Can the benefits of investing in supply chain technologies outweigh the risks?


global supply chainAs the global marketplace becomes increasingly interconnected, companies are looking for all available innovations that can increase growth while reducing costs. A complex supply chain can be par for the course when operating on an international scale, and a lack of visibility across the supply chain can put a firm risk for costly delays and lost business. Supply chain management software can offer increased transparency, a benefit that is driving demand for these solutions.

Supply chain management technologies are found to be used by 62 percent of logistics services providers, with specific concentration on adoption of freight forwarding, transport management and warehousing software solutions. About 46 percent of logistics services providers are worried that the time it takes to implement these solutions may reduce their overall value. However, working with vendors who help deploy the solutions can ensure timely adoption rates and accelerated returns. The management tools keep all business components connected, while reducing room for error or costly oversight. How are major firms leveraging the tools in the near future?

Top investments
A recent independent study of 484 global businesses revealed 70 percent of logistics providers are planning to deploy new transport management, freight forwarding and warehouse management software within the next two years. Logistics software from the past no longer offers the same value to global companies as it once did. As a result, many are finding themselves in need of an upgrade that offers a higher return on investment and a more user-friendly interface. The easier it is to operate a software solution, the faster it will be integrated into existing infrastructure and day-to-day operations.

The vast majority (80 percent) of logistics providers are expecting high returns on investments in all supply chain solutions within the next two years.

Because the global economic downturn impacted all industries, logistics service providers are working to recoup some of these losses with automated solutions that work to increase efficiency and productivity. 

Mitigating Risks
When a firm fails to take full advantage of supply chain management software and solutions, there are several risks that could arise and threaten the security of the company's operations and long-term success. Leaner processes and reduction in wasteful or unnecessary expenditures will help mitigate many of these risks, as well as optimizing management solutions to enhance performance.

When supply and demand disruptions occur in the company, companies average a 14 percent increase in inventories, 11 percent increase in costs and a 7 percent decrease in sales for the following year. Factors that can impact the extent of certain risks include:

  • Increased globalization through outsourcing to draw out most supply chain processes
  • More regulatory compliance from governmental bodies that complicate international trade
  • Persistent economic uncertainty that drives variability and unpredictability in demand and supply - creates a difficult balancing act
  • Short product lifecycles and rapid changes in technology solutions and demands drive up obsolete inventory and unnecessary costs
  • Customer-centric business models creating additional time-to-market pressures with regard to delivery, order fill rates and service efficiency
  • Constraints to supply chain capacity makes it hard to meet requirements and demands simultaneously
  • Increasing number of disasters and external environmental factors affecting supply chain performance

So, despite the number of factors increasing the growth of supply chain risk, there are modern solutions available to keep these aspects in check. Managers are able to not only take precautions to control these factors, but also respond quickly with supply chain management software when a risk presents itself. These solutions allow managers to worry less on everyday tasks and focus more on growth and innovation, while also impacting relationships with external partners and clients by adding transparency and accountability.