Technology in Supply Chain Management (AQA A Level Business): Revision Note

The value of technology in supply chain management

• Adopting technology across the supply chain brings a range of wider benefits that help a business run more effectively as a whole

Benefits of technology in supply chain management

Improves visibility across the whole supply chain

• Businesses can see where materials, inventory and deliveries are at every stage, rather than only when problems are reported

• This allows issues to be spotted and dealt with before they escalate into serious disruption

Speeds up the flow of information

• Suppliers, businesses and customers can share data instantly rather than relying on phone calls, emails or paperwork

• This reduces the delays associated with human communication

Reduces costs through greater efficiency

• Better route planning, more accurate ordering and reduced administration all help cut unnecessary spending across the supply chain

• This frees up money for other areas of the business

Improves reliability and customer satisfaction

• More accurate tracking reduces missed deliveries and unexpected delays

• This helps a business build a reputation for dependability

Increases transparency and trust

• Technologies such as blockchain make it easier to prove where materials came from and how they were handled

• This can meet growing customer expectations around ethical and traceable sourcing

Supports faster problem solving

• When a supplier fails or transport is disrupted, real-time data helps a business identify the issue and respond quickly

Strengthens competitiveness

• Businesses that invest in effective supply chain technology can often operate more efficiently and reliably than rivals that still rely on manual systems

• This can make it easier to win and keep contracts with major customers

Ways technology is used in supply chain management

• Technology helps businesses track, coordinate and speed up every stage of their supply chain, from raw materials leaving a supplier to finished goods reaching a customer.

GPS tracking and telematics

• GPS (Global Positioning System) tracking and telematics use satellite and sensor data to monitor the real-time location, speed and condition of vehicles, containers or shipments as they move through the supply chain

• Businesses and logistics providers fit tracking devices to vehicles or containers

  • Live location data is transmitted so the exact position of goods can be checked at any point in their journey

Example

Maersk provides real-time tracking of over 12 million shipping containers a year, combining GPS, ship tracking signals and scans to give customers live updates on location, estimated arrival time, and even the temperature of perishable cargo

Supply chain management software

• Supply chain management software integrates data from suppliers, production, inventory and distribution into a single system

  • This allows different parts of the supply chain to share information instantly, rather than relying on separate systems or manual communication between departments and suppliers

Example

Unilever uses complex software to integrate data from its suppliers, factories and distributors across the world, giving it a real-time view of its entire global supply chain

Blockchain

• Blockchain is a shared digital record system that securely stores information about a product's journey through the supply chain

  • Data cannot be altered or deleted

• Businesses record verified information at each stage, such as origin, processing and shipping

  • This creates a transparent, unamendable history that interested parties can access instantly

Example

Walmart worked with IBM to use blockchain technology to trace the origin of mangoes sold in its US stores, reducing the time needed to trace a batch back to the farm from around seven days to just 2.2 seconds

AI-powered logistics and route optimisation

• AI-powered logistics tools use artificial intelligence to plan and adjust delivery routes, schedules or supply chain decisions automatically, based on large amounts of real-time data

• These systems analyse factors such as traffic, weather, delivery windows and vehicle capacity to calculate efficient routes and schedules that can update in real time as conditions change

Example

Logistics company UPS uses an AI-powered route optimisation system called ORION to plan its delivery routes, saving the company around 100 million miles driven each year and hundreds of millions of dollars in costs