For years, the supply chain for small and medium-sized businesses has followed the same tired formula. A business owner or buyer creates a purchase order. There is some back-and-forth via email or telephone, and when the items are ready to ship, the supplier contacts a freight company to transport the goods. This practice, though it has served us well for years, is now woefully out of date.
As nearly any business owner will tell you, an efficient supply chain is measured by when the correct goods are delivered on time in the right quantity — to the precise location. The key to much of this efficiency is technology.
Large Companies Have Been Using Supply Chain Tech For Years
Taking advantage of the latest technology is nothing new. It’s something that the “big guys” have been doing for years. It’s particularly evident in the supply chains of the world’s largest retailers. However, many small and medium-sized businesses (SMBs) don’t handle inventory on the same scale as larger companies. That’s why another, more accessible, solution is needed. Thankfully, technology is finally catching up.
Technology will only continue to grow at a rapid pace. As more tech startups enter the supply chain management space, it is vital that SMBs embrace technology so as to not be left behind in the digital dust.
Making Supply Chain Tech Accessible For SMBs
Fortunately for many SMBs, the supply chain management industry is continually adapting to the needs of businesses. The downside is that it isn’t happening as fast as many would like. I feel that it is incumbent on everyone in the industry to make the most of technology and revolutionize the way SMBs handle supply chain management.
Imagine a software application that fuses all of the functions of the supply chain in one central location — a program that combines purchase order management, transportation management and supply chain optimization. The industry isn’t as far from achieving this goal. Here are three solutions currently tackling that goal in the industry:
1. Automation Is Trying To Tackle Transportation
There is no shortage of players invested in supply chain innovation. There are established companies trying to either purchase these startups or create their own technology to better compete with them. Transportation continues to be the biggest wild card. This is largely due to the complexities of varying regulations around the world. Often, you are dealing with the regulations of two different countries, and they might not match up.
Even in the United States, a simple truck order of 1,000 pounds of freight is operating under a set of regulations and pricing methodologies that are nearly a century old — and difficult for many to understand. Just look at the Jones Act of 1920. SMB shippers and logistics providers have been slow to enter the modern era, but strides are being made through transportation management systems (TMSs), a solution my company and other players in the market currently offer.
With TMSs arriving for SMBs, the next technological advance for many business owners is centered around shipment tracking. No longer are they satisfied with when the shipment will arrive. They want to know when it will arrive and what’s in each box. Slowly but surely, this technology is trickling down to SMBs.
2. The Internet Of Things Is Connecting All Links Of The Supply Chain
We’ve discussed how transportation management systems are taking advantage of automation to improve efficiency. Many companies are taking things even further by incorporating technology throughout the entire supply chain.
The internet of things (IoT) has already interfaced itself with our homes and cars, so it should come as no surprise that we also see it in our businesses. While you can argue that this reliance on technology makes our enterprises vulnerable to cyberattacks, many manufacturers feel the benefits of the IoT are worth the risks.
A survey by PwC — referenced in the article linked above — found that 47% of industrial manufacturers see the benefits of the IoT, while an additional 23% say they plan on using it within the next two years. As the speed of the supply chain continues to increase, the IoT is helping companies reduce errors by improving inventory tracking and catching problems before they happen through predictive maintenance.
3. Technology Cuts Labor Costs While Improving Wages
Labor costs make up just under a third of overall supply chain costs. In an industry where margins can be razor-thin, saving money wherever possible is paramount to a business’s success. Technology provides crucial supply chain solutions at a time when businesses need them to keep the world moving.
Whether it’s seen in warehouses or on the trucks themselves, technology is making the supply chain more efficient for businesses of all sizes. What’s more, while it reduces overall labor costs, technology actually increases wages of some jobs as the skills needed to operate this technology become more complex.
The Future Is Now, And It’s Here to Stay
As we head into the future, the supply chain management industry keeps getting “younger.” Many millennials are taking management roles in established supply chain companies, or even starting their own entrepreneurial endeavors.
They are a generation who often are anti-person-to-person communication, instead choosing to work independently, with a reliance on technology. They’ll be the ones purchasing and innovating new technology to transform the industry, and we must give them the chance to do so.
As you begin to wonder how you can embrace technology yourself, the first step to implementing your solution is to identify your problem. It is important to take a step back and survey your operations from a 30,000-foot perspective. In this way, business owners can apply a holistic understanding of their supply chain to better see areas that need improvement. Once you have identified your problem areas, it’s only a matter of applying the right solution. If you can’t find one, the technology will catch up soon enough.