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The Cost of Not Modernizing Your Supply Chain


Green, blue, and black digital screen updating through modernization

$1.9 trillion. As far back as 2015, that was the predicted impact estimate of Internet of Things (IoT) technologies in the supply chain and logistics sector. With IoT technologies growing by leaps and bounds, that number is likely much higher today.


Of course, IoT’s value doesn’t exist in a vacuum. Rather, it’s made possible by its connected nature to a host of cutting-edge technologies that make up the digitized supply chain.

Such numbers underscore the importance of modernizing the supply chain—as well as the resultant costs that may be experienced by companies not willing to do it.


According to a 2017 study conducted by the Business Continuity Institute (BCI) that covered 65 countries, 63% of the 400 respondents indicated their businesses weren’t using any type of technology to monitor their supply chain performance.


If things hadn’t changed by the time COVID-19 hit, those businesses were likely left reeling and wishing they’d paid more attention to modernization needs.


Such modernization includes digitizing the supply chain by understanding the value of cutting-edge technologies, how they can be applied to a company’s specific needs, and making the investments needed to implement them.


Here, we’ll take a look at the cost of not modernizing your supply chain through a lens of understanding what would be possible if you do.



Modernizing to Address Evolving Priorities


Quoted in a Select Hub post, Lisa Anderson, the founder and president of LMA Consulting Group Inc., highlights the importance of keeping up with modernization efforts:


“To thrive in today’s Amazon-impacted business environment, customers expect rapid deliveries, 24/7 accessibility, last minute changes and easy returns with innovative service options. … To meet these ever-increasing expectations while increasing profitability and cash flow, executives are looking to technology such as robotics, IoT, artificial intelligence, automation equipment and predictive analytics to accomplish these objectives.”


Referencing supply chain challenges created by COVID-19, consulting firm Deloitte highlights the need for companies to make an urgent pivot to address new priorities within their business models:


“A decades-long focus on supply chain optimization to minimize costs, reduce inventories, and drive up asset utilization has removed buffers and flexibility to absorb disruptions—and COVID-19 illustrates that many companies are not fully aware of the vulnerability of their supply chain relationships to global shocks.”


However, making such a pivot may be easier said than done—especially if an organization doesn’t have an ongoing commitment to do what’s needed to keep up with supply chain modernization. When that’s the case, the following costs are just a few they may be occur.



Cost: Reduced Visibility


Better end-to-end visibility likely was and is a major need for many companies hit by pandemic-induced breakdowns in the supply chain. This is especially true for global organizations that rely on suppliers in a variety of locations.


Lack of visibility can increase costs in a variety of ways when unseen cause-and-effect issues create disruptions that impact mission-critical dynamics. These may include lack-of-visibility issues such as:


  • Stock levels that aren’t appropriate to meet demand—which may lead to either failing to meet customer needs or overspending on already-available inventory and the space to store it.

  • Inability to accurately predict purchase and production needs—which may lead to higher costs and reduced process efficiencies.

  • Inability to track items within the supply chain—which is a critical factor in highly regulated sectors and can also negatively impact a company’s brand if something needs to be addressed.



Cost: Reduced Efficiency


Automation in its various forms promises to provide new efficiencies that can’t be accomplished with a manual approach—and as Anderson notes, “Automation is coming, whether or not we get on board.”


This prediction is supported by a 2019 report from research firm LogisticsIQ that predicts automation spending will more than double from 2018 to 2025: “Much of the spending will focus on fulfillment activities. Automated mobile robots, automated guided vehicles, and picking robots will account for 40 percent of the warehouse automation spend by 2025.”


Companies that commit to those kinds of investments will likely do so based on the return on investment (ROI) they’ll experience through the increased efficiencies various types of automation can provide.



Cost: Reduced Customer Satisfaction


Writing for Forbes, supply chain expert Yasaman Kazemi describes the increasingly connected nature of the global digital supply network in which various cutting-edge technologies are being integrated to meet growing customer demands. Such technologies include automation, artificial intelligence, blockchain, and location intelligence.


Automation. In terms of meeting delivery demands, Kazemi says “forward-thinking” businesses are meeting last-mile challenges through automation: “With smaller, last-mile distribution centers being built no farther than six or nine miles from major metropolitan areas, the work of delivering packages can be done by a combination of traditional shipping as well as autonomous vehicles and even drones.”


Artificial Intelligence. Although artificial intelligence (AI) can be used to meet a variety of needs, Kazemi underscores its importance in the warehousing process, noting that AI and location intelligence can help retailers when it comes to product delivery and supply chain operations.


For instance, she describes how “multi-faceted big data” derived from specific geographic locations can be combined with data from online buying activity to show which customers are buying what and when. “A retailer can therefore use AI to predict which products are more cost-efficient to stock in a certain warehouse based on its proximity to certain areas,” Kazemi says.



Block Chain


Another cutting-edge technology she highlights is blockchain. Describing the technology as “a way of distributing the process of verification for anything from financial transactions to logging shipping information,” she underscores its value within the context of elevating “the level of trust” for recording every interaction along the supply chain.


In addition to providing critical information—such as temperature monitoring for perishable items during the shipping process—she says blockchain can also inform a company’s overall improvement efforts: “[Over time], the aggregated blockchain ledger information can reveal weaknesses within the supply chain and help organizations continually optimize operations.”



Location Intelligence


In light of supply chain transparency issues experienced during COVID-19 disruptions, location intelligence may be one cutting-edge technology companies need the most. Kazemi says that by combining AI, automated vehicles, blockchain, and “other transformative advances” with geographic data, location intelligence enabled by spatial analytics can support the much-needed end-to-end visibility described previously.


“It is this dynamic, always moving, real-time representation that will allow businesses to have complete situational awareness and predictive control of all aspects of their organizations in the future,” she says.


If that description sounds like a foreign concept, it may be time to get started on modernizing your company’s supply chain. Otherwise, you may be left in the dust by competitors who are well on their way to doing exactly that.


The goods news is that CLN Worldwide can help.


At CLN Worldwide we know you are the kind of person who wants to scale your business with a simplified supply chain. In order to do this, and get time back in your day, you need a customized logistics strategy.

The problem is governing regulations, the economy, and environmental issues aren't always clear, which makes you feel overwhelmed and unorganized.

We believe your business's lack of supply chain optimization could lead to stagnant growth and a decline in potential profits. We understand that supply chains and logistics management can be a complex and daunting task to undertake. That's why we developed fluid strategies and customized services that removes the nuanced guess work and solves your logistics clogs.

Here's how it works. You schedule a call with us, we will analyze the current market you're navigating, and then create an effective supply chain strategy that we will then integrate and execute together.

Call us today, so you can stop wasting your time with regulatory delays and start trusting the efficiency of your supply chain to scale your business


CLN Worldwide www.clnusa.com customerservice@clnusa.com 704.756.6425

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