Why CEOs must worry about their supply chain for smart cost-effectiveness | The Financial Express

Why CEOs must worry about their supply chain for smart cost-effectiveness

Logistics for MSMEs: Indian businesses have prioritized sales and expansion for quite some time, but supply chain platform investments have not gotten the same attention. While traditional supply chains employ technology and machines, they lack end-to-end visibility and real-time updates on operations, causing a lag in logistics, miscommunicated operations, and unhappy customers.

Why CEOs must worry about their supply chain for smart cost-effectiveness
The supply chain plays a crucial role in translating corporate strategy into operational activities within and beyond the company.

By Zaiba Sarang

Logistics for MSMEs: Over the last decade or so, market trends have changed multi-fold for almost every industry. With new products and services entering the market now and then, there is a rampant shift in consumer behavior. Meanwhile, internet penetration has given rise to the need for on-time delivery, customized products, localization, and multi-channel buying platforms. Amid these altering consumer preferences, businesses constantly strive to stay ahead of the volatile market conditions by optimizing production, procurement process, and distribution strategies.

Also Read: The state’s new food processing policy will address the concerns of the MSMEs: Yogi Adityanath

Need for supply chain solutions

Companies may soon encounter another challenge as they prepare for the next stage of expansion, the lack of a seamless supply chain, even as they battle to deal with fluctuating market circumstances. Indian businesses have prioritized sales and expansion for quite some time, but supply chain platform investments have not gotten the same attention. While traditional supply chains employ technology and machines, they lack end-to-end visibility and real-time updates on operations, causing a lag in logistics, miscommunicated operations, and unhappy customers.

Essentially, the supply chain plays a crucial role in translating corporate strategy into operational activities within and beyond the company. It determines gratification for customers. With emerging technologies, supply chain software programmes can facilitate end-to-end management of all operations. It keeps track of the entire process of sourcing and transporting goods, from raw materials to ultimate distribution, and not just logistics.

Research by Mckinsey shows that autonomous or tech-driven supply chains potentially increase revenue by four per cent. They also reduce supply chain costs by around 10 per cent. As a result, more large enterprises across the globe are encouraged to adopt tech-enabled supply chain management solutions. The market for these new-age solutions is expected to grow rapidly and reach a whopping $4.52 billion by 2027. Let’s look at the result-bearing outcomes of using technology-backed supply chains:

Improving end-to-end visibility for efficiency

No matter the size of the company, the supply chain is something that ensures seamless operations. Every level of the supply chain creates heaps of data about inventory levels, sale-purchase, customer demands, and logistic timelines. By leveraging technology, and AI tools, stakeholders across all points can align data and develop logistical strategies to meet market expectations. Besides this, it also rules out any hindrances or delays by taking data-driven immediate actions. Additionally, employing tech-driven solutions help keep track of all that’s happening in the company and, in turn, helps streamline operations. It rules out manual inventory tracking practices, thereby saving cost and time.

Brings cost-effectiveness

Supply chain management includes inventory management, which can drastically reduce costs when planned and handled effectively. By using inventory management software, senior executives can maximize the output of internal inventories. They can do this by stocking just the right amount of inventory to satisfy consumer demand while freeing up valuable storage space—this aids in cutting down on less productive and inefficient warehouses while saving on storage costs.

Furthermore, employing third-party logistics fulfillment significantly improves end-to-end operations. This reduces the additional costs associated with maintaining an in-house logistics crew.

Closes the gap between supply and demand

New-age data analytics tools integrated with supply chain software help study consumer behavior. It continuously stores data about their product preferences, browsing history, and even the time they spend on a webpage during online shopping. Similarly, GPS-based monitoring and barcode labeling enable overall inventory stock keeping. After this, predictive analytics helps in reducing the demand-supply gap. It also aids in curating customized marketing campaigns for a particular target group. Some of these methods may strike the right cord with the customers and, in turn, increases sales.

Enhances customer experience

Modern supply chain solutions employ geofencing and shipping management technologies that enhance delivery and return experiences. For instance, think of all the touchpoints for a company, including its headquarters, warehouse, cargo loading station, etc. When using supply chain software, businesses will be notified at each stage as the driver departs from the site, picks up the inventory, and delivers it. Furthermore, it also helps track the delivery partner at the nearest proximity to the warehouse and also records non-delivery in real-time. In simple words, businesses no more have to worry about staying on their toes for accurate and timely deliveries. The supply chain software will automate all the operations and real-time updates, making sure that senior executives can make timely interventions to provide customers with the best product and service experience.

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Way forward

In recent years, the Indian startup ecosystem has witnessed a rise in new-age startups. While more new ventures are entering the business landscape, there exists a pressing need for smoother operations to stay ahead of the competition. Herein, tech-enabled solutions that keep track of all the operations are essential to overcome on-ground supply chain challenges. In fact, Mckinsey states that early adopters of AI-enabled supply chain management can improve their logistics cost by 15 per cent and service levels by around 65 per cent compared to those who lagged in adopting new-age technologies. As a result, more supply chain solutions are getting equipped with new-age technologies to ensure seamless business operations. This digital proliferation is about making end-to-end supply chains smoother and hassle-free. A robust supply chain, in turn, will further foster customer satisfaction and business growth.

Zaiba Sarang is the Co-founder of iThink Logistics. 

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First published on: 05-11-2022 at 16:00 IST