The Challenges before the Supply Chain Management and Logistics Industry

A look at the challenges before the supply chain management and logistics industry is instructive. Huge figures sit rather incongruously with the reality of the industry, which is that while from a universal point of view, the industry has been growing at a steady rate and is set to continue the upward trend; it has its own set of challenges and inequalities, depending on the market one is analyzing. The challenges before the supply chain management and logistics industry need to be looked at, if one were to analyze the supply chain management and logistics industry.

Let us start with a look at the size of the supply chain management and logistics industry.

Impressive overall figuresThe supply chain management and logistics industry employs over six million workers of various cadres in the US alone, again a fair indication of its enormous size. The good news is that by 2018, the industry is expected to need nearly a million and a half jobs. What factors have pushed this industry into such growth figures?

From almost a decade, the supply chain management and logistics industry has been seeing new and rapid changes and developments. These developments have mostly been in high-specialty areas such as marketing, data analytics, management and human resources, are involved. The reason for which the industry is in need of such high specialization jobs is that technology has made such forays into the segment that models on which most supply chain-dependent businesses were built are no longer viable.

What are the challenges before the supply chain management and logistics industry?The challenges before the supply chain management and logistics industry are dispersed based on the market one is looking at. The major challenge for the mature markets such as the US and the other markets in the west is in finding new recruits despite its being an industry that is in need of workers. The main challenges before the supply chain management and logistics industry in advanced countries are:

Challenges before the supply chain management and logistics industry in developing economiesOn the other hand, the problems of developing markets such India, where the retail industry is growing at a rapid pace, entertaining hopes of fueling the growth prospects of the supply chain and logistics industry, are of a different nature. In developing countries, despite the recent high rate of growth in this industry; the problems concern lack of good infrastructure, lack of governmental regulation for an industry that largely is seen as belonging to the unorganized sector, and challenges to warehousing, all of which are directly related to the supply chain and logistics industry.

A country like India has a long way to go before it can build the kind of infrastructure of the kind seen in the developed countries. Although it has a huge network of railroads and roads; the quality is pathetically low, affecting the efficiency of the supply chain. Delivery gets affected in an environment of poor infrastructure and low implementation of technology, although India is relatively stronger in the latter area. Logistics and warehousing need to improve in a large measure if the demand for growth in this sector has to be matched by the requisite infrastructure.

Infrastructure is the very backbone of this industry, and this is one of the biggest areas of weaknesses in India. This places major handicaps and hurdles right at the very heart of the industry that is poised for huge growth. A number of steps need to be taken if the challenges before the supply chain management and logistics industry have to be overcome.

 

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Trends that will shape Supply Chain and Logistics in 2017

Trends that will shape Supply Chain and Logistics in 2017 is an interesting topic to think about. Though most of the trends are a takeoff from the previous years, unless something really disrupting happens out of the blue at some point of time in the year; the signals are strong that the trends that emerged in the previous few years are set to solidify and get reinforced.

What are the trends that will shape supply chain and logistics in 2017?

For a sector that is dependent heavily on infrastructure for its working; there has been little of path breaking significance in terms of what has been added to the existing infrastructure in any country of significance in the world, at least not to the extent that it can impact the industry in a significant way. The Chinese hobbyhorse, the One Belt One Road (OBOR) initiative, is not slated for completion in this year. The completion of this grand project could spell a major change for the shape supply chain and logistics, but nothing of such drastic significance is set to take place in 2017.

In the other “happening” countries – for the supply chain and logistics industry that is – 2017 is not likely to see a signal shift. But the developments that have been happening over the past few years are likely to gather pace. Technology is one area in which the change is to be expected. While again, technology itself may not really be new till this point of time in this year; a few trends have been emerging, promising to make some impact on the shape supply chain and logistics industry in 2017.

Big Data as a driver of changeBig Data is the word on everyone’s lips. How can one expect an industry that is so completely data driven as logistics and supply chain to be insulated from its influence?

Transition to m-commerceA notable development that is expected in the supply chain and logistics in 2017 is the evolution of ecommerce into m-commerce. This again, is nothing new or defining for 2017, but the year is likely to see a continuation of the trend set earlier.

People all over the world are finding it much easier to shop with the help of their mobile devices, and are adapting to this medium, albeit at different levels and speed. The explosion in the number of smartphones being purchased globally has added impetus to m-commerce.

Try-ons as a new trendA new feature of online shopping is the try-on option that consumers are now being given. Online shoppers are given the option of choosing 4-5 varieties of their chosen product. All these pieces are delivered with the order, and the consumer can try out each of them and select the one that she thinks suits her best. The idea is to replicate the actual shopping to the extent possible.

This trend has its challenges, for sure, because the cost of making it work could be unimaginably high. As with any new trend, it is going to be some time before the economies of scale of such huge logistical operations start kicking in. Yet, this is a very tangible factor that is sure to count among the supply chain and logistics trends of 2017.

 

 

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Why Trade Compliance and Logistics Must Work Together

Trade compliance and logistics must work together for a number of important reasons. While on the surface, trade compliance for logistics may seem burdensome for many organizations, the benefits of getting their trade compliance and logistics to work together are multifold and far outweigh the short term effort that goes into it, and that of noncompliance.

Undoubtedly, the most important reason for which trade compliance and logistics must work together is that they ensure that there is compliance with the laws of the countries into which the goods travel. It is a lot easier and a lot uncomplicated to have goods moving within national boundaries, where one can expect familiarity with the rules and the operating environment. In the case of global trade, the story is different.

Need to grapple with multiple laws

There is great diversity and complexity of laws that govern trade compliance and logistics. They are now more integrated than at any point of time before because of the advent of new technologies. This brings in a motley mix of the elements of global business, such as currencies, laws, locations, people and so on. Businesses that have a stake in the global trade have to deal with these varieties and diffuse elements. One of the surest ways of ensuring that these are managed rightly is by getting trade compliance and logistics to work together.

Since there is a multitude of international laws that need to be complied with at many stages of the global supply chain; trade compliance and logistics must work together. This is the only sure way of ensuring that the company’s goods and products meet the required international trade guidelines and reach their destination safely.

A way out of the complexity

For many in the business of exports, complying with the global supply chain may seem complex. However, knowledge of the laws of respective countries and building a sound logistics and supply chain infrastructure will go a long way in mitigating the problems associated with these. This is why trade compliance and logistics must work together.

Imagine a consignment of textiles originating somewhere in the Middle East headed for North America. This consignment has to pass through a few countries, at each of which it has to be sure it meets the compliance requirements. Finally, even when it reaches its destination, it must ensure that the laws of that country are complied with.

Increased efficiency and enhanced reputation 

Another important reason for which trade compliance and logistics must work together is that there are substantial long term gains to be had by doing so. Supply chains that have come about as a result of trade compliance and logistics working together become more reliable and efficient. All these mean reduced costs in the long run, increased customer satisfaction, and enhanced reputation in the business.

Elaborating on the point above, it is also equally true that trade compliance and logistics must work together to pump up nations’ economic growth. A country that ensures that trade and logistics are in accordance with internationally legislated laws on the subject are more likely to be trusted by global businesses. Countries in which trade compliance and logistics work together and result in sound business infrastructure are naturally more preferred by businesses as transit routes or destinations for their products. This brings in substantial revenues to the countries.

 

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What is logistics and supply chain management?

Logistics and supply chain management (SCM) constitute a very important element of businesses. Getting the logistics and supply chain management aspects right is necessary for the smooth flow of products from their source to destination, during the course of which many activities need to be performed.

Logistics and supply chain management is emerging as a major area of business because of the evolution and growth of globalization. Many products and goods are produced in one country and consumed in another situated thousands of miles away. The right logistics and supply chain management helps to deliver the goods and products to the right person, at the right time, at the right place and in the right condition. Lack of proper logistics and supply chain management is a recipe for disaster.

What is logistics and supply chain management?

 

Among the lay people, there is a tendency to use the two words synonymously and interchangeably. In trade, however, there are major differences between the two. Logistics is just a part of the supply chain. In simple, general and broad terms, one can understand the difference between logistics and supply chain in the following ways:

Logistics is a part of supply chain, meaning that it is a set of activities that are carried out within an organization. Supply chain, on the other hand, is the full set of activities that are carried out from start to finish, i.e., from the time it departs the organization that it is leaving till the time it reaches its logical destination. In this process, supply chain management involves the coordination and collaboration of many entities. In this sense, supply chain is a whole set of activities, of which logistics is only a part.

Another way of understanding logistics and supply chain management 

Another way of understanding logistics and supply chain management is this:

Logistics can be understood as being a discipline in which the following activities are involved:

On the other hand, supply chain management can be said to include more extended activities, which include:

Logistics and its extended activitiesLogistics often is described in terms of inbound and outbound logistics. Simply put, inbound logistics is the movement of raw materials and goods that are bought by and transported into a company. When these are processed and finished and shipped to customers; they become part of outbound logistics.

Logistics and supply chain management in a broader contextWhen one tries to get an understanding of logistics and supply chain management at a higher or broader level in the way logistics has been described above; supply chain management can be understood as consisting of these elements:

A sound supply chain system seeks to create value for the organization by building and utilizing logistics infrastructure. Logistics and supply chain management become meaningful when the organization synergizes demand with supply, stock and supply and inventory management

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