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Procurement and logistics: Greater efficiency through the use of technology

by Editor

Many companies are currently struggling with high cost pressures on the supply chain caused by supply constraints, increased freight and storage costs, sharply rising energy prices and persistent inflation. What is needed at this point are efficient processes that can reduce costs, save time and increase productivity. Discussing examples from practice, we explain how companies can work much more efficiently with technologies tailored specifically to the supply chain, such as SCM software or the Internet of Things (IoT), network collaboratively and thus leverage potential savings.

With the multitude of challenges in supply chain management, it is becoming increasingly important to rely on future-proof technologies. In this context, digitization offers a wide range of solutions for supply chain processes. However, these are only being used by a relatively small number of companies worldwide. According to a recent survey conducted by SAP and Oxford Economics in April 2021, nearly 40 percent of companies use outdated, manual methods for the majority of their processes. Only 6 percent of respondents said that they use automated solutions.

With the following digital tools, companies could not only increase productivity, but also reduce costs, increase supply chain resilience and achieve more efficient processes through automation.

Further networking and increased transparency thanks to cloud-based SCM software

In view of uncertain supply situations and delivery bottlenecks, small and medium-sized companies in particular rely on increased inventories. While this response does lead to more security, it can also cause economic losses due to increased storage costs and possible surplus inventories. Another – at least additional – way to secure the supply chain and increase efficiency is to gain more control over supply chain operations. In order to achieve the required transparency, it pays to use supply chain management software that is tailored to company-specific needs for long-term protection and cost reduction. In this way, the entire freight management can be controlled in detail in coordination with other company divisions – from order management to tracking and workflow management. For this purpose, the SCM software offers real-time visualization of all processes in order to precisely monitor and control freight and inventory management and gain control over time, costs and optimization potential.

A cloud-based software solution  is suitable for connecting all supply chain players, some of whom have very different IT infrastructures and security standards, for the best possible utilization. If all partners are integrated into the SCM platform, parallel access to the relevant data and process flows is possible and the level of collaboration in the supply chain is increased.

“What-if” simulations: The digital twin

With the further development and interaction of the Internet of Things (IoT), Machine Learning and Big Data, the concept of the Digital Twin – a method to simulate networked processes or models – emerged. The Digital Twin is a typical example of how modern AI-based technologies lead to more control and efficiency. In supply chain management, digital twins ensure that flows of goods, machine utilization, transport routes are mapped in real-time exchange with the physical supply chain. End-to-end monitoring enables the permanent optimization of all processes within the supply chain.

This allows employees responsible for procurement, logistics and goods management to have a better overview of the system and to control inventories or deliveries more efficiently, but also to act with foresight and optimize procurement and delivery processes. If the supply chain falters, alternative suppliers, transport routes or means of transport can be selected.

Using blockchain to defend against cybercrime

Since value creation in the supply chain takes place across companies and sensitive information has to be transmitted between a large number of players, the risk of supply chain attacks is constantly increasing. According to a study on the security of operational technology (OT) systems by security expert OTORIO continue to underline the importance of IT security: according to the findings, companies see great danger in unauthorized access to customer and employee data. The respondents also consider automated data exchange in the supplier network to be particularly at risk.

The blockchain counters this problem with a sophisticated technology that protects against attacks. In simple terms, the blockchain is a database that links and logs all data records in a tamper-proof manner. The information chain is encrypted and stored decentrally on all computers that participate in the blockchain – for example, supplier information is linked to delivery data. This enables global access for all supply chain participants – for secure collaboration and the exchange of sensitive data.

Automation and robotics to increase process efficiency

Automation technology and robotics precisely and reliably relieve employees of routine tasks and increase process efficiency. This also applies to manufacturing, warehousing and logistics. With the help of automation in the entire logistics process, companies can optimize workflows, increase productivity and benefit from a significant cost reduction.

One example of successful digital transformation is the application of highly efficient robotic systems that independently pick inventory and thus relieve employees of packing or loading tasks. Technologies based on image processing are used in the sorting area or in shipping and inventory processes to increase employee productivity. Further, autonomous and connected driving is already being used in container ports with driverless transport vehicles.

Digitization as a path to efficiency and control

Comprehensive and cross-divisional digitization is the path to efficiency and control: An expansion of the digital supply chain by means of collaborative technological innovations can optimize a wide range of processes, reduce costs and make operations run more smoothly. This applies to aspects of transportation and warehouse management, data sharing, and improving planning and control through the use of artificial intelligence across the supply chain.

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1 comment

Fluix October 23, 2022 - 1:24

With increasing digital maturity, organizations are becoming “alive” – they “feel” the environment, are always attuned to internal and external signals, and are able to make – or even automate – appropriate and timely decisions in the supply chain. They use artificial intelligence and machine learning to reinforce learning from every opportunity to become self-healing organizations.

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