Lecture 3
Lecture 3
(ELES424)
Chapter three
DIGITAL TECHNOLOGIES IN E-SUPPLY CHAIN
MANAGEMENT
Through innovations such as IoT, AI, and blockchain, businesses gain real-time insights,
enabling them to monitor the movement of goods, predict demand accurately, and respond
swiftly to market changes or disruptions. This leads to:
improved decision-making
cost reductions
higher service levels
streamline collaboration among suppliers, manufacturers, and distributors, fostering
better communication and more agile operations.
KEY DIGITAL TECHNOLOGIES IN e-SCM (1)
Blockchain:
Use: Blockchain provides transparent records for all transactions, ensuring trust and traceability.
Example: Food supply chains use blockchain to track product origin and certifications, reducing fraud and
increasing consumer confidence.
KEY DIGITAL TECHNOLOGIES IN e-SCM (2)
Cloud Computing:
Use: Cloud-based platforms enable seamless collaboration, real-time data sharing, and remote
management of supply chain activities.
Example: Cloud services help multinational supply chain teams work in unison by accessing
centralized data and applications.
IoT refers to the interconnected network of physical devices embedded with sensors,
software, and other technologies that communicate and exchange data.
IoT enables real-time tracking of products, vehicles, and equipment, allowing for more
precise inventory management, route optimization, and enhanced visibility throughout the
supply chain.
With IoT, companies can track shipment locations, monitor environmental conditions such as
temperature and humidity for perishable goods, and detect potential issues before they
escalate.
IoT data can be integrated with advanced analytics and AI systems to optimize logistics,
predict maintenance needs, and automate processes, resulting in cost savings and improved
efficiency.
IoT USE CASES (1)
IBM Food Trust: IBM has collaborated with food suppliers and
retailers to create the IBM Food Trust, a blockchain-based platform
that provides a secure and transparent view of the food supply chain.
This helps companies comply with safety regulations and increase
consumer trust.
2. Supply Chain Optimization: AI-driven tools help streamline complex supply chain
networks by optimizing routes, schedules, and resource allocation. ML models can
simulate different scenarios and identify the most efficient paths for transportation and
logistics, reducing delivery times and costs.
ARTIFICIAL INTELLIGENCE (AI) AND MACHINE
LEARNING IMPACT IN SCM (2)
5. Enhanced Supply Chain Visibility and Risk Management: AI and ML enable real-
time visibility into the supply chain by tracking products and shipments throughout
their journey. These technologies can identify potential disruptions, such as delays or
supply shortages, and alert managers to take corrective actions. Additionally, AI
models can assess risks by analyzing factors like supplier reliability, geopolitical
events, and environmental conditions.
6. Quality Control and Inspection: AI systems equipped with computer vision can
perform quality control checks and identify defects in products faster and more
accurately than human inspectors. ML algorithms can learn to recognize patterns that
indicate potential quality issues and trigger corrective measures.
ARTIFICIAL INTELLIGENCE (AI) AND MACHINE
LEARNING IMPACT IN SCM (4)
1. Increased Efficiency:
Automated Guided Vehicles (AGVs): These robots navigate through warehouses to transport goods, reducing the time
workers spend moving items manually.
Robotic Picking Systems: Robots equipped with AI and machine learning can identify, pick, and pack items with high
precision, speeding up order fulfillment.
2. Enhanced Accuracy
Inventory Management: Automated systems use RFID and barcode scanning to track inventory in real-time, minimizing
human errors and ensuring accurate stock levels.
Order Fulfillment: Robots can sort and package products with high accuracy, reducing the likelihood of shipping errors.
3. Cost Reduction
Labor Costs: While there is an initial investment in automation technology, the long-term savings on labor costs can be
substantial. Robots can work around the clock without breaks.
Operational Costs: Automation reduces the need for large workforce teams, cutting overhead costs associated with training,
health benefits, and insurance.
4. Improved Safety
Reduced Workplace Injuries: Robots can handle heavy lifting and dangerous tasks, decreasing the risk of injury for human
workers.
Smart Warehouses: Automation can also include safety monitoring systems that help ensure compliance with safety
protocols.
ROBOTICS AND AUTOMATION IN WAREHOUSING AND
LOGISTICS (2)
1. Enhanced Collaboration:
Real-Time Data Sharing: Cloud platforms allow all stakeholders in the supply chain (suppliers, manufacturers,
distributors, retailers) to access and share data in real-time, fostering better communication and collaboration.
Integrated Platforms: Many cloud-based SCM solutions integrate various functionalities (like procurement, inventory
management, and logistics) into a single platform, enabling seamless information flow across the supply chain.
3. Cost Reduction
Lower IT Costs: By using cloud services, companies can reduce the costs associated with maintaining on-premises servers
and software, including hardware expenses, maintenance, and upgrades.
Pay-as-You-Go Models: Many cloud providers offer flexible pricing models, allowing companies to pay only for the
resources they use, making budgeting easier.
ROLE OF CLOUD COMPUTING IN SCM (2)
8. Sustainability
Energy Efficiency: By utilizing cloud services, companies can reduce their carbon footprint compared to
maintaining their own data centers, contributing to sustainability goals.
Supply Chain Optimization: Advanced analytics in the cloud can help companies identify inefficiencies and
optimize their supply chains, reducing waste and improving resource utilization.
9. Global Reach
Access to Global Markets: Cloud computing enables companies to operate globally without the need for
extensive physical infrastructure, making it easier to manage international supply chains.
Local Compliance: Cloud solutions can help companies comply with local regulations and standards in
different regions, facilitating smoother operations.
EXAMPLES OF CLOUD COMPUTING IN SCM
1. Procter & Gamble Integrated Supply Chain Management: P&G uses cloud-based applications for
its supply chain operations, allowing real-time collaboration among suppliers, manufacturers, and
distributors. By utilizing cloud technology, P&G has improved forecasting accuracy and reduced inventory
levels, resulting in significant cost savings.
2. Coca-Cola Collaborative Planning: Coca-Cola adopted a cloud-based supply chain management
system to enhance collaboration with its bottlers and suppliers. The cloud platform enables them to share
data in real-time, improving demand forecasting and inventory management across the supply chain.
3. Zara Fast Fashion Model: Zara uses cloud computing to support its agile supply chain model. The
company collects and analyzes data from sales and customer feedback through cloud-based platforms,
allowing for rapid adjustments to inventory and production. This approach helps Zara quickly respond to
fashion trends and consumer preferences.
4. Unilever Real-Time Supply Chain Analytics: Unilever utilizes cloud-based platforms for real-time
analytics across its supply chain. This allows them to better manage inventory, predict demand, and
optimize transportation logistics. The cloud enables Unilever to enhance visibility and responsiveness in its
supply chain.
CLOUD COMPUTING USE CASES (2)
6. Ford Motor Company Connected Supply Chain: Ford employs cloud computing to connect its
supply chain partners and streamline operations. By integrating data from suppliers, manufacturing
plants, and logistics providers into a cloud platform, Ford enhances collaboration and improves supply
chain efficiency.
7. DHL Cloud Logistics Solutions: DHL utilizes cloud computing for its logistics operations, allowing
for better tracking and management of shipments. By implementing cloud-based tools, DHL improves
visibility and communication throughout its supply chain, leading to enhanced customer service.
8. Pepsi Co Cloud-Based Analytics: PepsiCo uses cloud computing to analyze supply chain data and
improve demand forecasting. This helps the company to manage inventory levels more effectively and
respond quickly to market changes, optimizing its overall supply chain performance.
9. Walmart Supply Chain Visibility and Collaboration: Walmart employs cloud-based solutions for
better supply chain visibility and collaboration with suppliers. The company uses these platforms to share
data and analytics with its suppliers, improving inventory management and reducing stockouts.
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