Last year, Amazon lived through one of its worst nightmares; in a rare occurrence, the company fell short of the Wall Street projection on the stock market by almost 3% in its last fiscal quarter of 2021. Although the company’s economy remained strong, with millions of shoppers making purchases daily, its supply chain mismanagement did what its regulators and rivals failed to do in decades: slow Amazon down!
Supply chain management has become a buzzword for industries and corporations across the globe. From small businesses and startups to large multinationals, nearly every company has had moments of doubt regarding its supply chain abilities. This is primarily because global consumerism is on the rise despite unstable economies. Manufacturing and consumption of traditional goods and more innovative commodities are contributing to a growth in consumer demand. Additionally, since the advent of worldwide shipping, the global customer base has skyrocketed and expanded at an unprecedented rate.
The supply chain has become harder to predict. The consumer market's growth has no parallel in history. Despite efforts at marketing and improving manufacturing pace, there’s still a backlog of sorts in the supply chain of almost every big and small brand today.
Global Issues in Supply Chain
Whether you are working with logistics/supply chain CEOs, logistics project managers, program directors, area managers, or those working on the ground, almost everyone has something to say about the spike in the frequency and diversity of supply chain issues over the last decade. If you research some of the significant issues affecting the supply chain continuum, this is what you’ll find:
Sounds odd, doesn’t it? If there’s so much unemployment on the one hand and worker shortage on the other, why doesn’t the corporate world hire more of those unemployed people? Unfortunately, it’s not that straightforward. Labor laws, labor welfare, and worker security are three hot-topic debates that make it difficult for industries to easily hire a sufficient number of people for their workforce to clear the backlog. In the US labor market, for example, both laborers and employers alike are contending with “The Great Resignation,” for many reasons, one of them being low advancement abilities.
Environmental concerns are another vital part of the supply chain crisis. When it was just a few big corporations controlling most assets, this issue often went unnoticed. However, the switch of the millennium brought a new kind of environmental urgency that the corporate world couldn't escape. The Millennium and Sustainable Development Goals fueled the fire by setting the bar high in ecological sustainability.
The issue the supply chain has been facing here is the blatant waste, misuse, and overuse of environmental resources. The fuel used for transport and types of machinery, the water reserves and forests used to make products, and the immense range of packaging material that many products require isn't something that the supply chain can as easily get away with anymore. Although companies can't entirely quit using these resources, they need to find ways to minimize the waste and damage for which they're responsible.
The Industry 4.0
Have you heard of the industrial revolution? How we first had steam trains and factories that urbanized societies? Well, we have had three more revolutions after that first one. But, how are they linked to the supply chain? Here's what you need to know:
The First Industrial Revolution:
The first industrial era was based on simplistic mechanization. Steam power and waterpower were crucial in generating mechanical power, powering machines, running vehicles, and establishing extraction and supply systems. This is also the wave where we see the first signs of supply chain methods.
However, production and manufacturing were scarce at this scale because the society was also going through broader shifts; the transition from rural agricultural communities to mechanized urban ones was slow and arduous. The supply chain was in its nascent stages.
The Second Industrial Revolution:
The highlights of the second industrial revolution include mass production and assembly accompanied by electricity. During this era, the world saw a rise in mass-scale productions and assembling. Cars, bicycles, televisions, and other types of technology that we now think of as basic were the height of advancement back then.
At this point, the supply chain also went through an immense revolution. Electrically-powered machines made it easier to acquire resources. Navigation technologies made supply chain predictions possible.
And as more and more people shifted to urban societies, they began using mass-produced goods handed over by supply chain technologies. Of course, there were a few hiccups in the process, but the era was too new and intimidating to point out potential long-term disasters that could occur from mismanagement.
The Third Industrial Revolution:
The third industrial revolution was the first one that employed innovative computer technologies and integrated automation with basic complex mechanical structures. This integration boosted supply chain mechanisms, where mass production accompanied intelligent processes to deliver different quality standards at different production rates. In short, the beginning of automation brought about extreme changes in the way the supply chain functioned. As a result, mass consumption began showing signs of abuse.
The Fourth Industrial Revolution:
The internet of things. The metaverse. NFTs. Cyborgs. Robots. Artificial Intelligence. Robotic Process Automation. Do any of these names ring a bell? They’re all a part of the fourth industrial revolution, the current revolution, or the Industry 4.0.
The fourth industrial revolution is smart beyond what we can fathom. If you take out the apocalypse part from most science fiction, you’ll get a gist of how phenomenal technology has been in altering the discourse of the supply chain to make it more sustainable, smart, and equitable.
How Does AI Help Supply Chain Do Better?
Artificial Intelligence uses a host of tools and techniques to diagnose and eliminate turbulence in the supply chain at different levels across various industries. Here are some AI characteristics that help increase supply chain efficiency:
Robotic Process Automation
The first step in implementing AI within an organization is by adopting relatively simple RPA processes. Robotic Process Automation allows the supply chain departments in companies to automate and improve most of their mundane day-to-day operations. These include roll calls, inventory checks, appointment schedules, CRM updates, and other tasks at regular intervals or as needed.
With AI’s smart quality control technologies, supply chain systems no longer need to waste their time with substandard products. On the contrary, corporations can use Artificial Intelligence to test the strength and longevity of their products. Other than this, AI can also prove useful in creating a database of quality raw materials and sustainable substitute options if the raw material presents an unfavorable cost-benefit analysis.
Corporates all over the world are being held accountable for their blatant misuse of natural and human resources. AI is helping build a more sustainable and equitable world. It improves employee representation, Corporate Social Responsibility, material management, community outreach, employee welfare, and financial spheres because they directly impact supply chain standards in different ways. The end goal for AI in sustainability is to ensure an efficient and sustainable supply chain culture at all corporate levels.
Return Logistics Management
We can also refer to this as the reversal of the supply chain. Return logistics are the goods that never make it to their end customer and end up staying in the corporate’s warehouse. In other instances, customers may return their products due to unsatisfactory service or quality.
Here, too, Artificial Intelligence can help reduce the bane of return logistics and minimize the losses a company may incur from its returned items. For instance, AI may monitor the service quality in delivering the product through retailers and vendors to ensure they don’t horde or tamper with the products. It may also time delivery processes to ensure that the delivery doesn’t fall short of meeting customer expectations.
Is your supply chain a mess right now? Wherever you belong in the corporate world, issues in the supply chain have the tendency to impact everyone, from a CEO to a ground-level employee. The supply chain is crucial to its success, prioritizing it when dealing with a growing global customer base.
Here at Integratz, we’re exploring, experimenting, and experiencing success with AI and RPA in the supply chain. Our services extend across various fields because everyone these days needs a dose of AI to help them navigate their brand with dignity. If you’re facing issues in your supply chain, Integratz would love to solve them with you. Simply schedule a meeting with us here, and we can get started!