Smart supply chain journey starts with Digitization
Posted: Jul 04, 2020
Smart supply chain journey starts with Digitization
Covid-19 has put organizations to test, in particular their contingency plans and ability to adapt and respond in a timely manner. Businesses have had to respond to the pandemic at every level in their production and distribution value chain. Today, we will focus on the supply chain aspect of business operations to explore how smart supply chains using digitization are enabling companies to respond faster to market needs.
Traditional supply chains suffer visible damage in case of any unexpected change and typically they cannot adapt fast enough. In order for traditional supply chains to respond to a crisis, they require significant money, time, and human resources. Supply chain professionals have elaborated about the problems they face in making their system more agile and we see a pattern.
Lack of visibility - David Parker in the Supplychainbrain states that companies have access to just 20% visibility in their supply chain instead of 80-90% needed by Supply chain mangers. Better supply chain visibility allows professionals to make decisions faster based on accurate data, manage regional and global distributors and vendors as well as optimize operations. Digitization of supply chain operations is one way a manager can gain visibility into their end to end supply chain.
Inventory management- Procurement and circulation of the end product are managed by supply chain managers based on analyzing past patterns and forecasting future demand. This method becomes problematic during major shifts in buying patterns and trends leading to major issues. However, accurate data for forecasting, efficient raw material, and product management based on FIFO/FEFO and operations improvement can all be achieved with digitization. Companies that can stitch together a digital supply chain in an integrated manner are well-positioned to gain in customer service, flexibility, efficiency, and cost reduction.
Identify hotspots – Strategic decisions of where the stock should flow and where purchases should be made from are some most important decisions made by supply chain managers. Similar to inventory management, these figures are defined by previous purchase and sales patterns, which become unreliable during times of change and disruption. Companies with smart supply chain solutions have opportunities to link their raw materials to finished goods and track their finished products throughout the supply chain. This information can easily identify hotspots where consumption is peaking or where consumption is falling and this data gives business managers the ability to reroute goods from low demand to high demand hotspots.
Identify and Manage theft – Thieves today are keeping an eye on gaps in the supply chain where they can infiltrate and flood the market with either counterfeit or tamper with original products that are in transit. In both these cases, brands take a direct hit to their image in the eye of the consumer. Digitization also allows companies to strengthen their anti-counterfeit measures. Intelligent packaging solutions not only allow companies to keep their supply chain protected from intruders but also allows the end consumer to do product authentication at the point of sale.
Several problems facing supply chain professionals can now be solved with digitization and a smart supply chain. Deloitte came to a similar conclusion stating companies that have invested in supply chain digitization are better equipped to face challenges brought by COVID 19 and also save significant dollars in their report titled "COVID-19 Managing supply chain risk and disruption, 2020"
But where do brands even start on their digitization journey?
Brands can digitize their supply chain via smart packaging or intelligent packaging. There are many ways for a company to deploy smart packaging solutions. A company must consider its business objectives in deciding which route to take to create a digital supply chain that drives tangible results for them: -
Active IDs on the packaging – If a company’s objective is to track and trace their products across the supply chain stages in the most cost-effective manner, then the best option is using Smart or serialized QR codes. This option also reduces the need for a company to undertake major CAPEX or investment in upgrading its production lines. A static QR code can also be put on product packaging via the artwork itself and does not require much change. A unique or serialized QR code solution can also be easily placed on the product packaging either by printing on the package or via the label.
A smart QR code on the packaging enables intelligent packaging. A company can now use the smart code to report data back to itself as well as share data with trade partners or the end consumer. Indian Railways (IRCTC) is using smart QR codes on its food packaging to ensure the end consumer of the safety and health information regarding their food. Other FMCG brands like McDonald’s and Coca-Cola are using intelligent packaging to run targeted marketing campaigns with offers and promotional content at the point of sale.
Along with customer engagement, the same QR code also allows brands to track and trace the journey of each product unit from raw material to the point of sale. The track and trace solution provides companies with the necessary data and analytics in order for supply chain professionals to optimize inventory management, stock levels across the value chain, identify stock-outs or spikes, and also streamline their operations. Smart packaging via QR codes also helps companies to fight their battle against counterfeiting and improve their anti-counterfeit strategies further to secure their brand image.
Digital packaging solutions are now made available to brands by companies like Sepio Products Private limited, who have developed plug and play innovative solutions for customer engagement, anti-counterfeit packaging, and supply chain digitization for track and trace from farm to factory.
NFC or RFID tags –
NFC is brief for Near Field Communication, while RFID means radio frequency identification. Both technologies use radio frequencies to communicate and track the products which they have been assigned to. NFC is still an emerging technology with opportunities to be used as part of anti-counterfeit solutions. This means, with the tap of your smartphone, an NFC enabled label or packaging will display the intended information to an end consumer. Beverage brands such as Guinness and Astral have found use cases for NFC to help in their marketing and anti-counterfeit efforts. However, NFC is a much more expensive solution to deploy on each product as compared to smart QR codes. Also, for NFC to be successful, it requires to be read with smartphones equipped with NFC reading capabilities, which further restricts its use case.
RFID, on the other hand, has found widespread use all over the world to track and share data, especially in B2B situations. One common RFID solution that the market has adopted is the use of RFID E-seals to secure containers or trucks. An RFID E-seal is a digital security seal that combines the physical elements of a metal bolt seal along with the digital elements of smart electronics. An RFID E-seal can help businesses to move goods in an efficient manner since RFID offers a larger reading distance and hence is ideally suited for industries like logistics or e-commerce logistics. RFID is also useful in situations where thousands of items need to be read in the shortest possible time. For example, RFID tags have gained popularity in the retail industry in places like clothing stores and precious jewelry. This allows the end-user to not only add a layer of protection but also do inventory management efficiently.
Hence, it is critical for a company to identify the solution which best suits its organization’s requirements and business objectives. You can use Sepio’s proprietary supply chain diagnostic survey to identify and prioritize pain points in your supply chain and identify the best solution for you – be it serialized codes, NFC, RFID, or something else. Click here to take the survey now and share it with your colleagues. You can also directly reach Sepio on firstname.lastname@example.org to talk to a Customer Success Manager.
Raunak is an avid reader and likes to spread a word on smart logistics and digital supply chain.