The answer may be blockchain technology, which can be used to build applications where multiple parties can transact directly via a peer-to-peer network, without the need for a central authority to verify transactions.

With blockchain, companies document production updates to a single shared ledger that provides complete data visibility and a single source of truth. Because transactions are always time-stamped and up to date, companies can query a product’s status and location at any time. This helps to combat issues like compliance violations, delays, and waste.

In addition, companies can take immediate action during emergencies such as product recalls, and the ledger audit trail ensures regulatory compliance.

Moreover, blockchain technology is now mature enough to interface with, and take advantage of, other emerging smart technologies such as IoT, smart contracts (pieces of code stored on a blockchain), and AI to provide an enhanced and secured supply chain and automatically track production, transportation, and quality control conditions.
There are great strategic reasons to implement blockchain, such as:

Reduced risk. Access to reliable data can help mitigate risks thanks to the timely identification of issues and potential alternatives. Blockchain creates a trusted, shared, and decentralized ledger that eliminates silos and guarantees all parties access thanks to tamper-proof records that help ensure the data’s trustworthiness.

Improved visibility and transparency. A blockchain-based supply chain can digitize physical assets and create a decentralized, immutable record of all transactions across the end-to-end value stream when paired with IoT devices and RFID tags.

Increased trust. By recording all supply chain transactions on a shared and immutable ledger, blockchain provides a level of trust that was previously impossible.

While this all may sound good—but challenging—it raises the question of how to actually implement it. Some generic implementation steps include:

1. Identify the potential use.
2. Develop a proof of concept.
3. Choose a blockchain platform.
4. Build and test the solution.
5. Construct the first block with all essential features.
6. Deploy the blockchain network.
7. Create a set of rules to determine how participants agree on the validity of transactions in a blockchain network (known as “consensus protocol”).
8. Build out the blockchain ecosystem.

To get started, select supply chain software—often integrated with a “platform” such as IBM or Amazon Web Services—that utilizes blockchain technology for more accuracy, reliability, transparency and trust.
Maybe it’s time to unblock your supply chain with blockchain.

The reuse and recycling of products, improved efficiency, and the use of renewable energy could reduce up to 40% of emissions in supply chains, with just a minor impact on product pricing, notes the World Economic Forum.

By leveraging technology through a digital transformation, businesses can achieve transparency, energy efficiency, and waste minimization across their entire supply chain operations.

Here’s a rundown of some specific technologies currently being used in the supply chain to help take sustainability to new levels.

Cloud technology products unify data intelligence and provide organizations with the overall visibility—often in real time—needed to both improve sustainability reporting and track the insights necessary to make decisions for long-term business transformation.

Artificial intelligence and machine learning play crucial roles in enabling the sustainability effort by helping identify trends and patterns in large amounts of data and providing insights that you wouldn’t see otherwise.

Blockchain technology, while still in its early stages, has attracted attention as a record ledger. Blockchain enables organizations to trace each step in the supply chain as well as the carbon footprint changes that result from digital transformation and other attributes.

Public cloud ERP systems can specialize in environmental aspects and automate calculating product and organizational carbon footprints.

Smart devices are—or will be—used to mitigate the environmental impact of supply chain operations:

• Drones used in last-mile deliveries have an impact on customer satisfaction, variable costs, and greenhouse gas (GHG) emissions.
• Telematics can be used to track the condition of a vehicle and the actions of its driver—for instance, driving with low rpm reduces fuel consumption.
• Self-driving vehicles minimize GHG emissions by carrying more items per trip because the driver compartment is used as an additional storage area. Connectivity between these IoTs aids in route and traffic optimization to save on costs and GHG emissions.

Electric vehicles can drastically reduce GHG emissions without a negative impact on supply chain operations if the majority of electricity in a location is generated by green energy sources and adequate charging infrastructure is in place.

3D printing, or additive manufacturing, allows companies to computerize their intermediate goods and re-create them in the next production location using digital code. 3D printing offers several opportunities to lower transportation costs, reduce GHG emissions, and save time.

Supply chain sustainability is no longer a nice-to-have but rather a business imperative to help grow the bottom and the top line.

In the United States, small businesses, mom-and-pop shops, and entrepreneurs are the backbone of our economy. These small to mid-sized enterprises (SMEs) include brick-and-mortar retailers, e-tailers, omnichannel retailers, wholesalers, distributors, and small manufacturers that often operate with fewer than 50 employees.

Surprisingly, “micro enterprises” that employ nine or fewer people are the most common kind of private-sector business in the United States.

Failure to Launch

Depending on a variety of economic factors, small businesses can be susceptible to failure (50% fail in their first year and only 44% survive for more than four years). Making things even more difficult, during the past three years, SMEs have had to deal with supply chain disruptions resulting in product shortages and out-of-stock issues, as well as overstocks made worse by inflation.

Lack of cash flow and demand is a primary reason why small businesses fail. Some of this can be attributed to their investments in inventory (excluding pure service businesses). Having too much inventory impacts cash flow negatively and too little impacts demand, i.e. lost sales.

That is where having a robust sales forecasting and inventory planning process comes in. Sales and inventory forecasting for small business is extremely important, yet often underserved, if not outright neglected.

Having a good understanding of what future sales could look like and understanding how to order the right amount of inventory allows SMEs to develop an informed procurement strategy to make sure supply matches customer demand.

The exact sales forecast process will be unique to each business, but SMEs should at least determine their sales channels—for example, store vs. e-commerce—as well as use past sales data, factor in new products, and define forecast periods or planning buckets for up to 12 months in advance.

Next comes inventory planning. It is common for small businesses to run out of one type of product while having a surplus of another. This can be due to issues with both forecast accuracy and safety stock, which is the backup inventory kept as protection against demand fluctuations and supply chain uncertainty.

Affordable Planning

Unfortunately, it is common for many SMEs to use back-of-the-envelope and/or visual methods to manage this continuous, yet critical, process. Utilizing a low-cost application such as Forecisely.com (disclosure: I am involved in this enterprise), a small business can input the necessary data ahead of time, with all the forecasting calculations done for them.

From here, SMEs can forecast sales by channel/location, as well as project orders/re-orders while factoring in “scientific” safety stock, to determine where to focus marketing efforts and other investments.

It’s time to provide affordable supply chain planning tools for all businesses. As the saying goes, “to be forewarned is to be forearmed.”

As a result, many enterprises have invested or plan to invest in technologies such as autonomous and “semi-autonomous” (some human monitoring may be required) trucks, delivery air drones, and land-based bots.

A Growing Market

The global autonomous last-mile delivery market was valued at $1.1 billion in 2021 and is expected to reach $5.6 billion by 2027 (a 20.9% compound annual growth rate from 2022-2027), according to a recent Research and Markets survey.

The market for this service is segmented by long and short ranges; hardware, software, and services solutions; and specific applications in the healthcare, logistics, retail, and food and beverage verticals.

The North American region is expected to dominate the autonomous last-mile delivery market, the survey finds, due to its greater use of automation in last-mile delivery.

A number of firms—including Walmart, Amazon, JD.com, and Alibaba—are starting to offer drone delivery services. They have introduced innovations and made investments to deliver packages over long distances without human intervention. At this point, the use of drones to deliver medical supplies and prescriptions has been the most effective.

Driverless last-mile delivery faces challenges, however, due to infrastructure limitations and government regulations. Underdeveloped infrastructure and weak internet connectivity can delay delivery time or lead to delivery to the wrong locations. So, in the foreseeable future, the growth of autonomous last-mile delivery by air drones may be limited to less congested areas and by land robots to urban areas and campus environments. These factors may reduce the success rate of autonomous delivery mechanisms, leading to a lower market growth rate.

If these limitations can be resolved or minimized, the cost benefits are potentially immense—it is estimated that land delivery robots can reduce delivery costs by up to 80-90%, as well as significantly reduce carbon footprints.

This is especially important as last-mile delivery makes up more than 50% of the total cost of shipping and is the least efficient part of the shipping system.

Before the growth in single package deliveries—primarily due to ecommerce—everything was transported in bulk, allowing for costs shared across all packages. The last-mile single package makes up the majority of delivery costs as there are few packages to share the fees.

With global small package deliveries increasing, costs will continue to increase, stressing the shipping industry and the consumer.

No one knows how big autonomous delivery will get, but it is a great example of a leaner and greener supply chain of the future.

Near-sourcing, also referred to as near-shoring, occurs when a business works with a manufacturer that is located in foreign countries that are relatively close to end users.

Today, the two concepts have gained importance due to geopolitical events—such as the pandemic or rocky relations with China—that make global sourcing much harder to accomplish.

Does it Make Sense?

As the supply chain becomes increasingly unstable for many businesses, companies (and in some specialized cases, such as semiconductors, the U.S. government) are re-evaluating previously outsourced processes and materials as candidates for in-sourcing and near-sourcing.

However, are strategies such as in-sourcing or near-sourcing realistic? From an economic perspective, do they provide a real alternative? Today’s global supply chain is complex, and therefore, the answer also is complex.

Companies need to find points in the supply chain where they can reduce risk and find core competencies and economies of scale. They also must consider trade-offs such as lower inventory carrying costs, better quality, and higher service levels compared to potentially higher materials costs.

More specifically, before deciding to in-source or near-source, companies should take these steps:

• Examine key suppliers to better understand current and potential issues.
• Seek out secondary partners for critical needs.
• Explore in-sourcing some parts or elements to increase self-sufficiency.
• Review risks when considering bottom-line costs.
• Look at shifts in customer trends to guide production.

The benefits of near-sourcing include the opportunity to visit the manufacturing site more frequently, gain better control of intellectual property, operate in a more convenient time zone, enable quicker transit from manufacturer to customer and greater speed to market, and improve quality control and supply chain efficiency.

For example, to increase speed and agility, fashion retailer Zara has been moving production from Asia to Morocco and Turkey. And footwear manufacturer Nike has moved some production from China to Mexico.

Is it Feasible?

Some firms may find that in-sourcing, outsourcing domestically, or near-sourcing are not feasible for reasons that include cost, delivery speed, reliability, and control.

Near-sourcing also has its limitations, such as high labor, supplies, and tax costs, a restricted talent pool, training workers for production changeovers, decreased process monitoring, and increased security threats.

While off-shoring to low-cost sites in faraway places may still make sense, other criteria such as agility and flexibility have become more important when making sourcing decisions in these volatile times.

The pandemic is the most recent of many external examples. As we saw during and after the pandemic, supply chains can become unhealthy and shut down completely when core processes fail, while minor damage can be addressed and minimized when treated quickly.

At the same time, old legacy systems are rapidly becoming obsolete as they are too slow to adapt. They can’t support complex supply chains that change with increasing speed.

Moving to Real Time

In the past it was sufficient (and to be honest, we only had the capabilities) to update information in batches, sometimes overnight only. As time went on and technologies advanced, we were able to move some processes to real time where it made sense. Digitalization has made supply chains faster, more flexible, more accurate, and more efficient.

Today, thanks to how quickly technology is being developed, we have tools that allow organizations access to real-time visibility of delivery activities. We can access relevant information on one platform throughout the day, keeping all stakeholders current.

Examples of these tools include SAP HANA and Amazon Web Services. These platforms in the cloud offer supply chain resiliency and visibility, often in real time with a unified view.

They use tools such as advanced artificial intelligence and machine learning algorithms to identify dependencies, correlations, and current trends, as well as to suggest improvements and compute risks to mitigate and limit the impact of most supply chain disruptions.

Real-time visibility uses technology to track detailed information as raw materials and finished goods move through all stages of the supply chain. It allows you to know what is actually happening, so you can fix the problem by understanding the situation and finding the best solution, sometimes reducing or minimizing costs.

In the supply chain, real-time visibility refers to logistics activities that track and trace, in real time, the movement of goods and packages from suppliers, manufacturers, warehouses, and hubs to the end customer.

A lack of real-time visibility into your supply chain can result in negative consequences such as lost sales, inaccurate measurements, delayed deliveries, and increased costs.

On the flip side, if you do invest in real-time visibility, you can benefit from a general decrease in the dreaded bullwhip effect, where, through lack of visibility, small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand at the wholesale, distributor, manufacturer, and raw material supplier levels.

Other benefits include better cost effectiveness, greater customer satisfaction and lower supply chain risks.

It’s time for all of us to finally “get real” time.

• Infrastructure as a Service (IaaS)
• Platform as a Service (PaaS)
• Software as a Service (SaaS)

The cloud is the backbone of a “smart” supply chain—referred to as Supply Chain 4.0—because it contains the necessary data and interchanges.

To take advantage of all the Supply Chain 4.0 technologies now and in the foreseeable future, the cloud will be integral. Blockchain, the Internet of Things (IoT), artificial intelligence, and the digital supply chain will all require cloud computing.

The cloud centralizes data and then offers access to your extended supply chain network, which decreases costs, speeds velocity, scale, and visibility, and enhances data security. The cloud also helps companies predict market changes and risks across their supply network.

An added benefit: The cloud enables innovation with affordable access to leading-edge technologies and capabilities.

A recent Accenture survey supports these benefits, finding that executives attribute their cloud use to a 26% increase in demand forecast accuracy, 16% reduction in supply chain operating costs, and 5% increase in revenue growth and profitability.

Call for Security

There is one major disadvantage to consider and attempt to minimize: Cloud security issues can put your software supply chain at risk.

To reduce security risks, understand your cloud environment by learning what runs where. Consider a hybrid cloud architecture approach where sensitive data is kept on-premise. Also consider spreading your workloads across different cloud accounts to reduce the impact of any potential breaches.

Finally, stay on top of cloud security issues by following the news and your cloud provider’s security blog.

While traditional on-premise enterprise software or legacy solutions—either custom-built or packaged software—provide a powerful solution with robust features, they are difficult and expensive to acquire, install, and maintain and don’t always keep pace with business demand. They also often require custom programming.
It’s estimated that the global cloud supply chain management market will grow an average of 11% through 2028. The market has been segmented based on solutions, services, deployment models, organization sizes, verticals, and regions.

Many companies already leverage the cloud for supply chain applications including:

• Forecasting and planning. They use the cloud to collect and unify information from customers, retailers, wholesalers, and manufacturers.
• Logistics. The cloud helps companies provide and share tracking operations, automatic inventory management, and route optimization.
• Service and spare parts management. The cloud makes servicing schedules more efficient, which reduces downtime, while RFID and IoT can help track inventory location quickly.
• Procurement. The cloud can serve as a master supplier database and automatically order when inventory reaches a set minimum level. It can also be a platform for contract development and maintenance.

To survive today’s volatile global environment with a lean and agile smart supply chain, start moving to the cloud.

Some refer to this concept as Supply Chain 4.0: the application of the Internet of Things (IoT), advanced robotics, and big data analytics (including artificial intelligence). Place sensors in everything, create networks everywhere, automate anything, and analyze everything to significantly improve performance and customer satisfaction.

Companies expect their supply chains to deliver more—to be responsive to demand and resilient to change, to optimize costs and do good for society. To achieve all this, supply chain leaders must reimagine their supply chains for tomorrow.

Future Ready Supply Chains

Future-ready supply chains are intelligent, self-driving networks of growth. They’re built on a foundation of digital, data, and artificial intelligence (AI) to provide visibility, agility, and new ways of working needed to create 360-degree value, enterprise-wide.

These intelligent supply networks deliver across three key priorities:

Relevant–agile and customer-centric, addressing demand changes cost-effectively.

Resilient–preparing for, mitigating, and responding to disruptions of all scales.

Sustainable–good for society and the planet, enhancing trust with all stakeholders.

Get Smart

So how can we make it happen? By concentrating on five areas:

1. Artificial Intelligence. Transform data-driven decision-making across the supply chain using artificial intelligence, analytics, and intelligent automation. The most advanced companies understand that while cloud sets you up with next-level computing power and access to new kinds of data in the right quantity and quality, AI is the bridge to convert that data into business value.

2. Cloud. Change through custom cloud services and solutions that accelerate innovation, intelligence, and value across the supply chain.

3. Ecosystem. Navigate a complex partner ecosystem across the supply chain, accelerate digital transformation and enhance the digital core. The supply chain ecosystem refers to a network of interlinked companies—such as suppliers and distributors—that interact with each other, primarily complementing or supplying key components of the value propositions within their products or services.

4. Industry X.O. This term, coined by consultant Accenture, means to speed up operational efficiency and enterprise-wide growth by reimagining the way products, services, and experiences get designed and built in the age of digital disruption. Think in terms of how products are designed and engineered, sourced and supplied, manufactured, serviced, returned, and renewed.

5. Sustainability. Become responsible by building sustainable value chains that positively impact business, society, and the planet. To meet customer expectations and be truly sustainable, organizations must ensure responsible business practices internally and across their entire value chain.

By starting down this path now rather than waiting, the smart supply chain can help you manage day-to-day operations as well as handle global disruptions, visualize the full picture, and respond in real time.

Isn’t that the “smart” thing to do?

Also, because the supply chain consists of suppliers, customers, and the producer, companies can achieve competitive advantage by aligning the entire extended supply chain to a competitive hybrid strategy.

To illustrate how important a hybrid supply chain strategy is, companies that took this approach to heart appear to have performed the best through the pandemic.

The fact is, many companies that I have visited over the years have misinterpreted the idea of Lean entirely. They thought they were already lean because they laid off a significant part of the workforce, had minimal levels of inventory, or had single-sourced suppliers.

This kind of thinking missed the point, dangerously as it turned out. Having a Lean philosophy means getting to the root cause of your variabilities first and then lowering inventory levels.

Low-cost thinking made sense through the early 2000s when the focus was mainly on cost reduction (which helped to rein in inflation for 30+ years). However, since around 2010, there has been a shift in thinking from an emphasis on an efficient supply chain to a more responsive one requiring flexibility.

Furthermore, being Lean means that you are flexible and agile to some degree anyway. A primary example of this is the conceptual idea of one-piece flow, where batch size reductions are enabled through quicker changeovers in manufacturing. As most activities in a factory, warehouse, or office involve batching and changeovers of some kind, it is really a universal concept.

Lean and Agile Success

To be truly successful in a lean and agile endeavor, not only do your processes need to have these characteristics, but so do your people. You also need the technologies to support the strategy.

Agility is all about customer responsiveness, flexibility, people, and available information, collaboration within and between firms, and readying a company for change.

Your supply chain needs to take a hybrid approach structurally, as well as organizationally, which refers to the way decisions are made about how to schedule and utilize supply chain resources. This requires capabilities such as team alignment, end-to-end visibility, and cross-training.

Strategically, the hybrid supply chain professional of the future needs:

• To generate and manage large volumes of data, and have the ability to analyze and model it to support more frequent decision-making.
• A deep understanding of complex supply chain dynamics and how to plan or react.
• A better understanding of business objectives and how any daily individual decision or action can impact those objectives.
• The ability to communicate, often remotely, clearly and concisely with partners, other functions, senior management, and stakeholders.
• The ability to bring together dispersed and diverse teams through technology to solve problems.
• Up-to-date communication skills using new collaboration technologies.

What are you waiting for? If you delay adopting a hybrid supply chain strategy, it may be too late.

Because the time horizon of an S&OP process may span anywhere from one to six-plus months, it is critical to also include an element of risk management on a regular basis, especially in today’s volatile external environment.

Risk management—risk identification, assessment, treatment, and monitoring—through S&OP is just as important as financial alignment. Risk management permeates all functions and levels of an organization and might even extend to suppliers and/or customers. So, it should naturally be part of Sales & Operations Planning.

From Inside Out to Outside In

Historically, companies used an “inside-out” approach in S&OP, guided by the belief that an organization’s inner strengths and capabilities will produce a sustainable future to meet anticipated demand. This approach looks primarily at internal supply elements and then works outward.

To achieve success in today’s volatile global environment, however, companies need a more “outside-in” approach that uses information from the extended supply chain to maximize customer value and overall supply chain surplus. This approach includes not only collaboration with key customers and suppliers but also demand sensing, shaping, and enterprise tradeoffs, including risk/reward analyses.

Besides matching demand with supply while meeting financial and operations goals, best practice and mature S&OP processes uncover risks and opportunities that lead to scenario planning and help the organization prepare for a range of future circumstances.

Here are some steps to consider to help develop scenario planning capabilities in your Sales &Operations Planning process:

• Identify risks and opportunities that might impact the demand or supply plan by validating key assumptions as well as a range of internal and external supply chain drivers.
• Develop a culture of identifying risks and opportunities. Challenge the plan by engaging finance teams while using a common language—for example, develop a strong link between S&OP and financial planning.
• Use risks and opportunities to drive decision-making by moving them through the S&OP process using an agreed-on way of handing over information to the following step.
• The final executive S&OP step requires teams to think about sharing not only the risk or opportunity but also the impact, possible actions, and expected results.

Integrating Risk Management

Risk management can no longer be considered a purely long-term, strategic tool. It must now be integrated with more tactical tools such as S&OP to ensure your organization’s future success.