Areas of Opportunity in Supply Chain Management

Reevaluating your eCommerce supply chain solution for agility, scalability, and faster time to market efficiencies
The Importance of Planning, Sourcing, Inventory, and Transportation for SCM

Capitalizing on Top Areas of Opportunity in Your SCM

Supply chains are vital for many societal functions, these being our everyday shopping, manufacturing, even healthcare. Since the realization of the importance of supply chains and the development of supply chain management into a whole sector, this area has been a battlefield of challenges and opportunities. As society and its needs change, supply chains need to adapt to these changes as well. This means that there is an excellent opportunity for development and improvement behind every challenge, and why not, capitalization. This article will explain how this can happen.

A way to define the supply chain is to think about all the stakeholders participating in the supply of goods or services. Let's use the need for a new pair of shoes, for example. The process to be followed by someone who wants a new pair of shoes would be to go to a physical or online shop, view the available designs at the requested size, make a decision, purchase the item, and either take it home or wait for it to be delivered. What goes on in the background, though? The shop, either distributor or maker, should have the particular style at the particular size ready or able to procure or manufacture it at a given time. This means that raw materials (fabric, leather, rubber, soles, thread…) should also be available or procurable within known timeframes. Depending on how many people are involved in these steps, the supply chain can be long and tangled or shorter and more straightforward. With the explosion of eCommerce (online purchases), eCommerce supply chain management has evolved to be equally or more critical to managing "physical"-only supply chains. Supply chain management is the management of all these stakeholders' networks, from the people who supply raw materials, to the manufacturer of the shoes, to the person who took the order and the person who will deliver the finished product to the client.

A few decades ago, supply chain (management) was not a frequent term. Nowadays, this term is present everywhere and is a synonym for success. In an era where technology is taking over lengthy, time-consuming, and complex procedures, in an era of abundance of choice, in an era when we want everything cheaper and faster, or we expect a certain level of customer care, supply chain management (or SCM for short) is the means to make this happen and satisfy the needs of both suppliers and customers.

From a grand scheme point of view, the latest updates on SCM are introducing technology and the internet in our lives, and the ongoing effort to protect the environment and make more sustainable and conscious choices on a personal and industrial level. These factors have affected and continue affecting SCM and eCommerce SCM in ways that are constantly changing, with new information, legislation, technological updates, and the response from the environment on our actions. Overall, supply chain management benefits are undeniable, as a good SCM system can lead to better, faster, cheaper, more sustainable product manufacturing and distribution. However, as SCM is inextricably connected to societal needs and behaviors, and these factors are constantly changing, SCM can –and should– be considered an alive process, maybe equivalent to our brain's function for our bodies.


Top Areas of Challenge in Supply Chain Management

One of the most significant recent challenges supply chains had to face was the Covid-19 pandemic. The majority of business sectors were hit, and several SCM stages were hampered, causing delays almost every step of the way from an order to the client receiving their goods. The pandemic affected SCM of specific companies, sub-sectors, or even whole sectors, with too many being affected one way or another by this unprecedented health crisis. The overall "pandemic challenge" is only a placeholder for various other supply chain management challenges revealed under this world catastrophe.

One of these challenges is the efficient and fruitful communication across a single SCM or several SCMs to unite forces. Since the pandemic crippled some particular areas of the world, supply chains using suppliers of these areas or delivering to these areas were disturbed. Efficient communication across supply chains operating in the same sector and facing the same or opposite problems could have introduced collaborations, "exchange" of suppliers, delivery services, or even task force to support SCM's most heavily affected stages and stakeholders.

Another challenge somewhat related to efficient communication is agile response during a crisis (regardless of magnitude). The inability to move around freely suddenly highlighted the importance of online communication, monitoring, and digital technologies in general. Parts of an SCM which were not online suddenly had to be digitized, and this was a challenge, especially for smaller companies that based their supply chain on face-to-face interactions. SCM's ongoing challenge has been the need to comply with sustainability guidelines and try to become greener. Since several sectors faced changes and had to rethink and adapt their supply chain management practices, this challenge was (and is) a great necessarily evil if you want, to make stakeholders rebuild something better.

Finally, another significant SCM challenge is the protection of products, especially when it comes to time-sensitive or condition-sensitive products. An excellent and very current example is the transportation of vaccines from the manufacturer to the end-user point, which is temperature-sensitive and time-sensitive is temperature storage conditions are compromised. To overcome this challenge, providing that the product formulation cannot change, planning and introducing several contingency plan layers is vital.

Top Areas of Opportunity in SCM

Although the pandemic introduced a great deal of pressure on SCM, it also revealed an excellent improvement opportunity. Furthermore, every one of the challenges discussed earlier also poses a perfect opportunity for improvement. The top SCM opportunities will be analyzed below. Expanding on these opportunities does not mean that there are no others. These are some general, current areas of opportunity in SCM and a starting point for further thought.

Collaborations within sectors: similar to the notion of borrowing some sugar from a neighbor to make a cake, this opportunity is practically the same between neighboring supply chain systems. If there is a sudden shortage or malfunction in one of the stages that can be accommodated by another company's supply chain system or even sector that shares the same stages and resources, collaboration should be encouraged. Helping others does not need to mean that we are compromising our gain. It can mean that we have allies to lend us a hand (literally, if the issue is human resources shortage).

Technology has been one of the top supply chain management opportunities for years, as technological advancements, process automation, and eCommerce have changed SCM as we knew it. With all the focus on online shopping and online marketplaces, technology is still a great, not yet fully tapped SCM opportunity. The Covid-19 pandemic made many companies rethink and redesign their online presence and shopping platforms, bringing eCommerce to the forefront of attention. Enterprise resource planning integration across supply chain stages can help save a lot of time, human resources, and ultimately, cost, creating seamless and updated connections that otherwise would require a lot of hustle. Similarly, investing in robotic systems can be a way forward for improved and streamlined SCM.

Focus on expansion: expansion is an area connected to technology, but a great SCM opportunity, especially for eCommerce SCM. With flexible options that allow ecommerce platforms to follow the lead of the customers, a company can expand or contract upon request without significant investment. Furthermore, collaborations can help in case of need and lead to new markets with the aid of established partners.

New channel and distribution strategies: there is always room for improvement in product development and distribution, as both areas are interconnected to the end-users and their needs. Being unable to freely access physical stores and specific products primarily related to healthcare created SCM's opportunity to introduce new distribution strategies to accommodate the new conditions.

Disruption preparedness: if there is one thing this pandemic taught us, it needs to be prepared, especially in the healthcare sector. This need applies to SCM, as it revealed weak and vulnerable points on established and well-greased supply chains. Technology can play an important part here, connect stages online, improve visibility, and assist with SCM maintenance in remote areas.

How to Capitalize on SCM Opportunities

Identifying and capitalizing on supply chain management opportunities is the ultimate goal for companies aiming to improve their sales, profits, and general profile. An example of clever capitalization is Amazon, which offered relief to workers who lost their jobs in various sectors due to the pandemic by providing them employment as product distributors. This action came upon realizing an opportunity, a mass of qualified employees becoming suddenly available and in need of work. Capitalization will identify an opportunity and how it can serve a purpose beneficial to a company. For example, transferring business online is a great opportunity, as it reduces the need for personnel conducting physical activities such as filing, information management, system update, or communication across departments. Transferring these activities online and integrating the different systems used can help reduce costs and delays and benefit the company. The same applies to eCommerce; grabbing the opportunity to minimize physical store locations can help reduce costs and maintain customer experience if appropriate steps are taken. Collaborations are another excellent way for SCM capitalization, as goals can be achieved faster and cheaper with a partner than companies trying to achieve them individually. Collaborations can occur between companies of the same sector or even across different sectors, identifying mutually beneficial opportunities. A good example of collaborations would be outsourcing tasks that are cheaper or faster to be conducted elsewhere, such as using website and eCommerce platform hosts rather than in-house development. An excellent area for SCM capitalization is the circular economy, trying to obey sustainability standards, reduce waste production, or engage with reusing and repurposing.

Although several SCM challenges and opportunities are identified in this article, the list is not exhaustive, and it is not personalized. Challenges, opportunities, and ways to capitalize on them can be quite personal within sectors or even companies of the same sector, so appropriate research and strategy design must be done before jumping on a potential opportunity hoping that capitalization will come.