U.S. economy is still finding the best balance between remote and in-person work. 

It’s time to shift our focus to the people who work in warehouses, who are the essential personnel, ensuring things like our next-day Amazon Prime deliveries. But you can’t put loungers and a coffee bar in the middle of your warehouse floor, so how can you inspire warehouse workers in similar ways? Focus instead on creating beautiful spaces that inspire workers and allow them to enjoy their time on the job.
 
 Earlier this year, Configura shared insights from a survey of material-handling professionals across the U.S., Germany and Japan. When asked about design review methods, 89% of respondents stated they still are using .pdfs and PowerPoints to try to visualize their future spaces. Designers need tools that provide realistic visualizations of what a warehouse environment will look like that focus on ideation and visualization in 3D. Full video renderings for designers can help create an immersive experience before warehouses are built.  

Filling an Expanding Labor Shortage 

We’re facing a time when fewer people want to work in the manufacturing sector, and more jobs are going unfilled. The number of workers in warehousing and storage is growing, but not fast enough. Although the U.S. Bureau of Labor Statistics reported 1.9 million active warehouse workers in November 2023, up from 1.6 million in the category in early 2020, the National Association of Manufacturers predicts a gap of more than 2 million workers by 2030. The bottom line is that the manufacturing sector cannot afford to lose any more workers, and research has shown that an aesthetically pleasing workplace can drive recruitment, job satisfaction, and even productivity.  

The shift in workplaces that took place during the tech startup boom was due, in part, to a rise in millennials joining the workforce at the time. Now we’re seeing Gen Z enter the workforce and, by 2025, it is expected that they will make up one-quarter of the global workforce, according to McKinsey & Company. This increasingly significant generation of workers has different expectations, including mainly interactive, tech-first work environments. 

Future-Proof Your Warehouse with a Central Command Center 

The way administrators monitor employees and conduct oversight of complex systems is undergoing a transformation in the era of Industry 4.0. Future-forward warehouses are adopting command-center-like spaces equipped with multiple live monitors and real-time machine diagnostics systems, ensuring optimal up-time and throughput. Leading solutions providers are at the forefront of integrating industrial automation control centers into warehouses, emphasizing the importance of “future-proofing your warehouse.” 

The strategic placement of a central command and monitoring center within the physical space becomes pivotal in operations where a combination of IoT-enabled equipment, AI toolsets, and human leaders are crucial for effectiveness. This center may be positioned at the heart of the floor plan or elevated on a mezzanine level to oversee the physical operation. In either design, the incorporation of strategically located cameras and visualization tools enhances the oversight capabilities within a warehouse. Many manufacturing execution systems (MES), warehouse control systems (WCS), or warehouse management systems (WMS) now leverage visualizations that offer a heightened level of operational oversight, leading to increased productivity and efficiency. 

Put Connections and Collaboration Top of Mind in Your Warehouse Design 

In Industry 4.0 warehouses, everything works together like a well-oiled machine. This includes everything from workers to IoT devices to the ventilation system. Intelligent software is able to manage tasks like receiving, storing, picking, packing, and shipping. It can even change how machines work based on what’s happening at any given moment. 

In order for a facility to work as seamlessly as possible, it’s crucial that every part of a warehouse’s system is connected to each other. If you’re designing the layout of a warehouse, it’s smart to use an open architecture layout. This way, you can create a digital version of a warehouse before it’s built. This helps make sure everything will run smoothly when the physical warehouse is up and running and will allow for ongoing improvements. An open-architecture layout helps warehouse administrators meet goals, save money, and stay ahead in a fast-changing industry. 

Preparation is the Key Success Factor 

In a rapidly evolving industry focused on implementing automation, it’s hard to predict what a warehouse will look like in ten years. This makes it tricky for professionals who want to get their businesses ready and stay ahead of the competition. But there are several key fundamental considerations that can help guide you toward a successful floor design: 

  • Balance the demands of data and materials.
  • Inspire workers and drive recruitment with beautiful warehouses.
  • Future-proof your warehouse with a central command center.
  • Elevate connections and collaboration across workers and machines.
  • Use innovative design tools to plan the space before implementation. 

Designing an Industry 4.0 warehouse begins with putting people first to strengthen the industry and help carry the global supply chain forward. 

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What is operations and supply chain management (OSCM)?

The term “Operations and Supply Chain Management” (OSCM) refers to the management of an organization’s supply chain & operations. It involves various tasks including sourcing, materials management, operations planning, distribution, logistics, retail, demand forecasting, order fulfillment, and more. It covers both the manufacturing and service industries.

The objective of supply chain and operations management is to assist organizations in increasing their operational effectiveness and efficiency while lowering expenses.

Similarities and differences between operations and supply chain management

Similarities

Both operations management and supply chain management are necessary for improving business operations, enabling more productive workflows, and eventually boosting profits for the organization. The two positions are closely related to one another to achieve those goals. 

Differences

Even sharing the same goals, both of them have many different features.

Why is “operations and supply chain management” important?

OSCM is critical to all businesses since it includes the planning and execution of all the actions required to produce goods and services. It involves controlling the movement of resources, data, and money throughout the full value chain, from suppliers to clients. We can list some vital benefits of an efficient OSCM as follows:

Improve efficiency

Streamlining operations and supply chain can help a business improve efficiency. When all the important processes are well managed and planned, there is no repetition and gap time for unnecessary things. It means that you can minimize resource waste and reduce costs.

Increase customer satisfaction

Another potential advantage of proper OSCM is customer satisfaction. According to zippia.com, 70% of companies believe that supply chains are a key driver for quality customer service. Effective management of operations and supply chains results in shorter lead times, greater overall service levels, and higher-quality goods and services. As a result, you will have more happy customers who are more inclined to do business with your company again.

Improve collaboration

Improved coordination between various departments and organizations throughout the supply chain is another benefit of effective OSCM. An operation is more streamlined and effective when all team members are communicating with each other and working towards reaching the same goals.

Reducing cost

Cost savings may be the greatest advantage of implementing OSCM. With effective operations and supply chain strategies, businesses can allocate resources efficiently and growth potential is harnessed. As a result, businesses can reduce production costs significantly and raise profits in the end.

In addition, businesses can more efficiently acquire resources and goods when they have a better understanding of their supply networks. It paves the path for higher quality and reduced prices.

Increase cash flow

Last but not least, improved OSCM results in enhanced cash flow. Effective management of operations and supply chains results in decreased inventory levels and shorter lead times for businesses. As a result, there is less money held in inventory and more cash is available for corporate reinvestment.

Challenges of operations and supply chain management

Digital transformation

This is a new and one of the most exciting challenges to OSCM. Using new technologies to radically alter how your organization operates and provides value to customers is what OSCM needs to approach. It’s not simply about deploying new technology. The fundamental goal of operations and supply chain digital transformation is to enhance customer experience by lowering barriers between consumers and suppliers through improved communication channels, real-time visibility into inventory levels, etc. For example, if you have a retail business, retail operations solutions can help you simplify all operation processes, especially automating inventory management and delighting your customer with an omnichannel experience.

Qualified personnel

The core of any organization is its qualified personnel, which ensures the company’s sustainability and expansion. Building a workforce with the necessary expertise and ability to continuously move the business’ needs ahead is necessary for effectively managing operations and the supply chain. This movement comprises the capacity to not just finish a task at hand but to see beyond it, innovate, and continuously get better. However, finding talented people who are enthusiastic and engaged in this field of employment has grown more difficult over time. It is a big challenge.

Quality customer service

OSCM is centered on client requirements. Giving the proper amount of a product, of the right quality, for the right price, and at the best customer service is important. However, customers have a variety of preferences, thus we must always cater to their needs. Offering distinctive solutions to clients makes a huge difference. Businesses that put forth the effort to learn about and invest in new technology are the ones that succeed in this industry.

Costing

Raw material, energy, and labor costs have all increased globally as a result of economic restrictions. This is a big challenge to OSCM. Your business needs to make some adjustments to maintain operations for production to continue and for customers to receive high-quality products at reasonable prices.

Risk management and forecasting

The risks for OSCM are always existing as a result of the market’s ongoing changes, brought on by a range of factors including consumer desires, political objectives, and global sourcing. Your business has to forecast and always be prepared with a risk management plan.

Sustainability

In a survey by EcoVadis and the HEC Paris business school in 2017, sustainability was recognized as one of the top five priorities by 97% of the procurement officers. The three pillars of sustainability are social, environmental, and economic. Operations management needs to consider how the business’s activity affects a community’s safety and welfare, the environment, and economic sustainability. When any of the three pillars’ outcomes are threatened, your business must also start and monitor corrective action. The path of operations management sustainability and supply chain management is to pursue social, economic, and environmental goals within the business operations and operational links that extend outside the firm to encompass the supplier chain and communities.