Blog Category: Logistics & Supply Chain

  • Innovation with Reverse Logistics (Part 2 of 2)

    Introduction

    In Part I of this article we gave a short introduction to the Reverse Logistics concept, and the reasoning behind the recent increase in popularity. Many SME’s (Small-Medium Enterprises) now make use of Reverse Logistics to some degree. The benefits gained such as resource management, profit margin increase, and increased customer satisfaction are prominent within any company that maintains a reliable Reverse Logistics Chain. 

    In Supply Chain Management, Reverse Logistics can be used as a strategy to close the circularity of a products’ life cycle. Reverse Logistics is the process that deals with the collection and remanufacturing of used or unnecessary items. From a supplier point of view, Reverse Logistics’ drivers are legislations, which oblige them to manage the remanufacturing of sold products, environmental concerns, strictly linked to the demand of customer to have more sustainable products, and economic benefits, since a returned item can easily be sold instead of producing a new one from raw materials (D’Amico, E. D. 2021).

    This part of the Reverse Logistics Article will cover the latest innovations that are mainly used to gain a competitive advantage within the marketplace. When executed correctly, these innovative technologies allow companies to scale rapidly. SMEs often outsource to professional Supply Chain companies that make use of these technologies. This way, smaller companies can experience the benefit of rapid scalability whilst keeping their investment costs low. It also provides better resource management as they can allocate their personnel to other tasks. In this article, we will zoom in on the two most popular innovations within Reverse Logistics.

    According to D’Amico, E. D. (2021), An implementation of technologies such as IoT (Internet of Things) and Blockchain would allow to improve the functionality of Reverse Logistics. Although these technologies can be expensive to be implemented and require much expertise, they offer possible solutions, especially with the use of RFID (Identification tags usable on products). Traceability, transparency, and prediction are the main benefits of Smart Reverse Supply Chain (SRSC).

    Innovative Technologies

    Internet of Things (IoT)

    According to K. Ashton (2019), IoT describes a network in which every physical product has a virtual identity and is linked to a connection. It represents one of the main pillars of the revolution of Industry 4.0. The IoT is considered as the key that allows objects, such as RFID tags or sensors to communicate with each other and with humans. The holistic connection created a synergized network that allows streamlined Data transfers on a large scale.

    IoT is used within many Supply Chain aspects nowadays. Inventory management is a frequently used aspect. As soon as the quantity falls under an established number, a reorder can be automatically processed with the use of RFID in a virtual cloud. According to Wanganoo (2020),  the structure of IoT is based on four layers. These are:

    • Data storing (RFID)
    • Communicaion
    • Service
    • Display layer

    IoT is able to bring remarkable opportunities to Reverse Logistics. Through the establishment of a connected network of products, the information infrastructure is strongly improved (Gar-2020).

    Blockchain

    Blockchain can be defined as a digital technology that facilitates the recording of transactions and allows for the traceability of a resource. The type of resource can vary between physical (e.g., cars) or an abstract resource (e.g., patents or cryptocurrency). Especially with cryptocurrency, Blockchain allows the record of every transaction. Blockchain as a process can be explained as follows: The moved information can be envisioned as a block, which contains all the pertinent data and passes from one client to the next. The exchange should be endorsed by the organization, which looks at the data and approves it. This guarantees straightforwardness and security. The new record is added to a block, that contains a unique code, named hash. It also contains the code from the previous block and is successively added to a chain of blocks.

    The main concept stimulates the idea of handling information in a decentralized way. Information is verified by the collective, instead of by a single entity.

    When it comes to supply chain and Reverse Logistics, Blockchain can be used to improve the chain in multiple ways. The decentralized structure allows every logistics member to keep real-time track of a product and it increases the reliability of the data (Zhu-2019). The transparency enabled by Blockchain increases the security of a trade. This security is a valuable element needed in any resilient Supply Chain. In addition, Blockchain allows Supply Chains to streamline their transaction process as it can remove intermediate steps form the transactional process. This reduces costs and time, ultimately improving the Supply Chain.

    The figure below clearly illustrates the Blockchain process.

    Figure 1. (The Blockchain process) D’Amico, E. D. (2021, October 10).

    These two innovative technologies allow any company to build a reliable and resilient Reverse Logistics process, ultimately improving the Supply Chain. Would you like to know more about these innovative technologies and how you are able to implement these within your Supply Chain? Contact a ModusLink Expert today by clicking here!

    Bibliography:

    D’Amico, E. D. (2021, October 10). ResearchGate. ResearchGate. Retrieved November 6, 2021, from https://www.researchgate.net/publication/354551628_Analysis_of_Challenges_and_Potentials_of_Reverse_Logistics

    Jenkins, A. (2021, April 5). A Guide to Reverse Logistics: How It Works, Types and Strategies. Oracle NetSuite. https://www.netsuite.com/portal/resource/articles/inventory-management/reverse-logistics.shtml

    Marchese, K. (2021, October 29). Supply Chain leadership. Deloitte United States. https://www2.deloitte.com/us/en/pages/operations/articles/supply-chain-leadership.html

    Niroomand, I. (2021, August 31). The importance of reverse logistics in your supply chain network. Kinaxis. https://www.kinaxis.com/en/blog/importance-reverse-logistics-supply-chain-network

    Reverse Logistics – Rhenus Netherlands. (n.d.). Rhenus. Retrieved November 6, 2021, from https://www.rhenus.com/en/nl/our-solutions/contract-logistics/logistics-solutions/reverse-logistics/

     

  • Innovation with Reverse Logistics (Part 1 of 2)

    Introduction

    Both Challenging and Rewarding. When speaking to any experienced Supply Chain professional, it is these exact two terms that can almost be expected to be brought up somewhere within the conversation. A strong Supply Chain must contain elements such as Resilience, Agility, Responsiveness, Cooperation, Fluency and so forth. Managing to maintain all these elements can be highly challenging. However, if a business succeeds in doing so, the rewards are highly noticeable. Loyal customers, Fast delivery, Capability to adapt to the market, freedom in spending resources, time management, effective return management and so on.

    SME’s (Small/Medium Enterprises) often struggle to effectively manage their Supply Chain due to limited capacity and resources. A popular solution to this can be given in the form of Outsourcing. Many SME’s take advantage of Outsourcing the core components of their Supply Chain to experienced professionals within the industry. This allows them to quickly scale their business and invest their time and resources into other parts of the business without sacrificing on the importance of the key driver behind their business, the Supply Chain. A large Supply Chain element that is often prioritized when Outsourcing is the process of ‘Reverse Logistics’. This is because the element is highly impacting the customer satisfaction ratio, and overall Supply Chain performance.

    The definition of Reverse Logistics

    Reverse Logistics is often referred to as Reverse Supply Chain, and part of Closed Loop Supply Chain. It has its first definition published only in the beginning of the nineties by the Council of Logistics Management (Bri-2004, S. 4) and thus still represents a young sector of Logistics.

    The most acknowledged definition of Reverse Logistics is ‘’the process of planning, implementing and controlling flows of raw materials, in process inventory, and finished goods, from a manufacturing, distribution or use point, to a point of recovery or point of proper disposal’’ (Bri-2004, S. 5).

    Figure 1(The Reverse Logistics Process) (Chi-2018)

    The Figure above clearly illustrates the core elements of the Reverse logistics Process. Products are received from the end-customer and transported back to the warehouse in question. They are then carefully inspected for defects, depending on the reasoning behind the return. They are then adequately sorted and either resold/recycled or scrapped.

    The introduction of Reverse Logistics within Supply Chain Management didn’t go as smooth as expected. Businesses often quickly experienced the challenges that come with Reverse Logistics such as capacity management, customer expectations, waste management etc. These challenges were often too grand to build a strong Reverse Logistics process. It is only as of recent that Reverse Logistics has become increasingly popular to manage effectively. There are a couple reasons for this. The uprising of eCommerce businesses is one explanation as many products flow quickly through an eCommerce business, increasing the importance of managing the returns process. Another reason for the increase in popularity of Reverse Logistics management has to do with the uprise of strong Technological Solutions/Innovations such as IOT (Internet of Things), AVG’s (Automated Guided Vehicles), etc. These solutions allow SMEs to overcome the challenges that come with effectively managing a reverse Logistics process.

    Smart Reverse Supply Chain (SRSC)

    The concept of merging the above-mentioned Technology/Tools, together with Reverse Logistics forms the concept that is called ‘Smart Reverse Supply Chain’. To overcome the challenges that come with managing your Reverse Logistics process, Businesses decide to make use of the uprising beneficial technologies mentioned above. They can choose to individually adopt these technologies, or collectively make them work together to strengthen the synergy within the Reverse Supply Chain.

    SRCS can manage flow times and information exchanges more effectively between logistical partners. This minimizes the uncertainties and difficulties when returning products. (XU – 201-1b). According to Xu (Xu-2011b), each product can be equipped with a tag to be associated with a unique identity and to be able to communicate with other devices.

    The two key elements that ought to be managed effectively to improve SRCS are (Xu-2011a):

    • Identification tools: In order to implement a well-organised Smart Reverse Logistics, it is necessary to establish appropriate identification methods such as RFID (ID Tags), 3-D and 4-D Barcodes to permit the recognition of incoming and handled object and the communication between them
    • Standardization: To allow every member of the Closed Loop Supply Chain to pro- cess and identify the products, it is necessary to establish a standardization of the used technologies. Although there is the EPC, which uniforms the identity of every item, also the reading technologies need to be standardized

    These two elements are best managed through the innovative technologies such as Artificial Intelligence and Machine Learning, Blockchain and Internet of Things (IoT). Would you like to know more about these innovative technologies and how you are able to implement these within your Supply Chain? Stay tuned for our next Blog where we go more in depth or talk to a ModusLink Expert today clicking here!

    A picture containing text, indoor, computer, keyboard

Description automatically generated

    Bibliography:

    D’Amico, E. D. (2021, October 10). ResearchGate. ResearchGate. Retrieved November 6, 2021, from https://www.researchgate.net/publication/354551628_Analysis_of_Challenges_and_Potentials_of_Reverse_Logistics

    Jenkins, A. (2021, April 5). A Guide to Reverse Logistics: How It Works, Types and Strategies. Oracle NetSuite. https://www.netsuite.com/portal/resource/articles/inventory-management/reverse-logistics.shtml

    Marchese, K. (2021, October 29). Supply Chain leadership. Deloitte United States. https://www2.deloitte.com/us/en/pages/operations/articles/supply-chain-leadership.html

    Niroomand, I. (2021, August 31). The importance of reverse logistics in your supply chain network. Kinaxis. https://www.kinaxis.com/en/blog/importance-reverse-logistics-supply-chain-network

    Reverse Logistics – Rhenus Netherlands. (n.d.). Rhenus. Retrieved November 6, 2021, from https://www.rhenus.com/en/nl/our-solutions/contract-logistics/logistics-solutions/reverse-logistics/

     

  • What is Smart Packaging.

    The importance of correct packaging

    Each product has its natural flow from beginning to end. Packaging is an important element that manifests its presence within all stages of the product flow. These stages can be identified as the purchase of raw materials, the production and sale of the final product, and not to forget transportation and distribution.

    The role of traditional packaging is to protect a product against deteriorative effects caused by exposure to and usage in the external environment. Packaging logistics is quite a new discipline that has gained consideration in terms of its strategic aspect in providing a significant competitive advantage to improve the efficiency of the whole Supply Chain.

    Over the years, packaging has become an important challenge for companies. Companies must analyze and study the best way to pack products taking into consideration the characteristics of the products such as the shape, components, etc. to minimize cost and improve the companies’ performance and reliability. As a result, the emphasis on packaging systems has been growing substantially as of recent (Regattieri, 2013).

    Nowadays, a strong focus is being placed on Smart Packaging as traditional packaging is no longer sufficient due to continuously increasing customer expectations and increasing product complexity. Smart Packaging consists of packaging systems with embedded sensor technology used for different products to extend their shelf life, track and trace products, monitor freshness, display information on quality, or improve the product on customer safety. Smart Packaging contributes to the overall Supply Chain efficiency from being in constant contact with the products through strategic sensors devices on the packaging. These smart sensors add important functionalities to the packages and companies are becoming more reliant on them due to their numerous positive effects. Smart packaging is integrated into products such as food, pharmaceutical, and many more. The Supply Chain element is currently in a growth phase with immense potential. Latest developments such as thin-film electronic and antimicrobial packing are being analyzed to increase their capabilities and become even more accurate and safer (Cheung, 2018).

    The three main Packaging levels

    The packaging process consists of three main levels. The first level is about the structural nature of the package. This phase is the smallest. Within this phase, the package is in direct contact with the actual content.

    The second level deals with visual communication and customer satisfaction. The main purpose of the second level is to associate the primary packages together.

    Finally, the third level is designed and used for transportation and storage such as cartons. The packaging system is cross-functional which means that the system is being dealt with by different departments having each specific request about the design of the package. This can lead to misunderstanding and can be contradictory.

    The three package levels are illustrated in the schema below.

    (Regattieri, 2013).

    The security of the products can be monitored by research design to increase the safety of the product during manufacturing and assembly, storage and picking, and transport. Smart packaging also plays an important role in traditional packaging. Information transmission is used to inform the management team on the correct way to store or transport the contained product. Organizations also integrate the internet of things (IoT) through an electronic device RFDI (radio-frequency identification) which is a tag on packages to enable companies to identify the products in real-time, reducing the risk of damages and mapping the path of the products to control the work in progress. An unprotected product could cause product waste which can be negative from an environmental and economic point of view (Regattieri, 2013).

     

    Benefits to Smart Packaging

    Smart Packaging can offer various advantages. They can fulfill the information, automation, marketing, and protective functions. To do so, packages are equipped with tiny electronic devices that add functionalities such as barcodes, LED, augmented reality, NFC (near field communication), loudspeaker, displays. To illustrate their use, a good example would be the intelligent drug packaging with build-in RFID (radio frequency identification) chips which are LEDs and tiny loudspeakers that register the removal of pills and sound an alarm if they are taken in the wrong order by the patient and can inform the doctor who is treating the patient.

    Smart Packaging can also be used for logistics and marketing purposes. Johnnie walker blue label bottles use sensitive sensors that send information to the company if the bottle has been opened during transportation or storage and its location in the distribution chain (Emprechtinger, 2019).

    Smart Packaging has a strong customer empowerment element through great new technological tools. These tools can offer a customer interface that is used to better understand the different purchased products. Scanning a food package brings the customer to a larger explanation on the products’ storage conditions, dietary concerns, ingredient research, and nutritional value (impacx, 2020).

    Quality control is another strong advantage. Active packages use sensors that are being placed on the product. Organizations can detect the status of the product and see whether it is good or comprised. Furthermore, advanced packages can even go further by extracting unwanted particles inside the package which can increase the shelf life. These sensors result in simple access to absolute quality products from the manufacturer and longer-lasting solutions (impacx, 2020).

    Being able to track products might be one of the main reasons for companies to integrate Smart Packaging inside their operations. Organizations are leveraging intelligent packaging systems to track their product inside the Supply Chain process. Smart packaging has made the process of locating products much easier and safer as too many products were difficult to track within a complex supply chain (Choudhury, 2018).

    Finally, Sustainability can be increased through the use of Smart Packaging. It favorites the reduction of the packaging’s impact on the environment as it is economical, cost-effective, durable, and lightweight, enabling companies to have a competitive edge by reducing at the source and consequently reducing the carbon footprint (Choudhury, 2018).

    The many advantages mentioned above attract companies to switch from traditional packaging with high risks of damages or product loss to Smart Packaging with additional advanced technologies that make the logistic operation more resilient.

    Would you like to know more about the best way to integrate Smart Packaging within your Supply Chain? Contact one of ModusLink’s Industry experts by clicking here.

    Bibliography:

    Aliakbarian. (2019, February 20). Smart packaging: challenges and opportunities in the supply chain. Retrieved from supplychainquaterly.com.

    Bianchi. (2017, June 28). 5 Examples of Innovative Uses for RFID Technology in Retail. Retrieved from shopify.com.

    BioSpectrum. (2012, July 16). Packing smart for better reach of vaccines. BioSpectrum digital edition. Retrieved from https://www.biospectrumasia.com/.

    Cheung, S. &. (2018). Smart Packaging: Opportunities and Challenges. University of Liverpool & University of Northumbria, Department of Mechanical and Construction Engineering & Division of Industrial Design. Liverpool: Elsevier.

    Choudhury. (2018, April 05). Top Benefits of Smart Packaging for Packaging Companies | Infiniti Research. Retrieved from Infinity research.

    Emprechtinger. (2019, April 18). 5 things you should know about smart packaging. Retrieved from lead-innovation.com.

    Fedex. (2020). Tracking Technologies Are the Cornerstone for a Competitive Supply Chain Strategy. Retrieved from Fedex.com.

    FreightPOP. (2019, September 3). Barcodes, QR Codes, & RFID In Supply Chain Management. Retrieved from freightpop.com.

    Hou, L. &. (2016). The Application of NFC Verification System in Warehouse Management System. South China University of Technology, School of Computer Science and Engineering. Guangzhou,: Atlantis Press .

    impacx. (2020). What is smart packaging and its benefits? Retrieved from impacx.io. Jules. (2020, April 8). warehouse automation 101: a complete guide. Retrieved from

    easyship.com.
    Pagliusi, J. &. (2020). Roadmap for strengthening the vaccine supply chain in emerging

    countries: Manufacturers’ perspectives. Elsevier.
    Regattieri, S. &. (2013). The Important Role of Packaging in Operations Management. In

    Operations management .

    Richelle. (2021, January 11). Smart packaging. (Boulanger, Interviewer) Thrams. (2020, November 25). Big Benefits of Smart Packaging . Retrieved from

    primarypackaging.com.
    Vasić, Đ. &. (2018). NFC Technology and Augmented Reality in Smart Packaging. University of

    Novi Sad, Faculty of Technical Sciences., Department of Graphic Engineering and

    Design. International Circular of Graphic Education and Research.
    Ward, h. &. (2019). Rethinking packaging. DHL , Supply chain department. DHL Customer

    Solutions & Innovation Represented by Matthias Heutger.
    WHO. (2020). Bar-codes, QR codes and Vaccine Vial Monitors in the context of COVID-19 vaccines. World Health Organization.

     

  • The introduction of E-Procurement.

    The introduction of E-Procurement:

    Price and availability are not the only factors to be considered in a purchasing decision, especially now that a strong supply chain has become an unmissable element for every company in today’s business climate (Namulo, 2017). The dynamic of business around the world is changing at a rapid pace due to fast-growing technological advancements. The ease of accessibility of this technology causes many organizations to shift towards E-Procurement as an effective and innovative Supply Chain support system to help companies reach goals including operational efficiencies, sustainability, and profitability.

    According to (Namulo, 2017), “E-Procurement is the acquisition of goods, services or works from an external source. In procurement, it is necessary to ensure that the goods, services, or works are appropriate and that they are procured at the best possible cost to meet the needs of the purchaser in terms of quality, quantity time, and location”.

    The use of E-Procurement has recently increased as technologies are positively affecting different sectors around the world. E-procurement, which is known as ‘electronic procurement’ or ‘supplier exchange’, is changing the way companies are sourcing their goods and services. Over the last ten years, institutions have been using more electronic tools to manage their procurement activities. Organizations in both public and private sectors are adopting systems such as the Electronic Data Interchange tool (EDI), Enterprise Resource Planning (ERP), and of course the internet to benefit them when sourcing their goods (Adebayo, Dec 2015).

    Advantages/disadvantages:

    E-procurement is a tool that yields benefits in all kinds of ways. It enables companies to decentralize operational processes and centralize strategic procurement processes which result in higher transparency and integrity, as well as reducing transaction cost and boost decision-making processes. Furthermore, e-procurement enables price negotiation and supplier evaluation. It also enables selection to be automated between an organization and its suppliers which prevents time consumption. Instead of exchanging contracts or sending out a tender document, the entire operation is computerized, and therefore it helps reduce human errors, increase operational speed and allow staff to focus on other tasks (digital, n.d.).

    Moreover, e-procurement enables companies to have a good workflow that facilitates end-users self-services. The inflows/outflows of goods through the supply chain improves as the tracing and tracking of those goods are automated which reduces emergency shipments. Institutions can visualize their purchasing behaviors to control purchasing management and save costs by identifying leverage buying power (digital, n.d.). Finally, being connected to external supply chains and enterprise resource planning (ERP) enables companies to get a better overview of supplier transactions and information by sharing real-time data through ERP systems which improve communication (digital, n.d.).

    It is important to note that there are also obstructing factors that prevent implementing e- procurement. Lack of a strong business relationship, financial support, and organizational priority can also from obstacles as developing countries are usually late adopters and do not invest money into early adopters’ trends. On the contrary, firms from countries with low uncertainty avoidance such as Germany or the UK are early adopters of e-procurement, while countries that are less reluctant to change such as Spain or France have lower adoptions rate (Namulo, 2017).

    Concept of implementing E-procurement:

    Electronic procurement innovations (EPIs) are being utilized by many businesses to improve their supply chain sector. (EPIs) support the different parts of the core procurement process of businesses such as supplier selection, order placement, order fulfillment, payment, and settlement.

    Many organizations are using the scheme below to help implement e-procurement into their supply chain (Namulo, 2017). Successful implementation of e-procurement depends on strong good management to achieve the firm’s performance goals. It is important to have sufficient awareness about what adopting e-procurement means on a long-term and short-term basis. E- procurement has become a powerful tool resulting in a competitive advantage for many businesses. It is integrated into many firms’ overall strategies as the role of IT has evolved from productivity to a strategic tool (KANDA, 2017).

    (Namulo, 2017).

    Five forms of e-procurement:

    E-procurement is categorized into five main applications which consist of E-ordering, E-sourcing, E-tendering, E-auctioning, and E-informing.

    E-ordering: The ordering process is one of the major challenges for suppliers and buyers. Based on (Zaman, 2019), E-ordering captures electronic data which includes orders, requests, and information received by the customer. E-ordering benefits both suppliers and buyers in different ways such as speed, security, standardization, and traceability. From the supplier’s side, E-ordering can reduce errors and eliminate papers as invoices are automatically generated from the order information through the internet (Edicom, 2020).

    E-sourcing: Described as the action of selecting and identifying the suppliers based on specific requirements. This approach allows the firms to select their preferable suppliers taking into account their competitive aspects.

    E-tendering: is the procedure when the suppliers receive the invoices and the purchase requests. This process allows both suppliers and buyers to realize their online transactions. Moreover, the procedure covers the tender requirements which will be exchanged electronically (Zaman, 2019).

    E-auctioning: Online reverse Auctions facilitate the process of a buyer investigation ability to select the right suppliers to buy products or services. Instead of negotiating with several suppliers before selecting one, online reverse auction enables temporal and geographical convenience as well as reducing the cost of contact, providing feedback and privacy (Namulo, 2017). In other words, the buyers give a contract to the suppliers who have ‘won’ the online process of bidding where suppliers compete in real-time (Zaman, 2019).

    E-informing: This method includes assembling and gathering information regarding purchases of buyers and suppliers by using web-based technology (Zaman, 2019).

    The supply chain performance is dependent on each of the stated independent e-procurement steps. These steps aim to improve the overall supply chain performance. (Zaman, 2019).

    Would you like to know more about adopting E-Procurement within your Supply Chain? Contact one of ModusLink’s Industry experts by clicking here.

    Bibliography:

    Adebayo, V. &. (Dec 2015). Adoption of e-Procurement Systems in Developing Countries: A Nigerian Public Sector Perspective. In V. &. Adebayo, 2015 2nd International Conference on Knowledge-Based Engineering and Innovation (KBEI) (Vols. pp. 20-25, pp. 20-25). Tehran, Iran: IEEE.

    Cheney, C. (2020, July 01). How COVID-19 has advanced the case for procurement reform. Retrieved from Devex.com. demery, P. (n.d.). Digital commerce 360 . Retrieved from digitalcommerce360.com.
    digital, W. (n.d.). What is e-procurement . Retrieved from Waxdigital.com.


    Edicom. (2020, March 12). What Are Electronic Orders? Benefits and Success Cases in Europe.

    Retrieved March 2020, from Edicomgroup.com.

    KANDA, V. I. (2017, April). Factors Affecting the Adoption of e-Procurement Systems among

    International Non-Governmental Organisations in Kenya. International Journal of Academic Research in Accounting, Finance and Management Sciences, 7(2), 164-176.

    Kapepo, S. K. (2019, July ). The Role of Institutional Pressures in the Adoption of e-Procurement

    in Public Institutions in Developing Countries: The Case of Lesotho. The African journal of information systems, 11(3 ), 232-248.

    Mwangi, E. W. (2016, August 19). EFFECTS OF E-PROCUREMENT ON PROCUREMENT

    PERFORMANCE IN HOSPITALITY INDUSTRY IN KENYA: CASE OF SAROVA CHAIN OF HOTELS. International Academic Journal of Procurement and Supply Chain Management, 2(2), 1-19.

    Namulo, M. M. (2017, August). Employee Adoption of E-Procurement and its Implication on Supply Chain in Developing Countries. International Journal of Computer Applications , 171(9), 11-15.

    NGUI, A. M. (October 2016). BARRIERS TO E-PROCUREMENT ADOPTION BY SMALL AND MEDIUM ENTERPRISES IN MACHAKOS COUNTY. reserach paper, UNIVERSITY OF NAIROBI, SCHOOL OF COMPUTING AND INFORMATICS, Nairobi.

    Oracle. (n.d.). What is ERP . Retrieved from Oracle.com – Malaysian Manufacturing Firm. International journal of supply chain management, 8(2), 923-929.

     

  • Sustainable Supply Chain Management.

    Green supply chain history:

    The origin of Supply Chain Management can be dated back to the early 20th with Henry Ford who vertically integrates the automotive supply chain and organizational practices. The approach of “Just in time” and “supply chain management” focused on optimizing efficiency and reducing waste. But at that time, the reduction of waste was mainly due to economic reasons, not environmental.This was because waste means greater economic loss. At that time, pollution wasn’t mentioned by economics scholars, that’s why pollution caused by industries was not part of economic discussions. After recognizing the importance of pollution within the economic systems, a tax was suggested for environmental pollution caused by industries (EM Ojo). Nowadays, a lot of different factors are increasing the urgency for emerging economies to become sustainable. A great example would be today’s prominence of climate change.

    Why go green?

    Due to climate change, firms are rethinking their strategies to guarantee environmental initiatives to start environmental actions. Furthermore, the notion of Sustainable Supply Chain Management is often linked with social responsibility or environmental management (Ali Esfahbodi, 2016). Green Supply Chain Management emerges as a new environmental approach in Supply Chain Management and has been increasingly used by forward-thinking organizations. There are different reasons to turn to GSCM (Green Supply Chain Management) included being sustainable, profitable, and cost reduction. Customers usually say that they would rather buy products that are environmentally friendly and with a minimum of environmental impact. Business practices ought to become increasingly transparent therefore implementing green policy can generate profits, provide a positive social impact, and reduce environmental impact. Any steps taken to become greener will favor companies in visibility, credibility, and develop a leadership reputation. (Bhattacharjee, 2015).

    The purpose of going green is shown in the table.

    Sustainable supply chain management:

    The original model of Supply Chain Management follows a linear production that hypothesizes the constant input of natural resources and an unlimited capacity to assimilate waste. Unlike the traditional supply chain, being sustainable considers the environmental impact of a product through its entire process cycle and reduces maximum environmental damages. The idea of being sustainable is done by closing the loop and including the reuse, recycle step. This will aim at reducing environmental impact from the acquisition of raw materials to the final use and disposal of the product (Ali Esfahbodi, 2016).

    Based on (Ali Esfahbodi, 2016), the main activities in a typical sustainable supply chain management (SSCM) are illustrated above. When the product has a defect after its production, it is sent back to the inventory to reuse or recycle it. When the product comes to its end, it goes to the plant where the product is reused, recycled, or refurbish before heading back to the supplier.

    Four fundamental practices:

    Based on (Ali Esfahbodi, 2016) research, Chinese and Iranian governments have focused their fight for SSCM based on four fundamental practices: sustainable procurement, sustainable production along with sustainable distribution, and reverse logistics. These practices represent to which extend each country engages itself toward Sustainable Supply Chain Management. In addition, these initiatives are not used just taken in China and Iran but also in many other emerging economies. These innovations represent a strong commitment from through strategic environmental plans towards sustainable Supply Chain Management.

    • Sustainable procurement: consists of environmentally friendly purchasing that carry reduction, reuse, and recycle. Furthermore, it is a solution to achieve a selection of products and services that reduce the negative impact of the lifecycle. The sustainable purchase becomes easier through the year with fewer barriers as customers increase their demands for environmentally friendly goods (Vishal Gupta, 2013). Ikea is a good example as it has sourced close to 50 percent of its wood from sustainable foresters and hundred percent of its cotton from farms that meet better cotton standards (Ikea, n.d.).
    • Sustainable production: is the production process that uses inputs with low environmental impact, is greatly effective and provoke no waste pollution. Green production can improve the corporate image and lower the raw material cost. Companies are starting to take actions and produce materials that intend to be reliable, energy-efficient with no or lesser waste which benefits companies in many ways as it will have an impact on customers, shareholders, and the recognition of the company in the marketplace. (Vishal Gupta, 2013). Patagonia produces their wetsuits from natural rubber and parkas which are made from plastic bottles. (Cardwell, 2014).
    • Sustainable distribution: Distribution of goods usually generates a lot of waste and is can damage the environment, but green distribution consists of green packaging including size, shape, and materials that have an impact on transportation of the goods. Better packaging can reduce material usage, increase space utilization in the warehouse and trailer, and lower the quantity of handling required (Vishal Gupta, 2013). It is done by Logistrap in Mexico, they reduced their space within the warehouses and container ships to transport more within the same number of trips (Logistrap, 2020).
    • Reverse logistics: According to (Vishal Gupta, 2013) the concept of Reverse Logistics (RL) not only means the returns from the customers but also the management of E-waste. RL is a process where a manufacturer accepts previously shipped products from the customers point for potential recycling and/or re-manufacturing”. Kobo360 from Nigeria is a leader in the practice stated. They Pick up returns and bring them back to a warehouse or other location to be restocked, inspect and repackage returned products or parts (Kobo360, n.d.).

    Do you need help figuring out how to become more Sustainable? Contact one of ModusLink’s experienced industry experts today by clicking here.

    Bibliography:

    12 Million Bottles Used in Patagonia Recycled Clothes. (1995, April 12). Los Angeles Times. Ali Esfahbodi, Y. Z. (2016). International journal of production economics (Vol. 181 part B). (S.Minner, Ed.) Birmingham , UK: Elsevier.

    Avittathur, A. A. (2016). Green Retailing: A New Paradigm in Supply Chain Management.

    Calcutta, India: IGI Global.

    Bhattacharjee, K. (2015). Green Supply Chain Management- Challenges and Opportunities.

    Research scholar, Patna University, Applied economics & Commerce, Patna. Cardwell, D. (2014, July 30).

    At Patagonia, the bottom line includes the earth. The New York Times(section B), 1.
    CHAPPELOW, J. (2016, March 16). Emerging market economy. Retrieved from Investopedia. consulting, T. E. (n.d.). reverse logistics in a circular economy. Retrieved from Triple EFF

    consulting.

    EM Ojo, C. M. (n.d.). GREEN SUPPLY CHAIN MANAGEMENT IN DEVELOPING COUNTRIES. In C.

    M. EM Ojo. Johannesburg, South Africa : Department of Mechanical Engineering Science, University Of Johannesburg, Johannesburg, South Africa. Ikea. (n.d.). Corporate news. Retrieved from Ikea.com.
    Kobo360. (n.d.). Kobo. Retrieved from Kobo360.com.

    Logistrap. (2020). Logistrap packing services. Retrieved from Logistrap.com. 15

    Mohsin Malik, S. A. (2019). Sustainability Initiatives in Emerging Economies: A Socio-Cultural Perspective . Swinburne University of Technology. / Abu Dhabi University., Department of Business Technology and Entrepreneurship / College of Business Administration. Abu Dhabi, UAE.: MDPI.

    O. Zhu, J. S. (2005). Green supply chain management in china: pressures, practices and performance (Vol. 5).

    Queiroz, M. M. (2019). Environmental Quality Management (Vol. 3). (Wiley, Ed.) Wiley.
    Rama K. Jayanti, M. R. (2014). Sustainability dilemmas in emergingeconomies. (I. M. review, Ed.)

    Bangalore, India: Elsevier Ltd.8).

    Vishal Gupta, N. A. (2013, January). Green Supply Chain Management Initiatives by IT

    Companies in India. The IUP Journal of Operation Management , 12(2), 6-24.

     

  • The Circular Economy.

    The Circular Economy

    Taking the fastest route towards your destination is often the most effective one as you will use the least time possible. However, is it also the most efficient? This is a completely different question. Your efficiency depends on how you determine your efficiency factor. Is your idea of efficiency to spend the least amount of money on fuel? To take the route in the most sustainable way possible? To see the most beautiful scenery along the way? If your idea of efficiency is one of these mentioned, your strategy of taking the fastest route is probably not a good idea. This concept of efficiency is crucial for businesses to understand as it allows them to optimize their operational activities and business model.

    Businesses often conduct their operations as streamlined as possible. To oversimplify, let’s take an average Supply Chain from a start-up. First, the sought-after raw materials are procured. Then, the business uses these raw materials together with labor to convert them into their final product. Lastly, this product is sold, and any waste material is disposed of. This Linear way of conducting business is often how many start-ups begin their journey as it seems effective and straightforward. Depending on your business model/goals, there might be an alternative way to conduct business that yields benefits such as increased resource utilization, labor force efficiency, and sustainability within your business model.

    The Circular economy is a term used within Business practices that primarily aims to reinforce sustainability within Business elements (Ministerie van Infrastructuur en Waterstaat, 2019).

    The fundamental pillars of a circular economy are made of the term reusability. Instead of disposing of waste, waste materials are used through methods such as recycling, aiming to give purpose to waste. For example, during the creation of glass, the residue is formed that is normally disposed of. In a circular economy, this residue is again melted to create new glass. In this way, new raw materials are obtained in a sustainable way without damaging the environment or obstructing economic activity.

    Circular Supply Chain Management (CSCM), integrates the philosophy of the circular economy into supply chain management. This creates a new and compelling perspective on the supply chain sustainability domain (Farooque et al., 2019).

    There are many Supply Chain elements where the Circular Economy concept can be integrated. These elements include Product Design, Procurement, Production, Logistics, Consumption, Waste management and Supply Chain Technology. Each of these elements will be briefly elaborated upon below.

    • Product design

    Fundamentally altering product design can yield strong sustainability benefits. This is often best done when releasing/starting a new product, as big changes could take time to implement on scale. Sustainable packaging and product labelling is a way to integrate the Circular Supply Chain concept. The razor blade company ‘Boldking’ for instance gives their customers discounts on future products when sending back their packaging. The used packaging is later converted into new razor blade packages.

    • Procurement

    Raw materials that are technically restorative or intrinsically reusable have a low negative environmental impact thus increasing sustainability within Supply Chains. The concept of acquiring such materials is often called ‘Green Procurement’. These materials increase the utilization rate and decrease waste generation. Examples are glass and paper as mentioned earlier. 

    • Production

    Sustainable manufacturing practices are a great way to maintain a Circular Supply Chain. Although green production hasn’t been widely used (mostly due to cost-benefit comparing cheap labor), it certainly yields strong benefits when implemented correctly. Producing using renewable energy sources such as Solar Power reinforces a self-sustaining production process.

    • Logistics

    Sustainably distributing products can be achieved through route optimization and avoiding concepts such as same-day delivery. It is important to be aware of your current logistical process. Consulting experts on the best way to distribute your products or manage your internal logistical process can be extremely beneficial as professional expertise can guide (in)experienced businesses in the right direction.

    • Consumption

    Consumption is an interesting way to apply Circular Supply Chain Management as it has not been used until recently. It is predominantly gaining traction within the mobile phone industry where unwanted phones are returned to the respective company in return for discounts on newer models. Since new phones are often released on an annual basis, this is a great way for companies to regain their resources.

    • Waste Management

    Waste management is essentially reusing waste material for your production process. To take the prior example, the unwanted and returned phones (waste) are not disposed of but instead taken apart carefully. Individual elements such as the processing unit, battery, Glass, metal frame, are all given a new purpose by reusing them in the new production process.

    • Supply Chain Technology

    The newest addition to integrating a Circular Supply Chain into a business is done through Sustainable Technology. This concept hasn’t been adopted on a wide scale as much technology is relatively new, however, some companies see the benefits gained from certain technology. Techniques and concepts such as IoT (Internet of things) and Additive manufacturing (3D printing) can yield strong benefits when adopted correctly. If there is no inside knowledge on these concepts, it is strongly advised to seek professional expertise.

    Need professional advice on the right way to integrate Circular Supply Chain Management? Contact one of ModusLink’s Industry experts by clicking here.

    Bibliography:

    Angelis, D. R. (2018). [PDF] Supply chain management and the circular economy: towards the circular supply chain | Semantic Scholar. Semanticscholar.Org. https://www.semanticscholar.org/paper/Supply-chain-management-and-the-circular-economy%3A-Angelis-Howard/68c441507594095a7f07af8018c844194b88fa84

    Farooque, M., Zhang, A., Thurer, M., Qu, T., & Huisingh, D. (2019, April 1). Circular supply chain management: A definition and structured literature review. ResearchGate. https://www.researchgate.net/publication/332690616_Circular_supply_chain_management_A_definition_and_structured_literature_review

    Ministerie van Infrastructuur en Waterstaat. (2019, March 26). From a linear to a circular economy. Circular Economy | Government.Nl. https://www.government.nl/topics/circular-economy/from-a-linear-to-a-circular-economy

    Supply chain management in the era of circular economy: the moderating effect of big data | Emerald Insight. (2020, September 3). Emerald.Com. https://www.emerald.com/insight/content/doi/10.1108/IJLM-03-2020-0119/full/html

     

  • Manufacturing Strategies Explained.

    Understanding the concept

    A report published by CER (Comparative European Research) titled ‘The growing importance of the synergy effect in a business environment’, perfectly explains the synergy concept. Synergy is a core element present in many successful manufacturing strategies.

    It is defined as a connection/interaction between different elements within a specific environment, creating, or subtracting the additional value in the process. Synergy in the context of biology, physics, and chemistry can either be positive or negative. How does this relate to business?

    The synergy effect within a business is the result of mutual interaction between two individual company elements, usually achieved by executing a specific strategy. The strategy is aimed at generating synergy, resulting in increased efficiency and business growth. Synergy is the fundamental pillar on which a strong manufacturing strategy is standing (Comparative European Research, 2016).

    Manufacturing strategies refer to ways in which companies decide to manufacture and produce the products their selling. Different variables must be considered when selecting the right manufacturing strategy such as labor/inventory costs, customer demand, product customization, raw material type, etc. According to ModusLink’s e-business leader Johannes van den Berg, “Having your manufacturing strategy align with your customer’s needs and wishes creates synergy within a business, resulting in increased production efficiency and growth.” There are many different manufacturing strategies. The three core strategies are explained below (Manufacturing Production, n.d.).

    Manufacturing Strategies in Supply Chain

    The importance of a proper manufacturing strategy is indisputable. The three main Supply Chain priorities reported by U.S. health services providers and pharma/life sciences executives for 2021 are the improvement of Supply Chain transparency, improving Supply Chain security, and finding the right suppliers (Statista, 2021). These priorities can be found across industries. The three elements all relate to manufacturing strategy. Keeping close contact with your supplier of raw materials is necessary when implementing any of the above manufacturing strategies. Reinforcement of supplier relations plays a crucial part in being able to up/downscale your production process effectively. Managing inventory properly using principles as JIT reinforces security within your Supply Chain and consequently can increase transparency when closely involving your suppliers.

    Figure 1. (Top Supply Chain Priorities 2021) Statista. (2021, January 26). Supply chain priorities of U.S. provider and pharma/life sciences executives 2021. https://www.statista.com/statistics/1196032/supply-chain-priorities-health-services-provider-and-pharma-executives/

    Different strategies

    • Make to Stock (MTS)

    This strategy is prominent in many businesses as it utilized traditional production based on demand forecasting. The core reason businesses choose this manufacturing strategy is actually because of predictable demand forecasting that comes with certain products. For instance, winter coats are evidently known to be purchased during winter, increasing the demand predictability. Companies can thus safely create and stock winter coats before they are purchased. Unpredictable demand does not incentivize this strategy as excess inventory can accumulate to significant problems.

    • Make to Order (MTO)

    Companies that use this strategy put manufacturing on hold until an order is received, minimizing stock levels. This strategy is often used in conjunction with customizable products such as computer hardware, industrial equipment, birthday cakes, etc. This strategy provides strong inventory and market control, however, also has some drawbacks. A constant and minimal stream of orders must be present to maintain the production facility in question. Customer waiting times also tend to be significantly longer (TheBusinessProfessor, n.d.).

    • Make to Assemble (MTA)

    This strategy involves the making of product parts before orders being received. In essence, the MTA strategy can be viewed as a combination of the above MTO and MTS manufacturing strategies as product parts are stocked, yet the final product is assembled only when an order has been received. Benefits as quick final assembly can be gained since parts are stocked. However, if orders are not received, unwanted stock accumulation is present quickly and is difficult to sell-off. This strategy is often seen in restaurants as ingredients are prepared beforehand yet the final dishes are assembled only when an order comes in to keep the dish fresh and flavorful.

    The MTS, MTO, and MTA manufacturing strategies form the core strategies used by most businesses. These strategies can be further built upon with principles such as the Just-In-Time (JIT) principle that focuses on eliminating waste by making sure minimal stock levels are held through (party) automated product reordering systems. John Heffernan, Chief Supply Chain Officer at ModusLink believes that “maximizing the efficiency of your manufacturing strategy is of high importance as it will yield waste reduction and a more streamlined production process, optimizing your Supply Chain”

    Need professional advice on the right manufacturing strategy/optimization? Contact one of ModusLink’s Industry experts by clicking here www.moduslink.com.

    Bibliography:

    Comparative European Research. (2016, October). The growing importance of synergy effect in business environment(No. 1). Sciemcee Publishing. https://www.researchgate.net/publication/315657493_The_growing_importance_of_synergy_effect_in_business_environment

    Manufacturing Production. (n.d.). Investopedia. Retrieved August 27, 2021, from https://www.investopedia.com/terms/m/manufacturing-production.asp

    TheBusinessProfessor. (n.d.). Manufacturing Production (Strategy) – Definition. The Business Professor, LLC. Retrieved August 27, 2021, from https://thebusinessprofessor.com/en_US/business-management-amp-operations-strategy-entrepreneurship-amp-innovation/manufacturing-production-strategy-definition

    Statista. (2021, January 26). Supply chain priorities of U.S. provider and pharma/life sciences executives 2021. https://www.statista.com/statistics/1196032/supply-chain-priorities-health-services-provider-and-pharma-executives/

     

  • The Same-Day Delivery concept.

    The Same-Day Delivery concept

    The internet allows people to achieve instant gratification for things that they want as they can get what they want, when they want it. All you must do is open a search engine such as Google and request the information that you were looking for. For the most part you can get what you want within seconds. This driver of instant gratification has been introduced in today’s fulfillment practices as the concept of ‘same-day delivery’.

    Same-day delivery is mostly used as a tool for online companies to increase their sales. Customers are willing to pay an extra fee to get their products as fast as they can. The main reason for this is because it allows to narrow the gap of instant gratification compared with brick-and-mortar store shopping. Effectively implementing this concept does, however, require a vast number of resources which results in large companies adopting this practice for the most part, and leaving smaller companies behind as they gain a competitive advantage. 

    The advantages and disadvantages for companies and consumers

    According to Marlin W Ulmer (Ulmer, 2017) and the EconoCourier website (EconoCourier, 2016), the same-day delivery concept comes with both advantages and disadvantages which are listed and further clarified below.

    Disadvantages

    A recent article published by Fulfillmentworks (Fulfillmentworks, 2020) states there are 3 main disadvantages for both companies and consumers that correspond with the same-day delivery concept.

    Same day delivery can be limiting the flexibility of companies due to disruptions in planning and order prioritization. Companies that don’t utilize the same-day delivery concept are able to adjust more easily in their fulfillment operations such as re-routing, altering contents, cancelling, and holding orders, to optimize their fulfillment strategy. Companies that utilize same-day delivery, however, do not have this flexibility as changes within the fulfillment process will result in delays which can upset consumers who paid for the same-day delivery option (Fulfillmentworks, 2020).

    Efficiency is a key important factor within all fulfillment operations. A strong way to improve the efficiency in shipping is to group or batch orders, also known as consolidated shipping as this can reduce travel times. Same-day delivery limits the possibility of grouping orders as there is less time that is available to accumulate orders in your picking queue before the orders get processed.

    The final disadvantage for both companies and consumers is concerning the sustainability aspect. It is inadvisable for sustainable companies to adopt a same-day delivery concept as their sustainability practices are offset by the inherit nature of the concept. 92% of consumers are more likely to trust companies that support social or environmental issues (Fulfillmentworks, 2020). This means that stressing the positive impact traditional delivery standards can have on the environment may improve your brand’s perception more than same day shipping would.

    Advantages

    • The gain of a competitive advantage for companies

    Utilizing the same-day delivery concept allows companies to gain a competitive advantage over other companies that do not make use of this concept. Research shows that consumers want to get their products as fast as they can. This reinforces the statement of gaining a competitive advantage when using the same-day delivery concept. The more companies start to make use of this concept, the more it becomes a standard for consumers. This means that an increase in utilization of this concept will also increase the necessity for other companies to adopt this concept as they are otherwise disfavored by consumers (Ulmer, 2017).

    • Reduction in capital expense for companies

    Companies that utilize same day delivery see a reduction in their inventory costs. The reason for this is that by reducing the amount of safety stock of items, they are able to reduce the stock warehouses hold for retail stores (EconoCourier, 2016).

    • Increase in margins for companies

    According to (EconoCourier, 2016), companies that offer same-day delivery also require their customers to pay an extra fee to realize this concept. This is mainly due to the extra costs associated for the abrupt same-day delivery request.

    • Instant gratification for consumers

    Consumers that need a specific product fast can use the concept of same-day delivery and reduce the amount of time it takes before they acquire their product. This means that they can reduce the time spent before they receive gratification by obtaining their product (EconoCourier, 2016).

    There are plenty of indications that same-day delivery will become an even stronger standard in today’s fulfillment practices since companies that do not apply this concept lose their competitive advantage.

    ModusLink is ready to help you understand what it would take for you to be able to implement same day delivery.  We can analyze where you do business and where you want to do business and give you proposals as to the best approach, whether it’s a “universal” same day offering or a geographic dependent same day offering or some other criteria.  Contact us today to begin your journey.

    Bibliography:

    Umer, M. (2018). Dynamic pricing and routing in Same day delivery. Informs, 1-2.

    Ulmer, M. (2017). Delivery-deadlines in same day delivery. Logistics research, September. From inventoryops: https://www.inventoryops.com/articles/same_day_shipping.htm

    EconoCourier  (2016, December 22). The advantage of same-day delivery to businesses and shops. From Econo courier blogpage: https://econo-courier.com/advantage-day-delivery-businesses-shops/

    Fulfillmentworks. (2020, June 10). The disadvantages of same-day delivery. From Fulfillmentworks home: https://www.fulfillmentworks.com/blog/post/disadvantages-of-same-day-shipping/

    Clarkec, I. D.-P. (2020). Same-day delivery with drone resupply. Informs, 1-2.

    DHL, T. R. (2019, May 16). DHL . From DHL launches its first regular fully-automated and intelligent urban drone delivery service: https://www.dpdhl.com/en/media-relations/press-releases/2019/dhl-launches-its-first-regular-fully-automated-and-intelligent-urban-drone-delivery-service.html

    EHang. (2021, January 29). EHang home page. From EHang: https://www.ehang.com/ehangaav

    CNBC. (2019, July 15). How Amazon delivers on one-Day shipping .

    Geekwire. (2016, December 22). How does amazon prime now deliver packages in under two hours?

     

  • How to effectively control your transport costs.

    Introduction

    It is no secret that transport costs have been rising across all different modalities. Carriers must enforce measures such as peak surcharges, and records are being broken in terms of transport costs throughput. Inflation puts immense pressure on many businesses and forces them to reevaluate their current transport operations. The reasoning for the increase in costs is multivariate and can be accounted to phenomena such as the increase in fuel prices, the increase in demand for transport services, or the uprise of COVID-19. Another contributing factor is the online share of retail trade in Europe, continuing to rise across most countries (Statista, 2020).  

    Whether you are an Small to Medium Enterprise (SME) or a large multinational corporation, any company would do well to keep a firm grip on their transport activities. Depending on the type of business, not managing your transport activities effectively could lead to unwanted consequences such as overpaying, decreased customer satisfaction, and inventory management problems.

    Inflation amongst transport costs is not expected to become less prevalent anytime soon (Bloomberg, 2021). As you can see in Figure 1, ground transportation prices alone have and are predicted to outpace the Producer Price Index for the foreseeable future (TransportationInsight, 2021).

    Figure 1. PPI v Parcel, LTL and Truckload Price Indices June 2016 – May 2021

    Underestimating the importance of strongly maintaining your transport activates can lead to an array of quickly accumulating negative effects as mentioned above. Now how do you tackle this? Let’s start with Supply Chain visibility.

    Supply Chain visibility

    According to Hofman et al. (2019), lacking information and awareness on your current Supply Chain stakeholders and activities causes unnecessary delays and disruption amongst your business activities. If you are an SME that is growing, you understand the struggle of scaling effectively with your growth. Acquiring and allocating the right resources to the right business activities can be a challenge. Reducing transport costs starts with Supply Chain Visibility.

    The concept of Supply Chain Visibility essentially means awareness of and control over end-to-end supply chain information. As often said, knowledge is power. Zooming in on the transport/logistics area of the Supply Chain, it is vital for a business to first understand its Shipping profile and current transport activities before aiming to enforce measures that lead to reducing transport costs. This can be done by applying the 2 key steps below.

    • Request and analyse your current shipping profile.

    Do you currently hold a one-carrier approach, or are you using multiple carriers? Which modalities are you making use of? How much are you shipping, and where to? Are your transport carriers the same for import and export? What is your average weight per shipment? These are all questions to be asked when analysing your shipment profile. A business must first know the exact ins and outs of its Shipping profile before attempting to reduce transport costs. Request the corresponding data/documents from the purchase department or transport stakeholders.

    • Maintain a structured and detailed overview of currently incurred costs

    Once the Shipping profile has been analysed and the transport activities are clear, you must strive to create a clear overview of all incurred transport costs. This optimizes your awareness of currently spent resources and allows a business to evaluate their current activity by reviewing the performance/resources spent ratio.

    Reducing transport costs, utilize third party competence.

    Now that your current Shipping profile and costs are clear, you can start to implement measures to reduce transport costs. There are many ways to do achieve transport cost reduction. One important strategic decision concerns the choice of whether to insource or outsource your transport activities.

    Insourcing your transport has many benefits such as reducing third-party liability, clear transport activity overview, and eliminating unwanted waste processes. However, keep in mind that transport tariffs are rising and are expected to continue to rise. This essentially minimizes and complicates the benefits gained from insourcing nowadays. Companies that are unsure of their current transport activities do well by considering outsourcing to a professional and competent third party.

    Transport tariffs are often more expensive the lower your shipment profile. The more shipments you send, the cheaper the price per shipment as tariffs are usually being charged depending on the amount of KG’s or volume shipped. This means that third-party companies which are proficient in handling transport activities maintain and combine high usage shipping profiles to get surprisingly low rates and in turn, reduce transport costs for many participating parties.

    Expert companies such as Moduslink allow businesses to reduce transport costs effectively by providing businesses the opportunity to outsource their end-to-end Supply Chain and transport activities. Get a personalized offer, contact Moduslink today.

    Bibliography:

    Bloomberg. (2021, April). Higher Shipping Costs Are Here to Stay, Sparking Price Increases. https://www.bloomberg.com/news/articles/2021-04-12/higher-shipping-costs-are-here-to-stay-sparking-price-increases

    Campbell, S., Phillips, D., & Campbell-phillips, S. (2020, July). Lack of Communication between Management and Employees. Researchgate. https://www.researchgate.net/publication/342796387_Lack_of_Communication_between_Management_and_Employees

    Hofman, W., Dalmolen, S., & TNO, The Hague, The Netherlands. (2019, August). Supply Chain visibility ledger. Researchgate. https://www.researchgate.net/publication/334883753_Supply_Chain_Visibility_Ledger

    Statista. (2021, July 7). Online share of retail trade in selected countries 2014–2021. https://www.statista.com/statistics/281241/online-share-of-retail-trade-in-european-countries/

     

  • The effects of outsourcing your Supply Chain after Brexit

    A little over a year has passed and Brexit is still causing many disruptions amongst industries. Virtually any company that must maintain a streamlined Supply Chain cannot deny the strong effects Brexit has had within the industry. Companies must deal with rising issues such as changing Import/Export regulations, restrictions concerning the free movement of people and managing supplier relations. One of the most predominant effects faced by companies concerns the increase in complexity in cross border customs/tax regulation. This is especially relevant in the Transport and Logistics sector.

    The new customs/tax regulations force companies that conduct trade between the UK/EU to reassess their strategic decision-making regarding the clearance of goods and paying VAT (this includes any additional tariffs when selling to EU customers). Doing so is necessary, but will result in increased transport costs, extensive paperwork, and prolonged delivery times. Companies can also choose to regain control by acquiring warehouse space within the EU to function as a fulfillment center and vice versa. This decision will, however, implicate high opportunity costs (Williams, 2021).

    In addition to the increase in complexity concerning customs/tax regulations, UK regulatory compliance now exists separate from EU regulatory compliance. The most essential requirements in terms of environmental issues, safety, and health will not change substantially. However, there are most certainly some major changes applicable to UK/EU product compliance regime (Grist & Erasmus, 2021). Two of the most significantly changing instances are:

    • The introduction of a UKCA mark and a UK Declaration of conformity for market entering products.
    • A shift in obligations and duties between ‘manufacturers’, ‘importers’, and ‘distributors’

    Brexit has caused many Supply Chains to have their weaknesses exposed as a result from the above stated effects. This does not mean, however, that there are no opportunities for the sector. Experienced businesses know that problems create opportunities for improvements.  Organizations are adapting by reassessing their current Supply Chain operational processes. This is vital for improving post Brexit. Companies must reevaluate their current transport activities and adjust their strategies in accordance with the Brexit effects and regulations. One of the ways of doing so is Outsourcing.

    According to Investopedia (2021), the definition of outsourcing is defined as: ‘the business practice of hiring a party outside a company to perform services and create goods that traditionally were performed in-house by the company’s own employees and staff.’.

    In essence, companies that outsource elements of their Supply Chain can achieve benefits such as:

    • Reducing Operational Costs
    • Increasing Flexibility
    • Mitigating risks
    • Creating opportunity for innovation
    • Streamlining operational processess

    Working with experienced professionals that deal with outsourcing daily is an effective way to quickly increase your company’s efficiency. Some organizations outsource their entire Supply Chain to expert companies that are up to date with the latest knowledge. This allows them to tackle the complex issues concerning customs/tax changes resulting from Brexit. Others merely outsource elements of their Supply Chain to increase their proficiency in that specific area. For both cases, Moduslink is  your partner of choice and can provide you with customized solutions that fit to your needs, increasing your needs and allowing you to anticipate growth, streamlining your costs, increasing your revenue, and building brand loyalty.

    If you are a company that is struggling to effectively resume your business between the UK and EU, allow Moduslink to relieve you of your worry by offering a wide variety of outsourcing solutions backed by industry experts. Our solutions allow you to improve your Supply Chain by implementing:

    • Packaging, Kitting & Assembly
    • B2B and B2C Fulfillment
    • Reverse Logistics
    • Warehousing and Distribution
    • Delivery and Logistics
    • Location optimization

    Gain control over your Supply Chain and experience the benefits from Outsourcing through Industry experts.

    Sources:

    KPMG International. (2017, February). Brexit: The impact on sectors. https://assets.kpmg/content/dam/kpmg/uk/pdf/2017/03/brexit-the-sector-impact.pdf

    Investopedia. (2021, May 2). Why Companies Use Outsourcing. https://www.investopedia.com/terms/o/outsourcing.asp

    SchoenHerr, T. S. (2010, January). Outsourcing Decisions in Global Supply Chains: An Exploratory Multi-Country Survey. International Journal of Production Research. https://www.researchgate.net/publication/247162714_Outsourcing_Decisions_in_Global_Supply_Chains_An_Exploratory_Multi-Country_Survey

    Williams, C. W. (2021, March 26). How is cross-border e-commerce and distribution adapting to Brexit? KnightFrank. https://www.knightfrank.com/research/article/2021-03-26-how-is-crossborder-ecommerce-and-distribution-adapting-to-brexit

    Grist, E. G., & Erasmus, P. E. (2021, January 1). Brexit: Product Compliance and Liability implications. Bird & Bird. https://www.twobirds.com/en/news/articles/2016/uk/brexit-product-compliance-and-liability-implications