September 29, 2014

Future Trends & Challenges in Supply Chain Management

         A supply chain is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials, and components into a finished product that is delivered to the end customer. Supply chain management (SCM) is the management of the flow of goods. It includes the movement and storage of raw materials, work-in-process inventory, and finished goods from point of origin to point of consumption.The primary objective of SCM is to fulfill customer demands through the most efficient use of resources, including distribution capacity, inventory, and labor.

Future Trends & Challenges in Supply Chain Management:

Impact of E-commerce
          E-commerce industry has become prominent in the last three years.This will create an impact on supply chains of many retailers.Statistics of 2013 show that customers preferred online shopping even during holidays.In fact online sales are high during holidays.So retailers are providing special offers during holidays to attract customers.E-commerce players are trying innovative techniques to increase customer reach.One such technique is "click & collect" service,where people order products online for pick-up at store or any other preferred location.This service is popular with busy internet-savvy buyers of groceries and electronic gadgets.These people cannot wait at home during daytime for deliveries but pick up at a convenient location and time.This service has altered the supply chain and inventory management systems of many firms and they need to be ready to face challenges.

Emergence of 3D printing
        3D printing  is the processes of making a three-dimensional object of almost any shape from a 3D model or any other electronic data source.A 3D printer is a type of industrial robot. 3D printing is one of the technology that has potential to revolutionize manufacturing and supply chain systems in future. 3D printing is already being used in health care services (in dentistry for artificial implantation).Manufacturers see the potential for 3D printing to change the way they source various spare parts.At present,this technology is ideal for creating customized parts and reduces inventory and storage costs.If the speed at which 3D printing produces items increases,it will change the structure of supply chains. Right now 3D printing is not that useful in mass production as it takes a long time to print a single item;2 hours for a smartphone and longer periods for complex items.But if,for example it takes 16 hours to print a spare part,and normally that part is shipped from a factory in Europe to India,printing the part is less costlier than sourcing it.

Big Role of Big Data
      It is very easy to get data related to customer behavior and purchasing trends using Big data and a proper analysis and thorough number crunching can give significant inputs to understand customer requirements regarding online and in-store shopping.Accordingly changes in Supply chains have to be incorporated.The challenge is in using the information from big data and getting a particular buying pattern of consumers, as enormous amount of data is generated using big data.

Increasing Use of cloud computing
       Logistics and warehouse operators are increasing usage of cloud computing to host their IT supply chain on a centralized cloud,rather than on different physical computers located at many locations.Cloud computing is used to set up warehouse and logistics operations quickly in areas where there is paucity of established infrastructure.A warehouse is created in the cloud.As long as a physical site is present,data present in the cloud can be accessed.Cloud computing helps in improving  a supply chain's long-term efficiency.

Urban deliveries are becoming more complex
       There is increasing complexity of logistics in urban areas.One important factor contributing to this trend:higher environmental standards set in cities.Cities such as Mumbai are getting bigger and more congested and are struggling to cope with the volume of people and traffic.So there is a pressure on users to be more ecologically responsible.Therefore  Retailers and logistics companies need to work on making their deliveries more environmentally friendly by using innovative solutions.

Integrated Supply chain management
      The ISCM not only means integrated logistics  but also demands that the SCM must look into the ramifications of these arrangements on the cost of transportation  of products within a trade zone and outside it.It also includes developing logistics strategies. The field of ISCM has developed in the last few years for bridging the gap between demand and supply using efficiency and cost trade-offs. The SCM now not only involves the "management of logistics", as was done in the past  but, includes the management and co-ordination of activities, upstream and downstream links in the supply chain. The integrated supply chain management include but not limited to: Planning and Managing supply and demand; Warehouse Management;Inventory control;Efficient Transportation and Distribution;Timely Delivery and customer's delight and customer's satisfaction.

Tough competition among major E-commerce players
        Last two months have seen major ts investments in various E-commerce companies by venture capitalists.There is an investment of 1 billion dollars in Flipkart by some foreign VCs.Amazon has announced an astronomical 2 billion investment in India.India. Jabong and some companies formed as global fashion group.As all these companies have attracted lot of investment,there would be huge competition among them.In such highly competitive scenario, the simple pursuit of market share is no longer sufficient to ensure profitability.companies must focus on redefining their competitive space and have unique strategies.For E-commerce companies supply chain is main differentiator.A company that has an efficient and better supply chain can have edge over others in getting good revenues. and Wikipedia.

  The article is written by Sourav Aggarwal. He has completed B.Tech. in Mechanical Engineering from IIT Kharagpur and has a 2 years of work experience in manufacturing industry.Currently he is PGP 1st year student at IIM Raipur.

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