Introduction

Imagine you order a new phone online, excited to get it next week. But wait! A pirate attack in the Red Sea delays the ship carrying your phone, then a drought shrinks the Panama Canal, adding more days to the journey. Sounds frustrating, right?

This chaotic scenario, nicknamed the “perfect storm,” is wreaking havoc on global supply chains. But there’s good part is that eprocurement can be a lifesaver!

Impact of Perfect Storm on Global Supply Chain

Red Sea Crisis and Panama Canal:

The recent Houthi attacks on ships in the Red Sea [1] which is the gateway to the Suez Canal. This incident has sent shockwaves through the industry. Major shipping lines are rerouting vessels around the Cape of Good Hope. This has been creating delays and causing significant costs to journeys. This, coupled with the never-before-seen drought impacting the Panama Canal [2], further squeezes capacity and raises concerns about missed delivery windows.

Ripple Effects:

Retailers are bracing for product delays and limited availability. For instance, IKEA [3] anticipates late deliveries with restricted items, while Abercrombie & Fitch resorts to costly air freight, mirroring their 2022 strategy during Vietnam lockdowns. These stopgap measures highlight the vulnerability within just-in-time supply chains.

Beyond Holiday Hurdles:

While the holiday season’s immediate pressure is off, the impact extends to spring and summer collections. Delays are expected, with UK retailer Next predicting a lag up to three weeks. Additionally, the Lunar New Year factory closures in China pose a risk if containers miss the window for shipment, potentially adding further delays.

A Perfect Storm, Not a Pandemic Nightmare:

Experts like Margaret Kidd [4] from the University of Houston offer a different view. Compared to pandemic lockdowns, factories remain operational, and consumer spending on discretionary items has moderated. However, the situation could escalate if the Houthi attacks persist.

Call for Eprocurement

In this “perfect storm,” the need for supply chain digital transformation becomes more evident than ever. In this regard, digital procurement solutions can enhance visibility and agility. For instance, businesses can get real-time info on where their stuff is, even with detours. As a result, they can respond faster to disruptions. Supply chain management software predicts potential delays like the Panama Canal issue and helps businesses adjust. 

By adopting digitalization, companies can find new shipping paths if pirates are causing trouble. Businesses can also save costs with supplier consolidation and vendor-managed inventory solutions like Moglix did for an Automotive OEM to unlock 2% cost savings in indirect procurement through supplier consolidation.

Bottom Line

The “perfect storm” might be rough, but technology offers a life raft. By adopting digitalization, businesses can build resilient and adaptable supply chains, ensuring customers get products on time, even when pirates and droughts are causing chaos.

Looking for supply chain digital transformation or supply chain management software to strengthen your digital procurement.

Partner with Moglix Solutions! Visit our website to learn more. 

References:

1. https://www.bbc.com/news/world-middle-east-67614911
2. https://www.bbc.com/news/business-67281776
3. https://www.cnbc.com/2023/12/21/houthi-attacks-in-red-sea-ikea-warns-of-product-delays.html
4. https://dot.egr.uh.edu/departments/cm/people/faculty/kidd-margaret

According to a PwC survey 2023,  around 86% [1] of organizations agreed to use real-time supply chain digital transformation to deal with unexpected events or problems. In this regard, let’s understand how switching to digital procurement and using real-time procurement analytics can help companies easily manage cost, inventory, and more.

How Real-Time Analytics Benefits Your Supply Chain 

Improves Operation Visibility 

According to recent research, 77% [2] of industry leaders state that real-time visibility is a must to provide superior customer service. Real-time analytics data helps you understand how your supply chain runs throughout all stages and address lurking challenges in advance. 

For instance, it shows on-time delivery rates for each distribution zone and improves your ability to respond quickly to bottlenecks before they become a major problem. Interestingly, an ideal supply chain management software can also pull data from machine sensors to display their technical status. That better prepares your maintenance team to carry out routine and emergency maintenance to ensure everything goes smoothly from the technical end.  

Reduces Operational Cost 

Did you know even a 5% [3] savings in supply chain costs can double your net profits? Real-time procurement tools offer detailed insights into your company spending and suggest improvement tips. For instance, a dashboard shows spending patterns, supplier performance, and contract terms. You can also use real-time data to negotiate better deals with suppliers per current market trends and competitor pricing. 

For instance, if a product has seasonal price fluctuations, you can propose a good deal to the supplier during off seasons only if you can access its price history for the last year through analytics. Learn more about how Moglix helped an automotive OEM to unlock cost savings in indirect procurement through supplier consolidation. 

Helps With Market Volatility

Volatility is an essential index of market risk. Imagine if you could stock materials in advance to beat upcoming shortages easily. Digital procurement with analytics tools can track and analyze the stock of raw materials in the market for the past few months and predict a stockout in the future. 

This can save your company’s reputation if you receive an unexpected order during the stockout, only to feel safe that the production continues without interruption. One of the most relevant examples would be ARIMA – a statistical model – commonly used in the financial domain to indicate stock price volatility. 

Conclusion

Supply chain digital transformation has become more essential than ever to be responsive to dynamic customer demands and market fluctuations. Though it may seem challenging to adopt digital procurement, with the right partner, the entire process can become a hassle-free affair. 

Looking to transform your procurement model and leverage digital procurement analytics for responsive supply chain management?

Partner with Moglix Solutions! Visit our website to learn more. 

References:

1. https://www.pwc.com/us/en/services/consulting/business-transformation/digital-supply-chain-survey.html
2. https://www.tive.com/content/the-state-of-supply-chain-visibility-2023-market-survey-report#:~:text=77%25%20of%20supply%20chain%20decision,yet%2C%20only%2025%25%20use%20it
3. https://www.linkedin.com/pulse/optimize-supply-chain-costs-generate-more-profit-elixiatech/

A 2023 survey revealed that 44% [1] of companies were compelled to adjust their supply chain structures in the preceding year due to logistical issues, and nearly half reported that disruptions had led to significant planning difficulties. 

This ongoing struggle requires digital transformation with real-time monitoring and data analytics. This blog outlines those innovative solutions in supply chain visibility. Let’s begin. 

Real-time monitoring with IoT

DHL uses this method in the logistics industry. With IoT and sensor technology, DHL tracks shipments in real-time and monitors temperature and humidity. This enhances their procurement process and the quality of goods.

Furthermore, IoT devices enhance supply chain security, protecting against theft and loss by monitoring warehouses, vehicles, and cargo. It also improves efficiency and reduces costs, ensuring a smoother, more secure supply chain operation.

Data Analytics: Key for efficiency  

Recent findings [2] show that 63% of companies need technology to track their supply chain performance. However, 81% of supply chain professionals see the value of analytics in reducing costs. It’s observed that companies with efficient supply chains tend to outperform in revenue growth compared to their industry average.

The use of statistics is critical in addressing supply chain challenges. By applying descriptive and inferential statistical methods, insights into improving operations and reducing costs emerge.

Look for supply chain management software.

Supply chain vulnerabilities span from internal disruptions, exemplified [3] by the 2011 Sony PlayStation Network outage, to external pressures like the geopolitical shifts in the US-China trade war. Research [4] indicates up to 40% of cyber threats emerge indirectly via the supply chain, yet more than 23% of security leaders engage in real-time monitoring of cyber risks among partners and vendors.

Companies can utilise Vendor software tools featuring updates and security assessments to present a method for addressing these challenges. 

Moreover, in managing a large vendor base, procurement data inconsistencies and price variations often lead to business hurdles. For this to resolve, consultation with experts in these scenarios has resulted in 5-10% direct cost savings.

Final Words

These are the starting steps for leaders to revamp their e-procurement process in the digital transformation of the supply chain. Also, consider using RFID tags to track, manage, and analyse your supply chain. 

With that in mind, the first step is to understand what your company needs to move to the next level. You can promptly consult with Moglix to learn more about your prospects. 

References: 

1. https://www.mckinsey.com/capabilities/operations/our-insights/tech-and-regionalization-bolster-supply-chains-but-complacency-looms
2. https://onlinedegrees.mtu.edu/news/how-statistics-are-used-in-supply-chain-management
3. https://www2.deloitte.com/us/en/insights/economy/us-china-trade-war-supply-chain.html
4. https://aag-it.com/the-latest-cyber-crime-statistics/