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3 Ways to Better Manage Supply Chain Risk in 2019

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3 Ways to Better Manage Supply Chain Risk in 2019

Managing a supply chain in 2019 incurs a certain amount of risk by necessity, but having a plan in place to manage risks, respond to incidents, and deal with disruptions can put your business ahead of competitors.

In order to best address these supply chain risks, they can be categorized by implications, or by sources.

  1. Qualitative: addresses the reliability and accuracy of materials
  2. Quantitative: addresses the availability of material or overstocks
  3. Atomistic: impacts only constrained links within it
  4. Holistic: requires businesses to assess entire supply chains

Based on a joint report from Cranfield School of Management and Dun & Bradstreet, supply chain risks can also be categorized in the following segments:

  1. Supplier criticality
  2. Supplier financial risk
  3. Global sourcing risk
  4. Foreign exchange risk

By looking at each of these risk categories individually, businesses gain a deeper understanding of how to best prioritize their attention. Supply chain risk management trends for 2019 offer further insight and solutions to businesses who desire a more transparent, risk-aware supply chain.

Keep Tabs on Your Current Suppliers

Visibility and transparency throughout the supply chain are critical as consumer priorities shift toward socially and environmentally-conscious ethics.

Outstanding performers are 250% more likely to have a fully visible and transparent procurement system compared to their peers, according to Deloitte’s Global CPO Survey of 2018. Despite this, 65% of procurement leaders have little or no visibility in their supply chains, according to the Zycus whitepaper “Ensuring Efficient Supplier Risk Management with Supply Chain Transparency.”

Pick Your Battles with Suppliers

Arguments with suppliers can cause major disruptions to production. While disputes are bound to happen, minimizing risks by hiring effective communicators who can arrive at symbiotic compromises will go a long way toward your company’s bottom line as well as maintaining fruitful supplier relations.

It’s also important to pick your battles with suppliers; ultimately if there is a continued conflict with a supplier, it may be time to find a new one.

Utilize Technology To Its Fullest

Modern technology can make a big impact in supply chain risk management if used correctly. 2019 trends include artificial intelligence, the Internet of Things (IoT), and blockchain as helpful resources to supplement your supply chain management.

Read more 3 Ways to Better Manage Supply Chain Risk in 2019

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Reefknot Investments launches $50 million fund to invest in logistics and supply chain startups

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Reefknot Investments launches $50 million fund to invest in logistics and supply chain startups

Reefknot Investments launches $50 million fund to invest in logistics and supply chain startups

Reefknot Investments, a joint venture between Temasek, Singapore’s sovereign fund, and global logistics company Kuehne + Nagel, announced today the launch of a $50 million fund for logistics and supply chain startups. The firm is based in Singapore, but will look for companies around the world that are raising their Series A or B rounds.

Managing director Marc Dragon tells TechCrunch that Reefknot will serve as a strategic investor in its portfolio companies, providing them with connections to partners that include EDBI, SGInnovate, Atlantic Bridge, Vertex Ventures, PSA unBoXed, Unilever Foundry and NUS Enterprise, in addition to Temasek and Kuehne + Nagel .

Dragon, a veteran of the supply chain and logistics industry, says Reefknot plans to invest in about six to eight startups. It is especially interested in companies that are using AI or deep mind tech, digital logistics and trade finance to solve problems that range from analyzing supply chain data and making forecasts to managing the risk of financing trade transactions. Data from Gartner shows that about half of global supply chain companies will use AI, advanced analytics or the Internet of Things in their operations by 2023.

“There is a high level of expectation from vendors that because of technology, there will be new methods to do analytics and planning, and greater visibility in terms of information and product, materials and goods flowing throughout the supply chain,” says Dragon.

Read more in Reefknot Investments launches $50 million fund to invest in logistics and supply chain startups

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Coupa Software: four tips for reducing supply chain risk

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Coupa Software: four tips for reducing supply chain risk

Coupa Software: four tips for reducing supply chain risk

The cloud platform for business spend management, Coupa Software, drives “Value as a Service” by helping customers to achieve significant cost savings.

As is the case with every supply chain, there is always risks that must be considered. These risks could be financial, cyber, legal or fraud and business leaders have a responsibility to consistently work to overcome these risks. Coupa has compiled four spend management decisions to help cut supply chain risk.

1. Automate compliance verification

In order to decrease risk in company’s supply chains, organisations must ensure is audit-ready and fully compliant. There’s an importance to ensure every vendor is compliant with relevant standards and observe the tolerance for risk. The process includes checking vendor credit ratings, financial liabilities, legal judgements as well as other details.

2. Utilise the insights of the business community

With some companies undergoing regular checks on its vendors to obtain credit reports from third-party sources, best-of-breed business service management (BSM) technology accelerates this. Based on a range of sources such as income statements, court documents and news articles, BSM algorithms quantifies financial, judicial and public sentiment health of each supplier.

3. Enable real-time visibility for spend-at-risk

Recognising and understand the risk that comes from each supplier is vital to ensuring information is married with the actual spend of the organisation. In the supply chain space, being proactive is key due to the pace of which the world moves. By operating with an agile approach, it allows businesses to adapt to situations that weren’t accounted for, such as trade sanctions, currency fluctuations and natural disasters.

4. Control in-flight transactions to mitigate risk

The importance of supply availability is key. Understanding and identifying these risks before they develop is vital to ensuring businesses protect guard against such threats. BSM processes should enable clear visibility of transactions that are linked with supplier risk.

Read more at Coupa Software: four tips for reducing supply chain risk

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DHL Supply Chain introduces first digital twin of warehouse in Asia for Tetra Pak

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The market leader in contract logistics, DHL Supply Chain, is introducing its first digital twin of a warehouse in the Asia-Pacific region for Tetra Pak with one goal in mind: optimised, agile and cost-efficient supply chains.

The warehouse is one of the biggest Tetra Pak warehouses worldwide and remains the first smart warehouse for DHL in the Asia-Pacific region that exists as a digital twin.

Having launched an integrated supply chain for Tetra Pak in Singapore, the digital twin is supplied with real-time data on a consistent basis from the physical warehouse in Singapore and makes changes consistently in real-time.

“The joint implementation of such a digital solution to improve Tetra Pak’s warehousing and transport activities is an excellent example of the smart warehouses of the future,” said Jerome Gillet, CEO, DHL Supply Chain Singapore, Malaysia, Philippines. “This enables agile, cost-effective and scalable supply chain operations.”

DHL Supply Chain is focusing on technologies and processes such as physical objects like industrial trucks kitted out with IoT technology. The DHL Control Tower tracks incoming and outgoing goods to ensure all goods are stored in the correct way within 30 minutes of receipt.

Tetra Pak has developed a smart storage solution that tracks and simulates the physical condition and individual stock levels in real-time, allows smooth non-stop coordination of operations, makes faults visible as well as improves safety and productivity in the warehouse.

DHL Supply Chain Singapore has in-depth expertise in the region in achieving individual customer needs, the firm provides Third-Party Logistics (3PL) solutions in which customers can outsource their logistics management and operations.

“We expect the partnership with DHL Supply Chain to further increase our productivity and maintain high standards in our supply chains,” commented Devraj Kumar, Director, Integrated Logistics, South Asia, East Asia & Oceania, Tetra Pak.

Read more at DHL Supply Chain introduces first digital twin of warehouse in Asia for Tetra Pak

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Is Virgin Hyperloop One going to change the supply chain game?

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Here is a breakdown of the potentially industry disrupting impact points that the integration of hyperloops into global supply chain could have.

Speed

So, let’s say we get a hyperloop built in the kingdom that runs from the port city and modern commercial hub of Jeddah in the West, to the city of Dammam in the East. The 844 mile journey takes over 12 hours by road. With its projected top speed of 760mph, Virgin Hyperloop One’s train could cut that travel time to just over an hour.

In June, Port Technology magazine interviewed Ryan Kelly, Virgin Hyperloop One’s Head of Marketing raised concerns about the current global supply chain’s ability to measure up to the logistical demands of the coming years. “We are not poised to meet the demand of the coming decades. Today, on-demand deliveries are novel. Tomorrow, they will be the expectation. E-commerce, set to grow to $4 trillion globally by 2020, is driving a dramatic shift in both consumer and business behavior. The market for express and parcel freight is set to grow to $516 Billion by 2025– this expanding market is currently limited by airline/airport capacity challenges.”

Kelly believes that, by being able to deliver goods across long distances, at the speed of air freight and near the cost of conventional trucking, hyperloop technology “can serve as an integrated logistics backbone, supporting the fast, sustainable and efficient delivery of palletized cargo. Deliveries can be completed in hours versus days with unprecedented reliability.”

Sustainability

The ability for this new mode of transportation to support high-speed, high-reliability logistical solutions across vast distances is obviously a game changer for supply chains currently bogged down by air, sea and land traffic congestion. Virgin Hyperloop One’s cargo subsidiary, DP World Cargospeed, will reportedly be a carbon emissions neutral, electrically powered alternative to current freight strategies, given that, according to a UK government survey, “heavy goods vehicles are currently estimated to account for around 17%1 of UK GHG emissions from road transport and around 21%2 of road transport NOx emissions, while making up just 5% of vehicle miles.”

The ability for hyperloops to transport freight that otherwise would make its way via truck, cargo ship, cargo plane (by far the most environmentally harmful form of transportation) and traditional rail freight alternatives is a strong argument for its adoption.

According to Kelly, Virgin Hyperloop One is currently setting its sights on eroding the market share of supply chains currently taken up by air freight. “We’re focused high-priority, on-demand goods — fresh food, medical supplies, electronics — the same goods often delivered via air. Hyperloop doesn’t make sense for carrying things like coal and other bulk goods which can be on the back of a truck/train for weeks with little impact,” he explains. “Air cargo currently accounts for less than 1% of world trade tonnage, yet 35% of world trade value is carried by air. This is an expanding market that is currently limited by capacity challenges.”

Read more at Is Virgin Hyperloop One going to change the supply chain game?

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Beyond the Economic Downturn: Recession Strategies to Take the Lead Now!

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Predicting a Recession

It’s overdue. Predicting the onset of a recession is difficult, but a downturn likely will arrive soon, with the current economic expansion now more than 10 years old, long by historical standards.

Signs of overleverage in the corporate sector, combined with geopolitical uncertainty – including the China-US trade war, Brexit and economic instability in some European countries – suggest the next recession is not far off.

For corporate leaders, however, the exact timing and duration of a recession matter less than being ready to seize the moment early, when they have more options. Getting ahead of the curve avoids the painful alternative – being forced to react hastily in a crisis. Bain & Company research shows that well-prepared companies emerged as winners during and after past recessions. They managed a strong defense and offense in parallel, reining in costs while simultaneously reinvesting in growth.

The next downturn will figure as just one element roiling the global economy. Several structural changes will combine to sound the starting gun to a new business cycle, including:

The end of the nontech business.

An array of evolving technologies will substantially alter customer behavior and demand in many sectors, disrupting both volume and price. In the automotive industry, shared mobility services and the shift to autonomous and electric vehicles could gut the economic returns of many manufacturing plants and assets in six to eight years – just one product cycle. In retail, digital-first insurgent brands with healthy balance sheets may take even more market share in a downturn, compounding the damage to many traditional retailers.

At the same time, new technologies are ramping up efficiencies in areas such as supply chain and manufacturing. Automation technologies, in particular, will accelerate to help companies address the dwindling supply of labor as more baby boomers move into retirement and labor force growth slows.

The end of low-interest rates.

Interest rates still hover near a six-decade low (see Figure 1). Even if central bankers hold rates low during a downturn to help stimulate their economies, we expect to see rates eventually rise. This potential change in the interest rate environment will be a new regime for most management teams and should prompt them to take a multiyear view of their capital structure and the timing of investments. A higher cost of capital will put pressure on capital spending, so if companies want to invest in technology, growth opportunities or acquisitions, the time is now.

Downturns Upend the Playing Field

These long-term trends will harden the divide between winners and losers, favoring those who act before the downturn. Headed into the global financial crisis a decade ago, a group of almost 3,900 companies worldwide that we ran through Bain’s Sustained Value Creators analysis posted double-digit earnings growth, on average, from 2003 to 2007. As soon as the storm hit, performance diverged sharply: The winners grew at a 17% compound annual growth rate (CAGR) during the downturn, compared with 0% among the losers. What’s more, the winners locked in gains to grow at an average 13% CAGR in the years after the downturn, while the losers stalled at 1%.

Read more at Beyond the Economic Downturn: Recession Strategies to Take the Lead Now!

Turkcell’s supply chain management transformation is driven by technology and communication

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Ali Türk, Executive Vice President of Supply Chain Management at Turkcell, discusses how Turkey’s largest mobile operator is driving efficiency with customers at the forefront

Turkcell, the largest mobile operator in Turkey, has undergone a significant shift in its procurement and supply chain operations driven by a radical ideological change to the business itself. “Turkcell is a unique company, a digital operator,” says Ali Türk, Executive Vice President of Supply Chain Management at the firm. “We are dealing not only with the mobile part, but also the commerce part: it’s one entity.” With a focus on establishing a high quality internal infrastructure, technology and network infrastructure, and meaningful, functional digital services, Turkcell has undergone a structural change that highlights the importance of procurement to its wider strategy. As part of supply chain management’s realignment as a strategic function, Turkcell established a dedicated procurement committee to drive positive change. Meeting every week alongside the CEO, Murat Erkan, the committee makes key decisions on the company’s biggest purchases. While these make up 3% of the firm’s purchases at large, their combined volume equates to 80% of the total made by Turkcell. “All of the company’s top executives are fully involved in these processes, and they acknowledge and evaluate all of the aspects of procurement investments and strategy.” Not only that, but a unification of operations between teams has been achieved through the adoption of agile management methodologies, enabling a consistent thread for supply chain management strategy to follow throughout the organisation.

These structural adaptations are bolstered by the application of disruptive technologies, driving efficiency and transparency at Turkcell. However, Türk stresses that digital transformation is, to Turkcell, a tool rather than a goal. “Digital transformation is a must to survive in our era,” he says. “It enables us to focus on optimising costs in a sustainable structure, to increase revenues, and to increase the level of quality we offer our customers.” A particular area of interest for Türk is robotic process automation (RPA) and the benefits it could have for internal teams. He adds that the application of this technology will be based on what those teams themselves view as the areas that would benefit most from automation, and the freeing up of staff from repetitive tasks that it would enable. “We have procurement departments, logistics departments, real estate, construction and site acquisition departments, and they are each highlighting their requirements,” he says. Once those needs are defined, they each collaborate with Turkcell’s ICT department to drive the gradual rollout of RPA through specific digitalisation departments. “For example, supply registration, fee operation, calculation of monthly payments, operation of the tender process, opening site acquisition and scrap sales orders; they’re all operational issues and ritual issues,” says Türk. “Right now, we are developing some use cases and we will forward those tasks to RPA.”

Read more at Turkcell’s supply chain management transformation is driven by technology and communication

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Six Ways To Optimize Your Supply Chain To Generate Profit

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Companies use multiple tactics to generate economic profit, including introducing new products, launching marketing campaigns or undertaking acquisitions. Supply chains offer an effective, though less understood, path to creating value through growth, driving down working capital, improving cash flow and lowering cost.

Surprisingly few companies understand the importance of the supply chain, and few have a formal strategy in place for managing global supply chain risk in the years ahead. This is especially dangerous given the volatility and uncertainty in trade relations between the U.S. and China, as well as other scenarios around the world. Besides geopolitical uncertainty, having the right talent, a holistic perspective and appropriate technology may all figure into the supply chain risk factor.

Use the following best practices to optimize your supply chain and minimize risk.

Redefine The Supply Chain

Best practices begin with redefining supply chain excellence and broadening its scope.

Create A Cross-Functional Team

Best practices for driving shareholder value through supply chain optimization can be easily implemented in any company for concrete results.

Focus On The Right Metrics

Following increased visibility and cross-functional team-making, focusing on the right metrics is the logical next step.

Connect With The C-Suite

Another essential best practice in supply chain optimization is building relationships throughout the entire company and starting conversations with the CFO and other key executives.

Manage Risks

Long-standing supply relationships have value, but disruption of those relationships can be devastating.

Total Value Optimization

The Total Value Optimization (TVO) framework promotes greater collaboration, integration and transparency.

Read more at Six Ways To Optimize Your Supply Chain To Generate Profit

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How To Improve Supply Chains With Machine Learning: 10 Proven Ways

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Bottom line: Enterprises are attaining double-digit improvements in forecast error rates, demand planning productivity, cost reductions and on-time shipments using machine learning today, revolutionizing supply chain management in the process.

Machine learning algorithms and the models they’re based on excel at finding anomalies, patterns and predictive insights in large data sets. Many supply chain challenges are time, cost and resource constraint-based, making machine learning an ideal technology to solve them. From Amazon’s Kiva robotics relying on machine learning to improve accuracy, speed and scale to DHL relying on AI and machine learning to power their Predictive Network Management system that analyzes 58 different parameters of internal data to identify the top factors influencing shipment delays, machine learning is defining the next generation of supply chain management. Gartner predicts that by 2020, 95% of Supply Chain Planning (SCP) vendors will be relying on supervised and unsupervised machine learning in their solutions. Gartner is also predicting by 2023 intelligent algorithms, and AI techniques will be an embedded or augmented component across 25% of all supply chain technology solutions.

The ten ways that machine learning is revolutionizing supply chain management include:

  1. Machine learning-based algorithms are the foundation of the next generation of logistics technologies, with the most significant gains being made with advanced resource scheduling systems.
  2. The wide variation in data sets generated from the Internet of Things (IoT) sensors, telematics, intelligent transport systems, and traffic data have the potential to deliver the most value to improving supply chains by using machine learning.
  3. Machine learning shows the potential to reduce logistics costs by finding patterns in track-and-trace data captured using IoT-enabled sensors, contributing to $6M in annual savings.
  4. Reducing forecast errors up to 50% is achievable using machine learning-based techniques.
  5. DHL Research is finding that machine learning enables logistics and supply chain operations to optimize capacity utilization, improve customer experience, reduce risk, and create new business models.
  6. Detecting and acting on inconsistent supplier quality levels and deliveries using machine learning-based applications is an area manufacturers are investing in today.
  7. Reducing risk and the potential for fraud, while improving the product and process quality based on insights gained from machine learning is forcing inspection’s inflection point across supply chains today.
  8. Machine learning is making rapid gains in end-to-end supply chain visibility possible, providing predictive and prescriptive insights that are helping companies react faster than before.
  9. Machine learning is proving to be foundational for thwarting privileged credential abuse which is the leading cause of security breaches across global supply chains.
  10. Capitalizing on machine learning to predict preventative maintenance for freight and logistics machinery based on IoT data is improving asset utilization and reducing operating costs.

Read more at How To Improve Supply Chains With Machine Learning: 10 Proven Ways

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Gartner: top 8 supply chain technology trends for 2019

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According to Gartner, while many of these supply chain technology trends have not yet been widely adopted, they will have a broad industry impact this year.

Gartner has highlighted the key supply chain technology trends which they warned must not be ignored. Christian Titze, research vice president at Gartner, said: “Within the next five years if half of the large global companies are using some of these technologies in their supply chain operations, it’s safe to say that the technologies will disrupt people, business objectives and IT systems.”

The top 8 supply chain technology trends in 2019 are:

#1 Artificial intelligence (AI)

According to Gartner, AI technology in supply chain operations is all about augmenting workers. Thanks do developments in self-learning and natural language processing, AI is now advanced enough to automate numerous supply chain processes such as predictive maintenance and demand forecasting.

#2 Advanced analytics

Thanks to the increase in IoT data and extended external data sources such as weather or traffic conditions, analytics is going to get a lot more advanced. Gartner predicted that organisations will be able to anticipate future scenarios and make better recommendations in areas such as supply chain planning, sourcing and transportation.

#3 IoT

Gartner has reported seeing more supply chain practitioners exploring the potential of IoT. However, according to Gartner, new IoT applications involve more than just passive sensors.

#4 Robotic process automation (RPA)

Excitement has been building around RPA for some time now, and its place in the enterprise has seen a lot of maturing this year. Like AI, RPA, according to Gartner, is about augmenting workers.

#5 Autonomous things

Autonomous things use AI to automate functions previously performed by humans, such as autonomous vehicles and drones. They exploit AI to deliver advanced behaviours that interact more naturally with their surroundings and with people.

#6 Digital supply chain twin

A digital twin is a digital replica of a physical asset, whether that is a product, person, place or system.

#7 Immersive experience

Augmented reality (AR) and virtual reality (VR) technologies have long been touted as the next big thing. For all its promise mass adoption by enterprises have, in reality, always seemed to be on the horizon.

Read more at Gartner: top 8 supply chain technology trends for 2019

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