Introduction
With sustainability at its heart, supply chain operations management has a greater influence than ever in the quickly changing global commerce scene. The recently passed EU Supply Chain Law best shows significant legislative changes pushing businesses toward more sustainable practices. This directive challenges businesses, but it also offers a chance to reimagine their environmental impact by affecting everything from procurement to logistics.
The results from Earth Day 2024 also throw light on the real difficulties and expenses logistics professionals encounter when trying to improve supply chain sustainability. With supply chain activities accounting for almost 80% of a company’s emissions, this knowledge is essential for businesses trying to lessen their environmental impact.
Leaders must be aware of and able to adjust to these sustainability trends in supply chain operations management as industries develop. In a world of limited resources, this guarantees long-term viability and competitive advantage and encourages adherence to new laws.
This blog will talk about new ideas and actions that are meant to help the environment and encourage people to be responsible.
GenAI in Supply Chain: Leading the Charge in 2024 Trends
Did you know that 72% of businesses intend to spend more money incorporating generative artificial intelligence into their daily operations? Application of this cutting-edge technology has several benefits, especially in the supply chain operations industry. One of the main trends for 2024 will be covered in this part: demand forecasting.
The start of the COVID-19 pandemic brought to light how urgently agile demand forecasting is needed because consumer spending shifted dramatically from services to goods, creating very unpredictable supply chain dynamics. These days, companies are using generative AI models to better predict and to adjust to such shifts in demand?
By simulating possible supply-and-demand situations, these models examine past sales data, market trends, and a host of other variables, greatly improving forecast accuracy. Through monitoring these demand trends, businesses can reduce interruptions and avoid inventory problems, guaranteeing a more dependable and seamless supply chain.
The Rise of AI-Enabled Low and No-Touch Planning
As we look towards 2024, a significant trend emerging in the supply chain operations sector is the shift towards low and no-touch planning processes enabled by AI technology.
Low-touch planning increases revenue, cost, and asset gross margins by 1 to 3 percent and enhances predictability, increasing Return on Equity (ROE) by 2 to 4 percentage points.
Low-touch planning leverages AI-powered applications to automate complex aspects of both sales and operational planning as well as integrated business planning. Through the use of sophisticated analytics to handle complicated problems with little human involvement, this approach greatly reduces the manual labour required in the end-to-end planning process.
AI shines in big, unstructured dataset analysis, as well as pattern and anomaly detection that could indicate impending disruptions. By doing so, it can swiftly propose effective solutions.
The success of a no-touch supply chain operations planning model depends on robust analytics, transparent real-time tracking through apps or dashboards, and granular, reliable data. Standardized procedures must be applied supply chain-wide. This transition requires a cultural shift in organizations, as seasoned professionals may be hesitant to hand over core activities to digital tools.
To manage this transformation, McKinsey suggests a “two-speed IT architecture.” This method layers a dynamic, fast-paced test-and-learn environment over the existing technology infrastructure for rapid prototyping and iterative development.
This lets users quickly develop, test, and refine new methods before integrating them into the system. Once proven, these new solutions can be fully integrated into the primary technology stack, improving supply chain efficiency.
Also Read: AI in Procurement: Top Reasons It Will Change The Way We do Business
Supply Chain Management through Data Integration
Moving ahead in Supply chain operations management, data is often isolated in silos, complicating critical data access and sharing. The globalisation of supply chains introduces complexity, variability in demand, and product diversification. Companies struggle with demand forecasting, balancing inventory against customer demands, and maintaining low holding costs. Additionally, regulatory compliance adds further complexity.
According to a study, 81% of digital supply chain management managers believe that data analytics will be critical for cost reduction. The key to this lies in Data integration. It involves combining data from different sources into a single format. This makes the supply chain more visible and gives users access to important operational data in real-time.
This integration uses historical data, market trends, and customer feedback to make decisions, automate and streamline processes, and predict demand more accurately. It also makes it easier for suppliers to work together, helps with compliance and risk management, and lowers costs by making operations run more smoothly and bringing products to market faster.
Also Read: The Power of Data Analytics in Inventory Optimization
Efficiency Gains through Supplier Consolidation at a Leading Tyre Manufacturer
Established in 1977, a leading tyre manufacturer with seven plants across India and Europe faced significant supply chain challenges due to a fragmented supplier base of over 600 suppliers, none of which were mapped to its crucial plant locations in Vadodara, India. This led to inefficient workflows and excessive inventory-carrying spaces.
Moglix intervened to streamline the supply chain by implementing vendor-managed inventory and consolidating suppliers, reducing the supplier count from 600 to 415 and line items from 8000 to 6000. This strategic consolidation achieved a 3% reduction in effective landed costs and a rebate of 0.5 to 2% on turnover.
Further enhancements included reducing the PR to PO generation time from an average cycle to just 2 days and setting up a warehouse within 25 KM of the plants, which improved the On-Time In-Full (OTIF) delivery rate to 90%. This restructuring not only streamlined operations but also unlocked significant cost savings and operational efficiencies.
Towards Tomorrow
As businesses confront new sustainability mandates, they must adapt to survive in a resource-constrained world, for organisations keen on adapting to sustainability trends, working with seasoned experts like Moglix offers valuable lessons. Moglix’s expertise in streamlining complex supply chains provides a blueprint for companies to enhance efficiency while meeting regulatory standards. Engaging with such partners can help firms maintain a competitive edge in a resource-sensitive market, making Moglix a strategic choice for those aiming to lead in supply chain innovation and sustainability.
