In the fast-paced world that we’re living in, online shopping is the new convenience, and speedy, efficient delivery is the biggest criteria for customer delight. To satisfy customer demands in a pandemic-hit world, numerous online shopping options and distribution models have evolved. A solid distribution network is a must to successfully operate an omnichannel supply chain and ensure the timely fulfillment of every customer order.
Simply defined, a distribution network is a structural framework on which an entire supply chain runs. The network design/structure determines the locations, number, and size of warehouses and distribution centers through the supply chain to ensure a smooth flow of goods. It is a fundamental building block for distribution and delivery operations, and therefore network planning is a decision that requires strategic forethought.
COVID-19 caused some huge shifts in consumer shopping behavior. Online shopping of essentials and non-essentials has skyrocketed since the outbreak, and same-day, next-day delivery, and convenient drop-offs have become essential demands. Although the world has now come to a certain level of normalcy, experts believe that the online shopping and delivery trends that have surfaced during the pandemic are here to stay, and will continue to shape the future of supply chains.
But why is supply chain network planning so crucial, especially during uncertain times like this? Let’s try to understand this with the help of a real-world business situation. A customer orders groceries online and expects the delivery within a two-hour time window.
Within these two hours, the delivery business has to pick the ordered items from the nearest distribution center, package them, and assign a delivery executive to fulfill the order. If there is even a slight error - missing items in the delivered package, delayed delivery, or lack of order visibility- it will impact the customer’s buying experience.
But, what does network planning have to do with successful last-mile delivery? Network planning is the string that connects all the important dots in the supply chain, right from the point of manufacture/sourcing to the point of consumption.
In the modern-day omnichannel scenario, network planning helps in determining the accurate location of each supply chain node - manufacturing units, company warehouses, regional warehouses, micro-fulfillment centers, dark stores, sourcing retail outlets, etc.- so that items can be picked from a distribution hub nearest to the customer’s delivery address.
Once picked and packaged, it can be quickly assigned to a suitable delivery partner who can fulfill the two-hour delivery promise. A well-planned network design helps a business carry out hundreds of such daily orders, with a standardized distribution process, and smooth last-mile fulfillment.
However, the reality is that despite the growing importance of network planning, most businesses still depend on manual planning to come up with a supply chain network design and fail to consider real-world business constraints or unforeseen events (like a global pandemic). Many established supply chain enterprises rely on distribution networks that were set up years ago, which may now be inefficient and not optimal for current-day operations. As a result, supply chains lack flexibility and agility, which is crucial for navigating through challenging times.
COVID-19 has taught us that a lot can change in just a year - work conditions, day-to-day lifestyles, shopping patterns, business operating models, and what not! In these rapidly changing times, and growing uncertainties, businesses cannot rely on rigid, outdated supply chain networks. Enterprises have to relook at network design planning as a frequent activity, instead of a one-time strategy or a 5-year plan. To remain flexible, and cope efficiently in times like these, frequently updating network designs, revisiting warehousing strategies, and smart route planning between supply chain nodes is a must.
Due to the remarkable impacts caused by the COVID-19 pandemic on supply chains, businesses have come to understand the importance of a well-planned supply chain network and are therefore emphasizing the key elements of a network design:
- Location of manufacturing units/ sourcing markets,
- The number, size, and placement of distribution centers/ warehouses,
- Inventory levels across each distribution hub, and
- The routes connecting these distribution centers to end customer locations.
Digitization is the way to go for delivery businesses to achieve the best results from their supply chain networks. Network optimization powered by data science, Machine Learning, the Internet of Things (IoT) and Artificial Intelligence is helping companies redesign and restructure their supply chain networks to suit these uncertain times and build more agility and resilience towards such events in the future.
Of late, digital twin technology has emerged as a breakthrough network optimization model and is gaining popularity among several supply chains, including FMCG, retail, food delivery, e-commerce, healthcare, and 3PL for greater supply chain network efficiency. A digital twin is typically a virtual replica of a real-world supply chain that mirrors supply chain assets, processes, transactions, and third-party relationships on a virtual screen, offering a clear comparison between actual and optimal network performance.
With AI-enabled digital twin simulations and what-if scenario analysis, digital twin enables supply chain decision-makers to visualize their existing supply chain network versus an optimal network design and minimize inefficiencies substantially. What-if analysis is a data-intensive simulation performed to predict variables such as consumer behavior, market trends and demand volumes, etc. based on different situations, known as scenarios.
Real-time data analytics converts day-to-day business information into actionable insights for better decision-making. It could be eliminating longer routes and planning shorter more optimal distribution routes between each point in the network, or it could be shutting down under-utilized warehouses across the supply chain.
Live visibility solutions allow managers to closely monitor distribution operations and take preventive measures to avoid delays and errors. Efficient network planning also breaks down silos in supply chain networks and boosts a logistics business's overall flexibility and resilience.
From cost-effective warehousing and distribution to faster last-mile fulfillment and enhanced visibility throughout the supply chain, strategic network planning and optimization is the key to strengthening a supply chain from the core, in testing times like these and beyond.
In a spirited discussion on AI and the retail industry, Puneet Chandok, President of Microsoft India and South Asia delved deeply into India's role in transforming the world through Artificial Intelligence and technology enablement. He discussed Microsoft's commitment to India, not only in training Indian talent but also in leveraging it.
On Monday, Prime Minister Narendra Modi had praised the Tech Entrepreneurs Association of Mumbai (TEAM) for hosting Mumbai Tech Week and their ongoing involvement in building tech startups in the country. During a panel discussion with Haptik CEO Aakrit Vaish at Mumbai Tech Week, Puneet Chandok, President of Microsoft India and South Asia, emphasized the transformative impact AI could have on various aspects of daily life.
Chandok stated, “When we look at India through the lens of demand, supply, and impact, there is no other market like India today. There are 7,000 listed companies in India and one hundred thousand startups. Many startups are in Maharashtra, and one hundred new startups are emerging in India every day. India is the largest SMB market globally, making it one of the most exciting markets today.”
He further added, “When we look at the supply lens and examine Microsoft's data, one out of four projects on AI in GitHub today is run out of India. Every sixth AI researcher in the world is from India. In the next ten years, 25 percent of the global workforce will come from India, meaning every fourth worker in the world will be from India.”
Discussing the growing influence and power of Artificial Intelligence, Chandok mentioned, “Last night, my 12-year-old daughter was creating text-to-video, and she told me that AI will change her life. She is an artist; she draws and paints. This also indicates how the younger generation perceives AI.”
Expanding on this, Chandok continued, “People will stop searching and instead have conversations. I have stopped searching myself; in fact, I was conversing with my Copilot to understand what is happening at the event and what I should speak about. We have shifted from searching to genuine conversations. This is not just chat drama anymore. These are sophisticated engines providing reasoning within.”
Regarding his personal perspective, Chandok remarked, “People say AI is overhyped, but I think it's not hyped enough. The next generation, which will use this in the next few years, will have much higher expectations of what technology can do for them. So, how you build it for that generation, how you build it for that future, will be really interesting to see."
Chandok also emphasized that those who do not embrace AI, risk falling behind in the rapidly evolving technological landscape. He encouraged Indian developers to seize the "lifetime opportunity" to become unstoppable by learning to use and deploy AI effectively.
He concluded, “If you are not learning AI, you are falling behind. I myself spend 30 minutes a day to learn more about AI. Technology is changing every day, and it has been 15 months since ChatGPT was launched. The speed of technology diffusion is unlike anything I have seen in my life, and it is advancing very rapidly. My call to action for everyone is to find a way to learn, otherwise, we will all fall behind.”
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