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Technology and the Future of the Supply Chain

by Guest Contributor
The future of supply chain management is in automation.

Cards on the table: there’s no way to predict how supply chains will change in 2019. The best you can do is make an educated guess from existing trends, and extrapolate from there. In order to understand what will happen next year, you have to look at the changes that have happened this year.

There are several trends to take into account. Primarily, cloud computing and IoT are making some notable changes. It is predicted that 72% of companies will be automated by 2019. So the market will definitely shift, and key to this shift are the cloud, IoT, and mobile innovation. As mobile tech becomes increasingly reliable, and cloud computing takes a more central role in basic operations, supply chains become better informed with data, allowing managers to reduce redundancies. We’ve already seen this in the form of Big Data. When you have statistically viable representations of data in real time, it becomes possible to identify areas of wasted resources previously invisible. Additionally, tracking inventory more accurately becomes more and more doable. You’ll note from the hyperlink that the full impact of Big Data is unknown, as it is so cutting-edge. It would be irresponsible to place directed statistical predictions beyond what is known here.

Multiple Angles of Supply Chain Transformation

There are a lot of factors to consider. Let’s expand out from the cloud, which is made up of servers networked together in great numbers. Amazon’s cloud actually has more than a million servers. Each server acts like a pixel on a computer screen or an LED diode in a massive billboard display. If one is lost, the picture isn’t compromised, and the faulty server can be fixed. Imagine one computer being able to process a terabyte in ten minutes. Two might do it in five, four in half of that, and continuing until ten minutes is turned into real-time processing. What this means is that massive quantities of data from across an international surface area of supply chains can be monitored as the supply chains proceed. Traffic and weather can be taken into account, as can the needs of clients and specific regions.

RFID and IoT

Additionally, those retailers optimizing their inventory can get a closer look at the state of their stock with RFID, or Radio Frequency Identification. RFID can be organized in conjunction with IoT (Internet of Things) and managed in the cloud to deliver continuous real-time inventory visibility.

IoT refers to any machine or device fit with internet connectivity and managed remotely. Examples of IoT include smart cars, smart refrigerators, and manufacturing equipment that can be monitored or controlled remotely. From production to sale, IoT through the cloud potentially can provide management software a continuous real-time status about products. This can reduce manpower requirements and associated costs.Retail supply chains dealing with seasonal spikes may find using these technologies to be a great advantage, especially in the last half of the year. That period from the back-to-school rush and fall-themed décor to Halloween then Black Friday, Christmas and New Year’s sees a spike in sales and related spike in inventory movement. Reducing operational redundancies from production to distribution will get products moving in and out of inventory to keep pace with sales.

Tech in the fashion supply chain

Take clothing, as an example. The Northern Hemisphere always sees a visible spike in autumn and winter seasonal items. Add to that the spate of back-to-school shoppers, Halloween costumes, even bridal wear designed around autumn theme and you get a time when lack of inventory optimization can cost you money. That means getting the right products in the right amount into your inventory and avoiding overstocking.

The same discipline is necessary for every season, as well as non-seasonal and specialty product categories. All of which need to move in and out of inventory as quickly as possible, at the highest margin possible. And that makes inventory movement and supply chain data strategically indispensable.

Without supply chain technology, business relies on gut instinct or an educated guess. What product must we stock up on? How much is moving through inventory already? Where do we stock those products: in the warehouse for eCommerce purchases or in the store? Supply chain technology will continue to improve and take a lot of the guess-work out of the picture.

Expect the Unexpected

You will never anticipate every circumstance. Stockouts and overstock will always be a risk. However, with the proper supply chain technology, you can manage inventory to reduce the overall negative impact of an unexpected turn of events.

It can start with cloud-based inventory management and build from there as technology like IoT find practical ways into the supply chain. In other words, you can implement new technology by degrees.  You just have to be aware of the trends and how they apply to your particular supply chain operation. 

About the Writer 

Wendy Dessler covers business topics for entrepreneurs and helps run the marketing company