A primer on smart logistics and supply chain management
Smart logistics and supply chain management are increasingly important for businesses to stay competitive in today’s fast-paced, global economy. The supply chain crisis of 2021 has brought forth a few lessons and accelerated the innovation rate. By using technology and data-driven insights, companies are able to optimise their supply chain operations and deliver goods and services more efficiently and effectively.
A key aspect of smart logistics is the use of advanced transportation systems and routing algorithms. Advancements in these areas [1] have allowed companies to plan the most efficient routes for their vehicles, reducing fuel consumption and emissions while also minimising travel time and costs. Solutions that cater to different modes of transportation, avoidance features such as toll roads, ferries and stairs, and dynamic updates of estimated time of arrival [2] have also begun to be commonplace transforming how journeys are planned.
By using data on past sales, weather patterns, and other factors, companies can better predict future demand and ensure that they have the right products in the right place at the right time. The availability of such information allows for the use of predictive analytics and machine learning to forecast demand and optimise inventory levels. This helps reduce excess inventory and avoid stockouts, resulting in lower costs and higher customer satisfaction. In fact, companies that do a better job of predicting future demand can often cut 20 to 30 percent out of inventory, depending on the industry, while increasing the average fill rate by three to seven percentage points [3].
Predictive analytics can take a lot of the guesswork out of planning and decision support processes. Unlike historical analytics that only look into the past, supply chain predictive analytics allows supply chain leaders to anticipate and prepare for the future.
Smart logistics also involves the integration of various supply chain partners and stakeholders, such as suppliers, manufacturers, and distributors. Through the use of shared data and communication technologies, companies can improve collaboration and coordination across the entire supply chain. This leads to more efficient and effective operations, as well as improved visibility and control over the flow of goods and information. An example would be Dell’s direct sales strategy that has helped the firm gain excellent visibility into what its customers want [4].
There are many benefits resulting from smart logistics and supply chain management. In addition to cost reductions and efficiency improvements, these technologies can also help companies better serve their customers and respond to changing market conditions. For example, with the ability to quickly reroute vehicles or adjust inventory levels, companies can better handle unexpected events, such as natural disasters or changes in consumer demand. An interesting piece that discusses the long-term impact of natural disasters on global value chains and their organisation can be found in [5]. This study focusses on the longer-term effects of the disruptions on trade patterns with an inclusion of time-varying shocks.
In today’s market, developing a solid supply chain and logistics strategy is an important part of the company’s business strategy.
References
[1] Recent advances in vehicle routing exact algorithms
[2] HERE Routing
[3] Building the predictive supply chain of the future
[4] How the Dell Supply Chain Stays Competitive with Tech Giants
[5] Lessons for COVID: How natural disasters reshape supply chains
