The Importance of Efficiency Improvements in Supply Chain Management

With today's globalization and digitalization processes, the world has become a more local place, and supply chain management has become more important and critical than ever. The increasing trade volume, regardless of distances, necessitates that products and services move faster, more transparently and more efficiently around the world. In addition, companies need more real-time data flow in every link of their supply chain processes. Technological developments, especially artificial intelligence, blockchain and IoT, are the most important players in creating a digitalized supply chain world. Therefore, adopting an efficient supply chain management approach using these and similar technological developments is of critical importance for all companies that want to respond quickly to customer demands and stand out in global competition.

Stakeholders of the Supply Chain and Elements of Effective Management

When we examine the supply chain processes, we see that they generally consist of the following stakeholders.

• Suppliers: These are companies that provide raw materials or intermediaries. There are also suppliers that provide information in the service sector.
• Producers: Parties that create the final product or service to be delivered to the consumer using raw materials and/or intermediates
• Distributors and Wholesalers: These are companies that deliver products to retailers to be delivered to customers. In cases where products are sold directly from production to the consumer, these stakeholders may not be involved in the process.
• Retailers: Physical stores and online platforms that enable final products to reach consumers constitute this stakeholder.
• Customers: Individuals or institutions that purchase products or services as stakeholders that form the final link in the supply chain. In processes such as B2C and B2B, customers may vary as individuals or institutions.

When we list the benefits of supply chain management as a discipline that aims to manage all stakeholders and the process with effective and efficient coordination, we can say that:

Inventory management, management of alternative supplier processes, optimization of logistics and transportation processes and cost improvement are provided. In this way, an improvement of 15%-20% of total costs is achieved, which makes a significant contribution to the competitiveness of the company.

Providing high quality products and services to the customer that will meet expectations also requires careful monitoring of all stages in the supply chain processes. A supply chain management that observes this is very important for the continuity of being a brand preferred by customers.

Another advantage that companies with efficient supply chain management have is risk management. Effective supply chain management, which ensures that situations such as supplier problems, logistics disruptions, etc. are followed in advance and action plans are created against potential risks, reduces operational disruptions and ensures that these processes are managed with the least cost.

So, what new technology applications can support such an important management approach that has control at many points to be efficient ?

New Technologies Used in Supply Chain Management and Their Effects

When we look at the technologies used today to increase efficiency in supply chain management, technologies such as big data, artificial intelligence, IoT, 5G and Blockchain come to the fore. When we look at some applications and companies in this regard:

Big Data & AI : According to Deloitte’s research, companies using artificial intelligence (AI) and big data analytics have achieved efficiency gains of up to 15% in their supply chains. AI helps solve optimization problems in the supply chain, creating great opportunities to reduce costs and speed up processes. At the same time, companies like Kraft Heinz have saved 8% on inventory costs and have been able to predict customer demand more accurately thanks to big data analytics. McCormick & Co., on the other hand, increased demand forecast accuracy by 20% by utilizing technologies such as artificial intelligence and data analytics, thus achieving significant cost improvements by reducing inventory errors by 30% by more accurately predicting which products will be in demand.

Blockchain : Transparency in the supply chain and trust in process tracking stand out as an important requirement. The most important technological development that meets this requirement is blockchain. Companies such as Walmart and IBM have launched a pilot project that will provide transparency by using this technology to increase food safety. Thanks to this project, food supply processes are monitored 100% and contamination risks such as E. coli are minimized, and customer satisfaction and sensitivity can be met at the highest level. According to the IDC report, OEMs that use blockchain technology are expected to improve their spare parts supply estimates by 60% and reduce their costs by 45%.

5G : The high data speed and low latency provided by 5G stand out as very valuable tools for supply chain processes that need live data more and more at every moment. According to the data provided by Qualcomm, companies can improve their instant decision-making processes and reduce their possible costs, thus providing a more efficient supply chain management by up to 15%.

IoT : Companies that can adopt more efficient management, especially in logistics and transportation, thanks to devices that can communicate with each other can reduce their costs and become more competitive. Again, according to a report by MIT Sloan, it has been determined that lost inventory in logistics processes has decreased by 35% and delivery times have been accelerated by 20% with IoT.

In Summary

As a result, the efficiency of supply chain management, which touches many stakeholders from raw materials to end users and has control at every point, has become much more important in today's competitive world. In order to achieve this efficiency, as in many other areas, it is now inevitable to use the tools that technology provides us.