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Pull-based Supply Chain for Cost-effective Logistics
Customers today want products instantly, but businesses’ inability to step up to the mark can leave customers waiting for a product. To match customer expectations, businesses need to adapt to current methods. But a transformation of such a nature is complicated. But, IoT holds the answer to unlocking the supply chain of the future. By combining IoT and vertical integration of the order process, businesses can achieve a leaner supply chain.
The traditional process which is highly fragmented and has long lead times relies on overstocking to make sure that there is always enough products to meet the demand. However, the operation fails, and, retailers are left without stock, and the customer doesn’t buy the product.
But the supply chain of the future needs to be flipped with the end customer triggering the whole process at the time of order, with each step of the process pulling from its corresponding supplier. A pull-based system can quickly solve the problems of understocking and overstocking by ensuring that only what is needed is built and shipped. But the implementation might not be so easy. Before tackling the technicalities of vertical integration, every part of the supply chain has to be on board for every piece of the string (except the consumer), which means a lot of data collection, flow mapping and analysis for a company.
The use of IoT can help in both the planning and realization of a pull-based supply chain—for instance, tracking of inventory. By using simple monitoring, the whole material flow process can be mapped from raw materials right to the finished product arriving at the customer’s door.
The visibility gained from asset tracking can immediately be put to use by the company in identifying the inefficiencies within the current process consequently saving costs and time along the way.
Push to pull: Companies have to bear in the mind that digital integration is federal decisions riding on the back of both the supplier and customer relationships. Suppliers have other customers, and in the same way, customers have other suppliers; the same is true throughout the chain. Changing their process could have a negative consequence on their supplier-customer relations. The answer lies in the gradual upgrade of parts of the supply chain with the help of IoT analytics.