10 Critical Innovations in Supply Chain Management

For too long, small and midsized businesses have had to settle for old-school, manual supply chain management, with the latest trends in “digital transformation” beyond the reach of their budgets and expertise. But market drivers such as extreme weather, talent shortages, and economic uncertainty are pushing every business to run more up-to-date, reliable, and lower-cost supply chains.

And luckily, the recent mainstreaming of artificial intelligence/machine learning (AI/ML), robotics, and other innovation trends in supply chains are improving the affordability and ease with which smaller businesses can modernize.

Digital Transformation Is Now Within Reach of Smaller Businesses

Supply chain management is challenging enough, as the process of planning, organizing, and managing the flow of goods and services from suppliers and out to customers. By themselves, smaller businesses would no doubt struggle to design and implement transformative technologies such as AI/ML or robotics to handle the classic supply chain functions of procurement, production, inventory management, transportation, and customer service.

The recent mainstreaming of artificial intelligence/machine learning (AI/ML), robotics, and other innovation trends in supply chains are improving the affordability and ease with which smaller businesses can modernize.

In many cases, though, even small companies can instead purchase cloud-based services or partner with a managed service provider to implement innovations in supply chain management. For instance, services are available that use historical and real-time data to create predictive models for demand forecasting and logistics management. In another example, order-taking and other error-prone administrative tasks can be replaced by robotic process automation (RPA) – now more easily purchased as a cloud-based RPA-as-a-service.

Key Examples of Innovations in Supply Chain Management

In addition to AI/ML and RPA, small and midsized businesses can step up supply chain management with the help of ever-higher-speed Wi-Fi and cellular networks, such as the current rollout of Wi-Fi 5/6 and 5G. As these networks connect the Internet of Things (IoT), they can carry more logistics information to more places with greater reliability and immediacy. This, in turn, supercharges communications to and from robots in fulfillment centers, virtual reality inventory “inspectors,” and 3D printers of customizable goods.

Below is a breakdown of these and other supply chain innovations that help can improve operations, reduce costs, and scale your supply chain as your company grows.

1. Data Analytics, Artificial Intelligence, and Machine Learning.

Data analytics tops the Association for Supply Chain Management’s (ASCM’s) list of the trends reshaping supply chains today. Increasingly, this essential process of collecting and analyzing data for real-time insights is supercharged with predictive powers by AI/ML. For instance, a small business can use AI/ML-powered data analytics to predict demand in order to right-size inventory levels. AI/ML can also automate inventory management, with systems primed to reorder when certain conditions are detected.

2. Cloud Software and Transport Management Solutions.

It’s now been some 25 years since the business world began to shift away from running its own on-site IT systems to renting cloud-based computing power, storage, and applications on demand. At this point, cloud software is commonplace across business functions and in support of IT strategies that can scale quickly – but only as needed. The cloud is not only giving small businesses more power to access the latest technologies, as already described, but it has also enabled far greater collaboration among employees, with suppliers, and even with customers.

Transport management solutions provide a prime example of how the cloud can help businesses improve cost efficiency, reliability, and customer service. These solutions help with planning and scheduling shipments, making rate comparisons, tracking shipments, and monitoring sustainable supply chain operations. They may be offered as a cloud-based service or as an on-site or cloud-hosted software package. And many companies get access to transport management information on dashboards provided by their shipping and logistics companies.

3. The Internet of Things.

The Internet of Things (IoT) has grown to many billions of devices worldwide across a spectrum of applications from smart homes to healthcare. Supply chains are among the biggest users, for tracking goods in transit, monitoring the condition of goods in warehouses, and automating tasks including the picking and packing of orders. The IoT often relies on small, electronic radio frequency identification (RFID) tags, which are used to accurately count and track items throughout the supply chain. In addition, geolocation applications combine RFID, GPS, and high-speed wireless networks to give companies real-time visibility into the flow of merchandise – helping to reduce stockouts and shipping mistakes.

4. Blockchain Transparency.

As a digital ledger in the cloud, a blockchain is not only used to record and automate financial transactions but other important business processes, as well. In supply chains, a blockchain can transparently track the movement of goods and materials over their entire life cycle, increasing visibility, efficiency, and confidence in the provenance and authenticity of products. In addition to automating payments, blockchain also enables collaboration among suppliers and buyers, to improve decision-making, reduce errors, optimize operations, and ultimately simplify partnerships.

5. Robotic Process Automation.

RPA and its offshoot – RPA-as-a-service – automate data entry and other mundane, repetitive processes in the back office. Companies worldwide are spending billions of dollars a year on RPA, which is considered a key component in digital transformation strategies. Even as it minimizes staff time spent on low-value activities, RPA also delivers greater accuracy and consistency. In a small business, for example, RPA robots can be used to process orders, generate shipping labels, and track inventory levels by cross-checking data from different point-of-sale and warehouse management systems.

6. Virtual and Augmented Reality Inspections.

The emergence of hybrid work environments has helped drive greater business use of virtual and augmented reality (VR/AR), including in supply chains. For example, augmented reality may be used to overlay digital measurements on top of “real world” products in inventory, to help inspectors identify dimensions and defects while also accessing documentation and instructions. While AR improves and accelerates inspections, other business benefits include a reduction in the number of returns and customer complaints. Additionally, using AR remotely means that inspectors don’t even have to travel to an inspection site, which can save time and money.

As a more immersive experience, VR can be used to help visualize and plan supply chain operations, train employees in navigating warehouses, and perform other tasks.

7. 3D Printing and Scanning Technology.

3D printing can make goods based on digital files, “printing” layer upon layer of plastics or other materials to output a component or final product. Customization is an important use case for smaller businesses that want to personalize products. What’s more, 3D printing can be a cost-effective way to localize production and take some strain off the supply chain. Also called “additive manufacturing,” the 3D printing market has been growing by double digits annually for several years, for uses such as on-demand spare parts.

3D scanning, on the other hand, is involved in reverse engineering, product design, and quality control. One application for retailers is providing customers with digital models of products so they can view them from different angles and zoom in on specific features.

8. Automated Fulfillment and Crowdshipping.

Warehousing and the so-called “last mile” of a supply chain, dedicated to delivering to customers’ doors, are deceptively difficult supply chain links – especially amid labor shortages and ever-higher customer expectations for rapid delivery. Enter automated fulfillment and crowdshipping.

Inside warehouses, robots and robotic vehicles now fill high volumes of orders, increasing productivity and cutting costs. Like supply chain software, robots can be leased using a subscription model, giving smaller businesses a leg up. From the local warehouse or distribution center, crowdshipping is sometimes employed to make sure deliveries reach customers fast. These operate like ride-sharing services, in that local couriers – usually gig workers who use their own transportation and mobile phones – are matched with shippers on a central platform.

9. Alternative Fuels and Renewable Energy.

More businesses are beginning to use alternative fuels and renewable energy in their supply chains, whether for the sake of the planet, the enhancement of their brand reputation, or the expectation of long-term cost benefits. Compliance is also a consideration, since new rules requiring public companies to report greenhouse gas emissions have been expected from the U.S. Securities and Exchange Commission since 2022. Despite the impetus to run greener supply chains, it can be costly to make the transition from diesel and other older energy sources to natural gas, biodiesel, electric, solar, or wind. Ultimately, however, the cost of alternative fuels and renewable energy is coming down due to technological improvements, government incentives, and increased demand.  

10. Driverless Vehicles.

Self-driving, robotic forklifts may be trending in warehouses today, and robotic delivery trials have been tested in some urban areas with mixed results. But driverless trucks face some of the highest hurtles, in terms of real and perceived safety issues. Nevertheless, given trucker shortages and high transportation costs, some experts predict that the first commercial “driver-out” routes will begin operating within the next two years. Driverless trucks are seen as particularly well suited for routes between distribution hubs separated by vast stretches of interstate highway.

The Bottom Line.

Digital transformation isn’t a one-and-done, “big bang” process. Nor is it only a big business phenomenon. Smaller businesses can engage in digital transformation as an evolution phased into their supply chains one technology at a time. Opportunity is knocking, with many innovations in supply chain management becoming more cost effective and strategically important to doing business both domestically and with overseas suppliers.

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