Supply chain analysis: Merging technology and commerce

May 23, 2018

Reducing costs while boosting service is the goal, and organizations are turning to computers for supply chain support.


While the supply chain might seem to reside in the corporate background, it’s truly at the center of a perfect storm. The e-commerce explosion is both increasing demand and changing consumer expectations. This is putting tremendous strain on the supply chain.

“Everybody wants their purchases at the lowest possible cost; they want it the next day, and they think shipping should cost zero,” says Eric Peters, President and CEO of SensorThink, a supply-chain software firm based in Los Gatos, California, and Orlando, Florida. At the same time, continued low unemployment puts pressure on wages, for warehouse and driver jobs. 


Reducing costs with supply chain technology

As a result, manufacturing, shipping and warehouse operations companies are seeking to reduce costs on the supply chain while maintaining or improving service levels. Many are looking to technologies like automation, analytics, artificial intelligence (AI) and the internet of things (IoT) to do so.

Peters expects rapid adoption of such innovations. “I’ve been in Silicon Valley for 25 years and this is the fastest change I’ve ever seen,” he says.

That can leave supply chain professionals feeling overwhelmed, because much of the technology running warehouses and other logistics functions has remained static for the last decade. Such swift change puts a premium on learning as much as possible about innovations and what’s necessary to maximize an organization’s return on its technology investment.

It’s important to understand and address widespread data challenges. The potential of many innovations depends on accurate, validated data that can be shared across platforms. Many companies aren’t yet able to maximize the value of analytics because they’re using only a small share of the data they’ve collected. In some cases, the data is stuck in silos. In other cases, it’s in unusable formats. 


Sensors and AI

Another area of investment is sensors. The World Economic Forum predicts that by 2022, one trillion sensors will be connected to the internet. This can boost visibility into processes and, as stated in Global Trade Magazine, “draw attention to potential faults in each supply chain operation.”

These sensors are key to AI, which could improve profit margins for freight carriers. Consulting firm McKinsey reports that transportation and logistics firms committed to adopting AI are more profitable than those firms partially adopting or simply experimenting with it.

However, AI is currently too complex to implement effectively. This is due to data challenges, most of which relate to accuracy. In a warehouse, a misfiring optic sensor on a conveyer belt could substantially skew AI data. If no one detects and corrects such errors, bad decisions may result.

Within the next five to 10 years, as data challenges get resolved, the supply chain could shift to data sharing, especially through distributed ledgers. A distributed ledger can work as a universal ledger that can track a product from the original manufacturer to the final consumer.

In the future, IoT will act as an automated third party that reports an event to the distributed ledger. For example, an IoT sensor could record when a pallet crosses through a dock door and officially moves from the control and responsibility of one party to the next. Within the next decade distributed ledger technology may become capable of integrating payments, eventually resulting in even greater efficiencies. 


Start small to gain IoT efficiencies

Today, IoT can provide valuable information to increase efficiency. For example, an organization might use sensors to monitor performance of one type of machine or one process to keep the pilot program a reasonable size.

An ideal pilot will focus on aspects of performance that can reveal potentially high-value process improvements. “Determine what kind of outcome you want to get from the pilot, and then you can find the sensors and devices to put it together,” Peters says.


Talk to your bank relationship manager to learn more about gaining supply chain and payments efficiency within your organization.

Related content

Do you need a business equipment loan?

Tech lifecycle refresh: A tale of two philosophies

Authenticating cardholder data reduce e-commerce fraud

Digital processes streamline M&A transactions

Work flexibility crucial as municipalities return to office

Tools that can streamline staffing and employee management

Hybridization driving demand

Delivering powerful results with SWIFT messaging and services

Private equity and the full-service administrator

Luxembourg's thriving private debt market

Insource or outsource? 10 considerations

The benefits of a full-service warehouse custodian

3 questions to ask your equity, quant and CTA fund administrator

10 ways a global custodian can support your growth

Empowering managers with data automation and integration

How RIAs can embrace technology to enhance personal touch

5 winning strategies for managing liquidity in volatile times

Easier onboarding: What to look for in an administrator

Planning for restaurant startup costs and when to expect them

What corporate treasurers need to know about Virtual Account Management

The future of financial leadership: More strategy, fewer spreadsheets

Leveraging the ASC-842 rule changes in equipment lease accounting

The ongoing evolution of custody

Supply chain analysis: Merging technology and commerce

The secret to successful service provider integration

Integrated receivables management solution supports customer focus at MSC Industrial Supply

Webinar: Robotic process automation

Webinar: CRE treasury leader roundtable

Webinar: CRE technology trends

Tech tools to keep your restaurant operations running smoothly

Staying organized when taking payments

Key considerations for online ordering systems

How does an electronic point of sale help your business keep track of every dime?

How iPads can help increase efficiency in your salon

How to identify what technology is needed for your small business

How small businesses are growing sales with online ordering

Start of disclosure content

Loan approval is subject to credit approval and program guidelines. Not all loan programs are available in all states for all loan amounts. Interest rate and program terms are subject to change without notice. Mortgage, home equity and credit products are offered by U.S. Bank National Association. Deposit products are offered by U.S. Bank National Association. Member FDIC.