The rapid development of modern logistics has promoted the evolution of smart supply chains. The integration and application of the traditional supply chain with 5G, big data, artificial intelligence, and other new generation of information technology becomes the so-called smart supply chain. The smart supply chain starts with lean production and helps enterprises realize intelligence, digitization, networking, and automation in all aspects of logistics. This article gives you an insight into how smart supply chains are changing the logistics industry and people’s lives.
What is smart supply chain?
Smart logistics refers to the use of smart hardware, the Internet of things, big data, and other smart technologies to improve the logistics system’s ability for analysis, decision-making, and intelligent execution. Its ultimate purpose is to improve the intelligence and automation level of the entire logistics system. Through the efficient operation of material flow and information flow, smart logistics reduce costs and better integrate social resources.
The working principle of smart supply chain
The smart supply chain is divided into three parts from top to bottom, including smart platform, digital operation, and automated operation. If we compare smart logistics to people, then the smart platform is the “brain”, the digital operation is the “hub”, and automated operation is the “limb”. The smart supply chain uses the intelligent platform to calculate, think and quantify the supply quantity of suppliers, reasonable price, storage volume, warehousing location, user preferences, and so on through the digital operation platform. The smart supply chain guides enterprise operation, warehousing, transportation, and other automated operations.
Driven by consumer demand, the smart supply chain has strong technology penetration and pays more attention to information sharing and interaction with customers and suppliers. To a certain extent, the smart supply chain optimizes business processes with the help of information technology, which is conducive to reducing the cost of enterprises and making the supply chain transparent, flexible, and agile. Strengthening the ability to collaborate between various departments is conducive to enterprises establishing their own core competitiveness.
In the future, whether online or offline, the smart supply chain can sense and predict user needs, habits, and interests, so as to guide the research and development, manufacturing, pricing, and inventory upstream of the industry chains. and also guide the downstream sales, promotion, warehousing, logistics, and distribution, enabling the scientific operation of the whole industry chain.
Five processes of supply chain management
01. Analyze the market competition environment and identify market opportunities
Competitive environment analysis is to identify the market characteristics and market opportunities faced by enterprises. To complete this process, we can conduct in-depth research on suppliers, users, existing competitors, and potential competitors by means of investigation, interview, and analysis according to the principles and methods provided by the Porter model, so as to master first-hand accurate data and materials. On the one hand, this work depends on the quality of enterprise management personnel and sensitivity to the market; On the other hand, enterprises should establish a market information collection and monitoring system, and develop the analysis and decision technology of complex information. For example, the customer service management system established by some enterprises is a powerful weapon to grasp the needs of customers and further develop the market.
02. Analyze customer value
The goal of supply chain management is to reduce total transaction costs and provide a better customer experience. Managers should define products or services from the perspective of customer value, and seek the lowest transaction costs while continuously improving customer value. According to the definition of marketing master Kotler, customer value refers to all the benefits that customers expect from a given product or service, including product value, service value, personnel value, and image value. Generally speaking, finding a market opportunity does not mean really understanding the value of a product or service in the minds of customers. Therefore, the specific characteristics of the product or service must be defined from the perspective of customer value. Only by continuously providing customers with value-added products can we meet their needs of customers, and the pull of customer demand is the source of driving the operation of the entire supply chain.
03. Determine the competitive strategy
After finding the positioning of enterprise products or services from the perspective of customer value, managers should determine the corresponding competitive strategy. The determination of the form of competitive strategy can make the enterprise clearly know what kind of partners to choose and the alliance mode of partners. According to Porter’s theory of competition, there are three basic strategies for enterprises to gain competitive advantages: cost strategy, differentiation strategy, and target concentration strategy. For example, when an enterprise determines the application cost strategy, it will often form an alliance with enterprises with similar resources to form economies of scale. When an enterprise determines the application of differentiation strategy, it will choose partners with strong innovation and adaptability. Chain operation in commercial enterprises is a typical example of cost. It integrates manufacturers, wholesalers, and retailers into a whole in the whole process of commodity circulation by adopting a large-scale centralized management mode. Through the commodity delivery center, the delivery center delivers the goods from the manufacturer to the branches in a timely and sound manner and then provides the goods to the consumers. Such an approach reduces circulation links, making enterprises more direct face with the consumer. The result not only promotes speed of circulation but also speed of feedback, thus achieving the goal of cost reduction.
04. Analyze the core competitiveness of the enterprise
Core competitiveness refers to the enterprise’s ability in research and development, design, manufacturing, marketing, service, and other aspects that are obviously superior and not easy to be imitated by competitors. Supply chain management focuses on the core competitiveness of enterprises. Enterprises concentrate their internal intelligence and resources on activities with core competitive advantages and transfer the remaining business activities to professional companies with advantages in this business to make up for their own deficiencies so that the whole supply chain has competitive advantages. In this process, the enterprise should answer such questions as whether the enterprise’s resources or capabilities are valuable; Whether the resources and capabilities are rare or not. Only those with more scarce resources can gain a temporary competitive advantage. The resources and capabilities that make it difficult for competitors to imitate are the keys to a company’s sustainable competitive advantage. Enterprises should carefully count their own businesses, and select core businesses that have a major relationship with the survival and development of the enterprise and can give full play to the advantages of the enterprise while stripping off those non-core businesses and leaving them to other enterprises in the supply chain to complete. After picking out the core business, companies should also rebuild their business processes.
05. Evaluate and select partners
The process of establishing a supply chain is actually a process of evaluating and selecting suppliers. Selecting a suitable enterprise as a partner in the supply chain is the most important basis for strengthening supply chain management. Enterprises need to comprehensively assess their partners in terms of product delivery time, supply quality, after-sales service, and product prices. If an enterprise chooses a partner improperly, it will not only corrode the profit of the enterprise but also make the enterprise lose the opportunity to cooperate with other enterprises, thus impeding the improvement of the competitiveness of the enterprise.
The role of the Internet of Things(IoT) in supply chain management
01. Understand the real value demands of supply chain customers
Understanding the real value demand of supply chain customers is the premise of the supply chain, which requires enterprises to truly understand the deep economic and emotional demands of customers, rather than external product and business needs. In the actual reform or optimization of the supply chain, we can use the “value radar” to achieve this. “Value radar” refers to the benefits realized by the enterprise supply chain and the value obtained by the customer, which has three aspects:
(1) Products and services with the highest cost performance can be realized from the perspective of suppliers, while the demander gets the use value.
(2) Suppliers can reduce the ownership cost of the supply chain, while demanders can get sentimental value.
(3) Suppliers can not only reduce the ownership cost of the supply chain but also help customers reduce various opportunity costs, while the demand side gets the development value.
02. The whole process of supply chain management can be visualized with the help of information technology
The whole visual management of the supply chain refers to that all parties involved in the supply chain can timely reflect the whole process of the supply chain, the state and operation of domestic and foreign markets, and track logistics and transaction activities, so as to timely detect and control the operation process of the supply chain.
03. Modular supply chain operation architecture
Enterprises can use the modular way to integrate the supply chain so that the supply chain has a good emergency response ability and process processing ability, that is, the ability to improve the flexibility of the organization.
04. Real-time supply chain planning and execution linkage system
Real-time supply chain planning and execution linkage systems refer to the connection between supply chain planning and execution systems that can be effective at both data and process levels, which requires enterprises to realize the sharing and synchronization of data and information, as well as the relative organization and process management.
05. Perfect reporting and performance management, and good supply chain early warning
06. Establish and operate intelligent and agile, efficient, and lean supply chain agility
The value of smart supply chain
01. Technology is more permeable
The smart supply chain usually takes the Internet, cloud computing, big data, artificial intelligence, and other new-generation information technology as the support point, and also adopts the visual way in the acquisition of data information.
02. Information integration is stronger
Relying on the highest open and shared intelligent information network, the intelligent supply chain system effectively solves the heterogeneity problem of the information system of each functional department of the enterprise, and realizes the seamless docking of business flow, logistics, information flow, and capital flow, so that the information in the supply chain has stronger integration and sharing.
03. More collaborative
The high integration and sharing of information enable enterprises to understand various information inside and outside the supply chain in a timely and effective manner. Enterprises communicate with upstream and downstream enterprises in the supply chain at any time according to the actual situation and make targeted adjustments and collaborations, thereby greatly improving the operational efficiency and effectiveness of the supply chain.
04. More extensible
The smart supply chain is supported by advanced Internet information technology, and all kinds of information in the supply chain have stronger mobility, integration, and sharing. Enterprises can communicate and interact with other members of the upstream and downstream of the supply chain at any time, thus greatly enhancing the ductility of the supply chain. This effectively solves the problem of efficiency decline caused by the transmission of information levels in the traditional supply chain.
Challenges of smart supply chain
01. Strengthen the enterprise’s understanding of the smart supply chain
Nowadays, smart supply chain management in our country is still at a low level. Therefore, enterprises not only need to deepen their understanding of the smart supply chain, but also need to specify a clear smart supply chain development strategy. Specifying a personalized supply chain development direction is conducive to ensuring the realization of the company’s profit goal and leading the company’s production to upgrade to intelligence.
02. Improve the construction of the smart logistics system and improve the level of informatization
Nowadays, most logistical operations are still in the manual stage. Information communication in all aspects of logistics is relatively low. The logistics system construction of the manufacturing industry is backward, and the road to logistics automation and intelligence still has a long way to go. So manufacturing enterprises need to improve the application of new technologies like the Internet of Things, and cloud computing in logistics systems.
03. Collaborate with the whole supply chain to create a smart platform
The building of a smart supply chain requires the joint cooperation and efforts of all enterprises in the supply chain. So manufacturing enterprises should build a smart supply chain platform through the integration of new technologies like IoT and traditional manufacturing technologies. These will realize the integration and sharing of human beings, information, staff, and machines, and finally will form a smart supply chain system.
04. Introduce and cultivate professional supply chain talents
The cultivation of professional supply chain talents is the core of building an intelligent supply chain. At present, most manufacturing enterprises have not realized this point and do not have sufficient professional talents.
Smart Supply Chain Solutions
Instrumentality means that the information in management must be generated by automation or sensing equipment, such as RFID, Tag tags, etc. Without the support of effective information and communication technology, the management of information will be impossible to obtain. Therefore, instrumentality is the first feature of intelligent construction.
It refers to all the participants, assets, information systems, and businesses in the management that must be highly connected. Intelligence means that different subjects, businesses, and elements can form interconnected and interdependent network relationships through information and communication technologies.
It means ICT can achieve large-scale optimization decisions and improve management performance. The intelligence of management lies in the integration of information through information and communication technology, so as to optimize the decision-making process and effectively guide the production and operation in the direction of high efficiency and high competitiveness.
That means business processes can be driven by information equipment, and then replace other inefficient resources, especially inefficient manual intervention. The frequent intervention of human factors in management often results in low efficiency. This is not only because human intervention delays reaction times, but often because people have moral hazards, increasing the likelihood of information asymmetry and opportunism.
Intelligence can promote collaboration between the whole different actors, including joint decision-making, public system investment, information sharing, and so on.
The smart supply chain can drive management innovation, create new value by providing integrated solutions, or satisfy existing value demands in new ways.
Application examples of smart supply chain
01. Innovative application of smart supply chain based on blockchain technology
With the continuous maturity of blockchain technology, the smart supply chain has been developed. Introducing how blockchain technology can empower the smart supply chain and its corresponding value is conducive to improving the current situation and business pain points of the smart supply chain industry. Through several smart supply chain and logistics industry application innovation projects based on HUAWEI CLOUD, it explains how to optimize the process, improve efficiency, and reduce costs through the adjustment and difficulties faced by blockchain and logistics in practical application scenarios.
02. Intelligent supply chain application based on Internet of Things technology
The traditional supply chain has been driven to evolve with the development of information technology. Especially with the continuous upgrading of the Internet of Things technology, the traditional supply chain is moving towards more intelligent and efficient development. The smart supply chain can better connect business flow, logistics, information flow, and capital flow, so as to improve overall efficiency. Starting from the current situation of the Internet of Things and its smart supply chain, this paper introduces the related concepts of the smart supply chain under the Internet of Things and discusses the specific link management of the smart supply chain based on the Internet of things, and finally puts forward the prospect of the future development of the smart supply chain.
03. Intelligent supply chain application based on the service value network
The basis of the realization of the industrial supply chain is the service value network. The elements of industrial supply chain realization are intelligent means and platforms, and the path of industrial supply chain realization is value cycle analysis.
04. Construction and application of urban smart supply chain development index
Driven by a new round of scientific and technological revolution and industrial transformation, the intelligent supply chain is developing rapidly. The related development of urban smart supply chains has also become an important issue in the current supply chain research field. However, the traditional evaluation index system of supply chain development is difficult to be directly applied to the evaluation of a smart supply chain. Therefore, Therefore, this paper constructs the development evaluation system of China’s urban smart supply chain from six dimensions: urban smart supply chain infrastructure, human resource investment, capital investment, enterprise innovation, and supply chain efficiency and effectiveness. It provides a method basis for urban management departments to quantify the development level of a smart supply chain.
05. Performance application of smart supply chain for international production capacity cooperation
More and more enterprises have begun to attach importance to international production capacity cooperation and use intelligent means to optimize and upgrade their supply chains. However, traditional enterprise supply chain management methods have been unable to meet the needs of intelligent supply chain management. Therefore, the influencing factors of smart supply chain performance will play a key role in improving the level of enterprise smart supply chain management. In order to promote the development of a smart supply chain for international capacity cooperation, we need to explore the factors that affect the performance of a smart supply chain. The study found that smart technology has a positive and direct impact on the key elements of the supply chain and the performance of the smart supply chain through the improvement of three dimensions, namely the advanced level of smart technology, the level of application, and the level of ecological development. Among them, in the process of ecological development to promote the development of a smart supply chain, we should start from demand and combine management methods to apply different technologies to the most suitable scenarios, which is conducive to the improvement of performance. The key elements of the supply chain, including supply chain network layout, channel integration, and collaborative sharing, will also have a positive and direct impact on the performance of smart supply chains.
The deeper the international capacity cooperation of enterprises, the greater the effect of supply chain element optimization on the performance improvement of the smart supply chain. Therefore, in order to improve the performance of the smart supply chain, on the one hand, it is necessary to strengthen professional technology research and development, use special technology to open up the entire supply chain, develop multi-directional development and multi-combination, and give full play to different technical characteristics. While improving its own smart technology capabilities from three aspects: advanced level, application level, and ecological development level, it is also necessary to start from needs and combine management methods to apply different technologies to the most suitable scenarios.
World famous smart supply chain companies and software
E2OPEN is a cloud-based provider of provisioning network solutions. Large brand manufacturers and producers in various areas use the E2open software and platform to coordinate their global supply chains to improve efficiency. The system has supply chain monitoring and analysis, order management, inventory, and transportation functions. With E2OPEN, you can integrate existing data. E2OPEN’s supply chain analysis helps to accurately analyze and integrate transportation, inventory, warehouse, and other data.
02. SAP SCM
SAP system is one of the most excellent ERP systems in the world. A good ERP system can not only undertake the management and business processes of the enterprise to the greatest extent but also achieve rapid deployment and challenges in technology. For users, it is easy to use， logical, convenient, and controllable. It can perfectly understand the needs of users. SAP supply chain management leverages new technologies such as the Internet of Things and artificial intelligence to provide advanced analysis to help accurately and timely source and deliver goods and materials. SAP supply chain management has SAP integrated business planning, and supply chain collaboration software.
Logility is supply chain management software that provides advanced analysis and optimization planning. Logility’s current digital supply chain leverages smart and intelligent solutions to help you respond positively to what’s happening in the marketplace. Logility can also be used to analyze and face difficult retail and supply chain planning challenges. The main functions of Logility include optimizing inventory and supply chain, integrating business planning, managing data, retail, transportation, etc.
04. Perfect Commerce
Perfect Commerce supply chain management software helps companies simplify payment methods and maximize profits by providing solutions. Perfect Commerce provides you with solutions to save strategic resources in tactical categories so that you can control your spending. The boutique approach provided by Perfect Commerce allows you to interact with customers by providing attention and personal care.
05. Oracle SCM
As ERP products, Oracle and SAP modules differ both in terms of name and division. First, SAP falls into two categories: Logistics and Finance & Controlling. Oracle is divided into distribution (SCM), Manufacturing (MFG), and Finance (FIN). The supply chain planning cloud, manufacturing cloud, and order management cloud is Oracle’s SCM products. The primary role of the supply chain planning cloud is to design growth profitability and cost reduction strategies for enterprises, enabling users to use visual analysis and intelligent advice. The supply chain planning cloud enables users to notice planning deviations, enabling even inexperienced users to plan effectively.
06. Infor SCM
As a supply management software, Infor SCM integrates all the links of the supply chain into an organic operation to improve the comprehensive efficiency of the enterprise supply chain. It has a unified and complete solution, including warehousing management, transportation management, labor management, and third-party logistics billing functions. Infor’s supply chain management system helps enterprises to build a complete supply chain and form a set of integrated and simplified business processes. By combining with Nexus Commerce, users can get a faster workable solution to supply chain problems.
07. JDA SCM
JDA Supply Chain Management software uses innovative technologies to effectively analyze, plan, and monitor the end-to-end supply chain to deliver differentiated services to customer segments. JDA SCM is designed to simplify today’s consumer-driven marketplace. JDA’s cloud-based solutions for supply chain management can help businesses reduce costs and improve collaboration from planning to delivery.
08. Manhattan SCM
Manhattan SCM is a set of retail management solutions provided by Manhattan, helping retailers to open up the entire link of the supply chain, including from front-end customers to back-end manufacturing and intermediate logistics and warehousing.·
As a global leader in supply chain commerce solutions, the Manhattan company has built powerful technology solutions to solve the most complex business-critical supply chain, inventory, and omnichannel challenges for more than 25 years. It develops, sells, deploys, and supports its solutions for retailers, wholesalers, distributors, third-party logistics enterprises, and producers around the world.
09. Epicor SCM
SOA architecture of Epicor supply chain management software integrates the essence of financial management, distribution management, and manufacturing management into Epicor ERP. Epicor has worked its way up from manufacturing and is deeply involved in manufacturing management, designing solutions around the unique operational requirements of each industry. It has rich experience and successful cases, an in-depth understanding of the pain points of enterprise users, and helps to solve user needs faster and more accurately. The solution, available on-site or in the cloud, enables customers to focus on core growth activities and manage complexity. Epicor SCM features requirements management, purchase management, inventory management, and shipping management.
010. Dassault Systemes SCM
As a premium supply chain management software, Dassault Systemes SCM provides management procurement planning for suppliers and manufacturers in the automotive sector. The full tools required for the procurement cycle are critical from gathering requirements to continuously tracking and improving supply bank performance. Dassault Systemes SCM provides an outstanding solution that enables supply chains to be sorted in profiles to provide suppliers with a structure of location and functionality.
Development history of smart supply chain
The development stages of the smart supply chain can be divided into:
● The traditional supply chain management stage.
● Integration of technology and management stage.
● Convergence of technology and management stage.
● Smart supply chain stage (integrated stage of technology and management).