South Africa

6 Ways technology can help to strengthen supply chain

Rodney Mabowa
Business Solutions Executive:
FunxionO
4 mins

By Rodney Mabowa, Business Solutions Executive at FunxionO

Supply chains are the backbone of any business that relies on the production and distribution of goods and services. As the global economy becomes more interconnected, and as the global pandemic revealed in 2020 and 2021, the efficiency, resilience, and reliability of supply chains are increasingly important. The good news is that while supply chains continue to be disrupted across the globe, there are significant ways in which technology can be employed to build supply chain resilience. We’re speaking specifically about Artificial Intelligence (AI) and Machine Learning (ML), Blockchain, and the Internet of Things (IoT).

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The rise of smart machines

We’re not talking about robots replacing workers (and never will be), but AI and ML have shown immense promise in transforming supply chain operations. These technologies facilitate intelligent automation, enabling supply chains to be more efficient and responsive to changes. It also frees up workers to focus on more high-value tasks and upskill in meaningful ways.

For example, AI-powered predictive analytics plays a crucial role in demand forecasting. By analysing historical data and current market trends, AI can accurately predict consumer demand. This foresight allows businesses to optimise inventory levels, reducing holding costs and eliminating stockouts. For instance, retailers can use AI to forecast which products will be in demand for the upcoming season, ensuring adequate stocks are available while minimising overstocking.

AI and ML algorithms can also improve supply chain resilience by identifying risks and potential disruptions. By continually analysing data from various sources, including social media, news, and weather reports, AI can anticipate events such as natural disasters, strikes, or political changes that may affect the supply chain. Timely alerts enable companies to take pre-emptive actions, such as rerouting shipments or adjusting production schedules.

The interconnected blockchain

Blockchain technology, best known for underpinning cryptocurrencies, holds immense potential for supply chains. At its core, blockchain is a distributed ledger technology that allows multiple parties to have simultaneous access to a constantly updated database that is secure, transparent, and immutable (or unable to be changed).

This technology significantly enhances supply chain transparency and traceability. Consumers and stakeholders can trace the product back to its origin, verifying its authenticity and ensuring ethical sourcing. For example, in the diamond industry, blockchain helps verify that diamonds are conflict-free.

Blockchain also simplifies transactions and reduces fraud. The traditional supply chain involves various stakeholders, often requiring tedious paperwork and verification processes. Blockchain smart contracts automate these processes by establishing end-to-end predefined rules. When conditions are met, the smart contract executes the agreement, reducing delays and eliminating intermediaries.

Internet of Things (IoT) can connect any machine, anywhere, to the Internet

The Internet of Things (IoT) is a network of interconnected physical devices that collect and exchange data. In supply chains, IoT technologies such as sensors, RFID tags, and GPS tracking can greatly enhance visibility and monitoring.

Real-time tracking of goods as they move through the supply chain is a critical feature of IoT. This enables companies to monitor the status and location of shipments, ensuring timely delivery. Environmental monitoring through sensors can be crucial for perishable goods, as it allows companies to ensure that conditions such as temperature and humidity are maintained within acceptable ranges during transit.

There’s an additional benefit too: IoT devices collect massive amounts of data, which, when analysed, can provide insights into process inefficiencies. Companies can utilise this data to optimise routes, improve warehouse management, and even predict maintenance needs for equipment, which, in turn, reduces downtime and operational costs.

Bringing it all back to people

We are firmly in the fifth industrial revolution (5IR), where people and technology must work together to create smarter, faster, more efficient and safer working environments. Within supply chains, technology can add huge benefits, but it is ultimately people that will guide, decipher and use technology to boost and maintain resilient supply chains. With that in mind, here are six ways to ensure that technology can augment the human experience, enhance skill sets, and reduce errors and delays.

  1. Training and upskilling

Investing in the training and upskilling of employees is crucial. As technology evolves, your workforce must be equipped with the skills needed to leverage these advancements. Training programs should focus not only on how to use new technology but also on understanding how it can enhance decision-making and operations. By upskilling employees, you ensure that they can engage in more high-value work that requires critical thinking and decision-making skills, rather than monotonous, repetitive tasks.

  1. Human-in-the-loop systems

Implement human-in-the-loop systems where technology is used for processing and presenting data, but humans make the final decisions. This approach capitalises on the strengths of both humans and machines. For example, AI algorithms might analyse data to predict demand or identify potential supply chain disruptions, but human managers use their judgment to make final decisions based on these insights.

  1. Automation of repetitive tasks

Use automation for tasks that are repetitive and don’t require human creativity or decision-making skills. This includes tasks like data entry, scheduling, and tracking shipments. Automation reduces the likelihood of human error, increases efficiency, and allows employees to focus on more strategic tasks.

  1. Implement decision support systems

Employ decision support systems that provide employees with real-time information and data analytics. Such systems can help in making more informed and quicker decisions, reducing delays. For example, a system might provide alternative suppliers or transportation methods when there is a disruption in the supply chain.

  1. Encourage feedback and adaptation

Create a culture that encourages feedback from employees regarding the technology being used. The people using these technologies often have valuable insights into how they can be improved or adapted to better suit the needs of the business. This feedback loop can lead to continuous improvement in technology adoption.

  1. Foster a culture of innovation

Encourage a culture of innovation and experimentation. When employees feel that they are part of the technological transformation, they are more likely to embrace change. Businesses that foster an environment where employees are constantly looking for ways to improve processes and operations will also attract better talent and skill sharing. At FunxionO, the skill sharing that happens across different industries, sectors and businesses.

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