Is There a Purpose to Supply Chain Technology?

Supply chain tracking and management technology is becoming more prevalent across logistics businesses of all sizes, providing value for workers and managers alike. However, if you are not already familiar with this technology, it can be easy to wonder what purposes these solutions actually serve and what roles they fulfill within the supply chain. Let’s break it down from the basics to cover the role of supply chain technology and what you risk by choosing not to implement it.

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What is Supply Chain Technology?

Supply chain technology refers to the array of tools, systems, and platforms that facilitate the efficient management and optimization of supply chain operations. This technology spans a wide range of innovations, from Internet of Things (IoT) devices that track goods in real time to advanced analytics powered by artificial intelligence (AI) that predict demand and optimize inventory levels. The integration of these technologies creates a seamless flow of information and resources, ensuring that every link in the supply chain operates cohesively and efficiently.

Historically, supply chain management centered on manual processes and the use of some basic supply chain management software that are no longer able to keep up with the complexities of modern commerce. Today, supply chain technology has expanded and matured to instead leverage digital transformation to enhance visibility, accuracy, and speed across the entire supply chain. This includes everything from procurement and production to distribution and customer service. By automating routine tasks, reducing errors, and providing real-time insights, supply chain technology significantly improves the overall efficiency and effectiveness of supply chain operations. It provides a greater, more detailed overview of a company’s supply chain operations without creating new steps or disturbing pre-existing processes.

What Role Does Supply Chain Technology Play?

Supply chain technology plays a pivotal role in modern business operations by enhancing efficiency, reducing costs, and improving overall supply chain performance through its application of real-time visibility, predictive data analytics, and streamlined communication. These applications and their benefits are as follows:

Providing Real-Time Visibility

With the increasing speed and complexity of industry, real-time visibility in supply chain operations is no longer a luxury but a necessity. Supply chain technology provides the tools and platforms necessary to achieve this visibility, allowing companies to monitor and track the movement of goods, inventory levels, and other critical metrics with unprecedented accuracy. By leveraging key IoT technologies such as GPS tracking and asset tracking tags, businesses can obtain real-time data on the location and status of their shipments.

Having access to this real-time visibility ensures the speed and efficiency of supply chain processes that hinge on knowing where an asset is or who it’s with at any given time. Without real-time tracking, misplacing equipment or not recording the location of cargo can lead to a massive headache that unnecessarily prolongs processes and leaves workers searching for what they need. Real-time visibility can quickly address issues of loss and miscommunication, allowing workers to simply look up the current location of the missing asset so that they can take the necessary steps to retrieve or reroute it.

Enabling Predictive Data Analytics

Predictive data analytics is a game-changer in the realm of logistics and supply chain management. By harnessing the power of an intelligent supply chain management solution, managers can quickly and easily analyze vast amounts of historical and real-time data to identify patterns, trends, and correlations. This capability allows businesses to predict future demand, optimize inventory levels, and make more informed strategic decisions, allowing them to build a more informed, effective, and responsive business model. 

One of the primary applications of predictive analytics in supply chain management is demand forecasting. Accurate demand forecasts enable companies to plan their production and inventory more effectively, reducing the risk of excess inventory or stockouts. By anticipating customer demand, businesses can align their supply chain activities to meet market needs, thereby improving service levels while simultaneously minimizing costs.

Furthermore, predictive analytics enhances operational efficiency by optimizing various processes within the supply chain. For instance, it can help identify the most efficient transportation routes, optimal inventory levels, and the best times for maintenance and replenishment. By streamlining these processes, businesses can reduce costs, improve resource utilization, and enhance overall productivity on a daily basis.

Predictive analytics also helps workers deal with daily disruptions with its crucial role in risk management. By analyzing historical data from various sources and circumstances, supply chain technology can identify potential risks and disruptions before they occur. It can also allow businesses to assess how well they’ve dealt with these situations in the past, providing a framework for how they might continue to improve that response in the future. Essentially, this proactive approach allows companies to develop contingency plans and mitigate risks, ensuring the continuity and resilience of their supply chain operations.

Ensuring Communication Among Stakeholders

Effective communication among stakeholders is essential for the smooth functioning of the supply chain; luckily, supply chain technology can help with this, too. An effective supply chain management system provides the platforms and tools needed to facilitate seamless communication and collaboration among all parties involved, from suppliers and manufacturers to distributors and retailers. These technologies include cloud-based platforms, collaborative software, and advanced communication tools that enable real-time information sharing and coordination.

By ensuring that all stakeholders have access to the same data and information, supply chain technology promotes transparency and accountability. This shared visibility helps prevent misunderstandings, delays, and errors, fostering a more efficient and reliable supply chain. For example, suppliers can receive real-time updates on inventory levels and demand forecasts, allowing them to adjust their production schedules accordingly. Similarly, distributors and retailers can track shipments and delivery schedules, ensuring that products reach their destinations on time.

Enhanced communication also facilitates better decision-making and problem-solving. When all stakeholders are connected and informed, they can collaborate more effectively to establish how to fix supply chain issues and find effective long-term solutions. This collaborative approach helps identify and resolve potential bottlenecks or disruptions before they escalate, ensuring the smooth flow of goods and services.

Moreover, supply chain technology enables the integration of various systems and processes, creating a cohesive and unified supply chain network. This integration allows for the seamless exchange of information and data, reducing the risk of data silos and ensuring that everyone is working with the most up-to-date information. By breaking down barriers and fostering a culture of collaboration, supply chain technology helps create a more agile, responsive, and resilient supply chain.

Are There Any Alternatives to Supply Chain Technology?

While supply chain technology offers numerous benefits, some companies might consider alternative approaches. Traditional methods, such as manual tracking, spreadsheets, and basic enterprise resource planning (ERP) systems, are still in use. These methods can work for smaller businesses with simpler supply chains, but they often fall short in handling the complexities and scale of modern supply chains. Manual processes are prone to errors, time-consuming, and lack real-time visibility, making it difficult to respond swiftly to changes and disruptions.

Another alternative is outsourcing supply chain management to third-party logistics (3PL) providers. These providers specialize in managing logistics and supply chain operations on behalf of their clients. While this can be a viable option, it often means relinquishing control and relying on the 3PL’s technology and processes, which might not always align with the company’s specific needs and goals. Additionally, 3PL services can be expensive and may not provide the same level of transparency and customization as an in-house supply chain technology solution, resulting in less benefit and control at a greater price point.

In contrast, investing in modern supply chain technology enables companies to maintain control over their operations, customize solutions to fit their unique needs, and leverage cutting-edge innovations to stay competitive. The advantages of real-time data, predictive analytics, and automated processes offered by supply chain technology far outweigh the limitations of traditional methods and outsourcing options.

What Do You Risk When You Fail to Invest in Supply Chain Technology?

Failing to invest in supply chain technology poses several significant risks that can impact a company’s competitiveness and operational efficiency. One of the primary risks is reduced visibility and control over supply chain activities. Without real-time tracking and monitoring, companies may struggle to identify and address issues promptly, leading to delays, increased costs, and customer dissatisfaction. In today’s fast-paced market, the inability to react quickly to changes and disruptions can result in lost sales and damaged reputation. After all, when there’s so many competitors within an area, why stay with one that can’t deliver on its promises or at least provide open communication?

Another risk is inefficiency and higher operational costs. Manual processes and outdated systems are prone to errors and inefficiencies that can accumulate over time, increasing the overall cost of supply chain operations. This includes costs related to excess inventory, stockouts, expedited shipping, and labor-intensive tasks. By not leveraging automation and advanced analytics, companies miss out on opportunities to streamline operations, optimize resource utilization, and reduce waste, all of which are obstacles to the modern mindset of continuous improvement.

Additionally, companies that do not invest in supply chain technology may find it challenging to scale their operations. As businesses grow, the complexity of their supply chains increases, requiring more sophisticated tools to manage effectively. Without the right technology, companies may struggle to keep up with demand, maintain service levels, and manage a larger network of suppliers and customers. This can limit growth potential and hinder the company’s ability to compete in the market against more long-standing businesses within that space.

Finally, neglecting supply chain technology can compromise a company’s ability to innovate and stay ahead of industry trends. Advanced technologies such as AI are driving significant changes in supply chain management, offering new ways to enhance efficiency, transparency, and sustainability. However, this type of solution cannot work without a strong basis of data, making it absolutely critical for forward-thinking businesses to invest in a supply chain solution now if they want to invest in AI when it becomes more reliable and widely available in the future. Companies that fail to adopt these technologies risk falling behind their competitors and missing out on the benefits of digital transformation.

The Purpose of Supply Chain Technology

At the end of the day, the purpose of supply chain technology is clear: it enhances visibility, improves efficiency, reduces costs, and enables companies to respond effectively to market demands and disruptions. Investing in supply chain technology is not just a matter of staying current with industry trends; it is a strategic imperative for maintaining competitiveness, achieving operational excellence, and driving long-term growth. With these goals in mind, Link Labs designed our AirFinder Everywhere solution, a highly customizable and scalable solution for supply chain management. We provide the location visibility you need to effectively manage your supply chain and logistics operations, with a variety of tag and sensor options to best fit your business’s unique needs. To learn more about how our solution can work for you, book a demo with our team of experts today.