Supply (chain) and demand

Companies around the world are now using advanced tracking technologies coupled with big data analytics to make their supply chains quicker, more efficient, more transparent, and to drive down costs. We look at the benefits the appliance of modern science can bring to supply chains.

Supplying the goods

A supply chain — a multiheaded system required to source produce and move goods from origination to a final destination — is of evermore importance as the world becomes smaller, and a package from China can make its way to Ireland in a matter of days. Managing a supply chain from start to finish is a huge operational undertaking and comprises many parts. Improving the supply chain efficiency is of benefit to the business and the company as it should at a minimum drive down costs, through more effective practices.

Technological innovations

There have been a lot of technology developments in the supply chains, but we are on the cusp of seeing much more, says Dr Eoin Plant-O’Toole, associate professor in logistics and supply chain management, Edinburgh Napier University, chairman of the policy committee, Chartered Institute of Logistics & Transport (Ireland). “There has been a great focus on tracking and trackability. Information flow is key for effective supply chain decision-making and having that information flow integrated into internal systems.

“While cost and efficiency are key aspects for supply chains and some of the reasons why organisations embraced globalisation and offshoring. However, the increased length of the lead time can be a challenge.”

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For many organisations the key mantra is continuity of supply, says Plant-O’Toole. “A disruption to supply has the potential to be catastrophic. While consumers think of tracking from their perspective mainly in terms of order delivery time, organisations want to be sure that they will get their materials as planned to avoid disruption to production schedules. Visibility in the supply chain is key to avoid disruption.

“Tracking technologies for containers can not only locate the position using GPS but can monitor temperature and tampering. This is particularly important for cold chain logistics such as in the pharmaceutical industry, which is highly regulated and a key export for Ireland. Traceability is also key, not only for pharma but for the food supply chain. They need to ensure high-quality materials and if there was to be a product issue, that suppliers can trace this back through the supply chain.”

Supplying soft drinks

Pepsi is investing in digitalisation, leveraging data and analytics to enhance end-to-end visibility via control tower capability, dashboards and leading metrics to improve its supply chain, says Pankaj Agarwal, supply chain vice-president, PepsiCo Ireland. “We use artificial intelligence-enabled ocean shipment tracking to give our teams real-time visibility of shipments and predicted arrival times for both inbound raw materials and outbound finished goods to protect supply, enhance service and mitigate both cost and risk.

“This means our teams now have earlier, better information on shipment arrivals. It’s a huge step forward from having to estimate what vessels were north or south of Suez during the blockage two years ago when we needed to quickly assess supply impact.”

Sustainable supply chains

Cost and customer service are still the main driving forces of most supply chain decisions, says Dr Heletjé van Staden, assistant professor of management in the supply chain management area at UCD College of Business. “If products are delayed, firms choose the best alternative method to get the products delivered to customers, they do not consider the environmental impact thereof — understandable since if you don’t deliver, you can’t make a sale.

“However, we are at a point where firms simply cannot afford to continue ignoring climate impact. A systems view, whereby manufacturing, inventory and transportation decisions are made together to limit the total environmental effect while meeting delivery requirements, is one approach to address this.”

A potential solution to this is synchro modality, an emerging transportation policy making use of smart algorithms and the physical internet to dynamically make transport mode decisions to ship inventory between source and destination, says Van Staden. “Mathematical models and data analyses have shown that such policies can reduce emissions, costs and improve reliability. However, they require collaboration between shippers and transport providers to work, also meaning changing working culture and obtaining buy-in from end users.”