Supply Chain 4.0

Recent years have brought major upheavals that have had a significant impact on all company departments.

However, one department—perhaps more than the others—is now facing many new challenges: the supply chain. So what exactly has changed in this area, why, and how can you address it? These are all questions you are surely asking yourself, and that we will explore in this article. We will provide an overview of the main challenges in 2022 for companies’ Supply Chain.

I. Long-standing challenges that are becoming increasingly critical

Traditionally, cost control and lead-time control could be listed as key Supply Chain challenges. These topics are more relevant than ever in a world emerging from just over a year and a half of pandemic. Moreover, with supply chains under strain.

Road freight costs are expected to increase by 4.2% in 2022 (according to the CNR). Meanwhile, container prices have risen by 351% according to the World Container index.

In the face of such increases, it is essential to secure your partners. It is also necessary to optimise the loading of trucks, containers or aircraft. A next-generation ERP makes it possible to forecast long-term demand and enter into long-term agreements with your partners. It enables automatic optimisation of the loading of handling units and means of transport in order to avoid “empty transport”.

II. Challenges related to the Covid-19 pandemic

Since the start of the Covid-19 pandemic in 2020, new phenomena directly impacting Supply Chain management have emerged. They are forcing companies to adapt. Among these, we can mention:

• shortages of raw materials or components

• the need for digitalisation

• inventory reliability

• collaboration between all players in the chain

Moreover, it seems that companies that implemented the DDMRP methodology to manage their planning and inventory management processes have weathered the crisis better. Indeed, DDMRP makes it possible to pull flows to better align inventory and planning with market demand. This method therefore makes the system more robust in the face of variations compared with a traditional planning system.

Overall, the objective is to quickly gain transparency and visibility throughout the Supply Chain by working with your preferred partners. It is also necessary to move up the value chain to tier-3 suppliers to ensure transparent, synchronous steering of actions.

Just-in-time management is becoming a reality today. The situation highlights the need to have a complete view of the inventory available at suppliers in order to be able to meet customer demand.

The pandemic also highlighted the dependence of certain industries on major import players. This is why end-to-end Supply Chain risk management is becoming essential. Product and component sourcing must now take into account not only delivery lead times or cost criteria, but also origin and security of supply. Multi-sourcing may be the solution.

Data analysis and digitalisation have been important levers for overcoming, in the short term, the challenges companies had to face. Digitalising processes is therefore essential both for day-to-day monitoring and for retrospective analysis.

Here again, a modern ERP solution will make it possible to implement the necessary processes and optimise the Supply Chain as a whole.

With their automatic requirements calculation features using the DDMRP method, they will help secure inventory for items and components deemed critical.

End-to-end supply chain tracking (from supplier order confirmation to goods tracking at the various stages of the supply chain) will make it easy to identify delays and alert operational teams by setting up dashboards or alerts for problematic deliveries.

Setting up sourcing quotas is also a feature that enables efficient, automated multi-sourcing management.

Of course, batch tracking (manufacturing, supplier, etc.) or serial numbers ensure traceability, but when combined with technologies such as RFID, supply chain transparency and inventory reliability are increased.

III. Consumer expectations to take into account

For several years now, consumers’ environmental and societal concerns have been present and seem to be increasing year after year. To meet these consumer expectations, the Supply Chain must be transparent throughout the process. Supplier selection must be carried out in compliance with CSR criteria. The carbon footprint must be calculable by tracking the means of transport used, the logistics chain from the supplier to the warehouse and through to the customer. In this way, the carbon footprint calculation is ensured.

Finally, because the era of the all-in-one ERP is over. Because certain functionalities are preferably assigned to Best-of-Breed solutions. Today’s ERP platforms are designed to be 100% open to APIs, enabling integration with machine learning or artificial intelligence.

By following all stages of the supply chain, opportunities to improve traceability are clearer.

Finally, by always staying up to date with the latest international regulations, ERP tools enable you to retain the data needed to support reporting for directives such as REACH, ROHS and WEEE.

With the cloud wave in ERP, this makes them always available. It also makes it possible to respond as quickly as possible to the problems encountered.

In short, even if Supply Chain 4.0 requires specialised tools, integrating them into an ERP foundation is essential to ensure the overall consistency of your supply chain.

Interested in the topic?
Talk to MeltOne’s ERP/Supply Chain teams: jsaccona@meltone.com