Reducing Supply Chain Redundancy With Technology: A Primer
A decades-long focus on increasing the redundancy of supply chain operations has only led to unnecessary costs and fragility. With modern supply chain technology reaching novel heights, enhanced digitization can not only reduce redundancy but also bring profitable resilience, improved visibility, and responsiveness.
Supply chain redundancy
Traditionally, a resilient organization has been established by creating redundancies throughout the supply chain. This means holding more inventory, having a diverse network of suppliers, maintaining low capacity utilization, and employing more workers.
In the event of a disruption, the organization can easily bypass the affected unit and use the redundancy to service the customer without any compromise to the organization’s functionality.
Assuming a regular supplier’s plant shut down, you could immediately turn to your backup supplier(s) to pick up the slack, without dialing up a new operation from scratch and risking delaying production.
Although redundancy can provide some breathing room to allow continued operation after a disruption, it has limited utility and is an expensive measure. A company must pay for the redundant stock, employees, suppliers, or extra warehouse space – spend which could otherwise have been invested into the growth and efficiency of the company. Often, maintaining such significant costs isn’t sustainable for a company in the long run.
Many tools such as the Toyota Production System, lean production processes, and the Six Sigma practices are great solutions when it comes to increasing supply chain resiliency. They aim to create hyper-efficient enterprises that utilize minimum inventory to yield products of high quality within a specific timeframe. An emphasis on redundancy, therefore, hinders an organization’s chances of attaining such efficiency.
It is evident that the limitations of traditional supply chain redundancy far outweigh its benefits. Digital transformation and modern supply chain technologies can help businesses reduce redundancy whilst maintaining resilience.
Technological strategies to tackling supply chain redundancy
Artificial Intelligence and Machine Learning
Modernizing supply chains means that an organization can unlock insights about various operations via its vast treasure trove of data. By harnessing powerful tools such as Artificial Intelligence (AI), Machine Learning (ML), and predictive analysis, companies can reduce supply chain redundancy and boost efficiency.
For instance, these technologies can be used to build a digital twin – a digital representation of a physical asset, process, or system that can be modified according to different parameters as required by the organization.
Digital twins can be used to construct forecast models and allow for the implementation of contingency plans as necessary. For instance, a digital twin can be used to anticipate a product’s decline and end-of-life cycle on a sales channel. Using this data, the company can maintain optimal stock levels to avoid out-of-stock catastrophes or stock overflow, thus reducing redundancy.
The above is just one example where AI and ML can be used to optimize the supply chain. Using algorithms and predictive analysis, companies can parse through larger data sets and garner insights at an atomic level which can open an infinite number of possibilities where supply chain redundancy can be reduced.
Transitioning to on-demand manufacturing leads to cost savings by significantly reducing or even eliminating inventory requirements. Businesses that use 3D printing contract manufacturers deal with less risk, more control, and reduced redundancy.
3D printing decentralizes production since it allows businesses to manufacture products closer to home rather than relying on imports. Not only does this bring the added advantage of getting products to consumers faster, but the shift away from redundant suppliers in favor of more local assembly hubs is especially useful during times of geopolitical tension where the cost of components can increase rapidly.
On-demand production can also help businesses to cut back on redundant logistics and transportation costs and overcome tariffs associated with offshore outsourcing of excessive inventory.
As robotic technology continues to evolve it has become easier to integrate a new generation of collaborative robots (cobots) into the supply-chain workflow. According to the IDC, by 2023, 65% of warehouse activities will employ robots to help with storage optimization, increasing warehouse capacity by over 20% and cutting work order processing time in half.
The utilization of inventory robots that are integrated with deep learning, computer vision, and artificial intelligence can easily scan warehouse shelves with a speed and accuracy that human employees cannot rival.
Automated robots also play an invaluable role in performing tasks that are otherwise hazardous to humans – lifting heavy pellets, performing operations during pandemics or other unsafe conditions, or welding. In-built sensors can help robots accurately scan the environment and perform tasks safely and efficiently.
By incorporating robotics into the workforce, companies can not only cut down on redundant workers and reduce the time spent on fulfillment, but the accuracy and overall efficiency of work would substantially improve as well.
Implementing technological solutions into your supply chain
The technologies described above mark the latest iteration of industrialization and are commonly referred to as “Industry 4.0.” Wouldn’t it be great to integrate and coordinate the operations of the supply chain using Industry 4.0 into one consolidated, streamlined business function?
Supply Chain Management (SCM) software integrates and coordinates operations across the resilient supply network using industry 4.0 technology, helping to further streamline business operations.
Reducing redundancy, eliminating waste where possible, and creating a more resilient and optimized supply chain are made easier with the right technological tools for the job at hand.
Cloud-based supply chain management software, like Verusen’s AI and machine learning platform, is revolutionizing supply chain management today with added functionalities such as improved visibility, optimized warehousing, demand forecasting models, and physical flow automation.
To learn more about reducing supply chain risk through MRO optimization, download the white paper on MRO optimization today.