AuthorEmily Hsiao, RUSCA Blog Committee Promises of blockchain technology revolutionizing the supply chain have been swirling around for years. But with so many exciting technologies sweeping the industry, it can be hard to identify which areas blockchain offers truly unique advantages. Which industries and environments does it have the most exciting applications in, and how have firms taken concrete steps to implement it? Blockchain technology stores data in a decentralized ledger, rather than a centralized database. It can securely verify the time, date, and users involved in each transaction, making tracing significantly quicker and more affordable. Supply chain applications typically use permissioned blockchains that require network owners to give it's users access (Singh). This allows companies to keep sensitive information private while pointing to the mathematical proof of data that ensures the ledger is virtually immutable and can be trusted (Harvard Business Review). Partner and associate director at Boston Consulting Group Stefan Gsettner explains that within the supply chain industry, blockchain will have "the biggest impact where there are dispersed networks and where many parties are involved". For example, the health care and pharmaceutical industries have some of the most concrete blockchain applications. In fact, 75% of firms either already have, or are planning on implementing blockchain within the past year. Firms must meet tightening regulations, and the current industry standard of central databases is expensive and vulnerable to the "risk of diversion, counterfeit and a trust gap between the siloed system" (Mearian). According to the Healthcare Distribution Alliance (HDA), verifying that drugs are authentic currently requires tracing along the supply chain and can take up to 48 hours. With blockchain technology, the process is reduced to scanning a barcode, which takes just a few seconds. The HDA runs the blockchain-based MediLedger system which is already being used by manufacturers, shippers, and wholesalers. MediLedger has completely eliminated the verification process. At each step in the supply chain, product is authenticated before the transfer takes place (Mearian). Similarly, blockchain has applications in logistics firms where customers need reassurance that the product is ethically sourced. Companies that may have otherwise struggled to track where their product originated from can present a ledger demonstrating that each unit came from a trusted supplier (Knowledge@Wharton). For example, in the diamond supply chain, consumers worry about the ethical implications of purchasing blood or conflict stones. The prospect of purchasing diamonds that potentially fund insurgency, authoritarian regimes, or are mined using child labor is so off-putting that some even purchase synthetic stones to side-step the issue. A number of leading diamond and gemstone producers including De Beers, Signet Jewelers, and Fura Gems are partnering with tech companies like Diamante Blockchain to put this new tech into place (Sabine). Looking into the future, blockchain could be crucial to integrating other emerging technologies into the supply chain industry. Much of it's value stems from being paired with tech that is still evolving like machine learning and artificial intelligence. Gsettner predicts that blockchain has yet to 'unfold it's true potential', and that "10 years from now, blockchain will become a default, especially in networked, smaller scale environments. Sources: https://101blockchains.com/permissioned-vs-permissionless-blockchains/ https://hbr.org/2020/05/why-big-pharma-is-betting-on-blockchain https://knowledge.wharton.upenn.edu/article/blockchain-supply-chain-management https://www.computerworld.com/article/3439843/how-pharma-will-soon-use-blockchain-to-track-your-drugs.html https://www.scmp.com/magazines/style/luxury/article/3031368/how-does-blockchain-root-out-blood-diamonds-worlds-supply AuthorNeha Avadhani, RUSCA Blog Committee 2020 has come with a host of reasons to turn away from sustainable business practices. These include COVID-19 health concerns, economic difficulty, and tumultuous political landscapes just to name a few. Some retailers are considering reusable bags as unsanitary, and there has been a rise in use of single-use plastic food containers. Yet, the importance of sustainability has never been underlined more boldly. With the public health threat at the forefront of minds, and a sharp increase in natural disasters, people have been reminded of human fragility, and the importance of sustainability. In fact, practices that foster environmental exploitation and contribute to nature loss, pollution, and greenhouse gas emission have been shown to lead to infectious disease outbreaks like this one (Ghosh, Godrej). With increasing awareness of these issues, many companies are seeking to move toward sustainability in a post-COVID world, attempting to be environmentally conscious and set themselves apart from competitors, despite short-term setbacks. There have been worries about sustainability being at risk this year, especially in the fashion industry. Keeping with this, in April, the Boston Consulting Group, the Sustainable Apparel Coalition, and technology company Higg Co. released this report, expressing concerns and providing strategies for businesses to reaffirm their commitments to sustainability as they rebuild (Gregoire). Companies are responding well, with apparel brands Mango and Saitex citing sustainability and transparency as key priorities. Working from home has also shown companies how they can reasonably reduce travel and their carbon footprints and satellite images show that it is making a notable difference to air pollution (Davis-Peccoud, Van Den Branden). Major companies continue to work towards improving corporate social responsibility initiatives as consumers demand them, despite the pressures of the pandemic. Consumers are also leading the charge toward sustainability. 65% of consumers surveyed have said they have become more concerned with sustainability since the start of the pandemic (Salfino). Companies are seeing this as a way out of the pandemic, securing long-term growth and differentiating from competitors by creating a personal connection with customers through a commitment to proactive corporate responsibility. Chances are this strategy will succeed with a new generation of consumers: Generation Z, 90% of which believe companies have a responsibility to tackle environmental issues (Gregoire). As companies seek to foray into a post-COVID world, recover economically, and establish a steady client base again, they also seek to ensure their own resilience to climate change. The pandemic has shown the importance of flexibility and being prepared for disruption. It has also framed a slew of new possibilities, opportunities to re-purpose tenacity in new ways using the skill set gained from this uncertain time. For example, tech companies that have been working to combat virus misinformation may see a future in doing the same for climate change denial (Davis-Peccoud, Van Den Branden). Luckily for both the corporate world and the Earth, studies have shown that practices put into place during pivotal moments of change are more likely to endure. The pandemic has highlighted the importance of sustainable business practices, and now they are here to stay. Sources: https://www.unenvironment.org/news-and-stories/speech/promise-action-sustainability-heart-covid-19-recovery https://www.prnewswire.com/news-releases/new-report-shows-covid-19-puts-sustainable-fashion-at-crossroads-301049937.html https://www.bain.com/insights/covid-19-gives-sustainability-a-dress-rehearsal/ https://sourcingjournal.com/topics/lifestyle-monitor/coronavirus-fashion-supply-chains-hbr-rsr-cotton-sustainability-ai-china-232162/ Author Aditya Nibhanupudi, RUSCA Blog Committee With the onset of the COVID-19 pandemic in December of 2019, many organizations faced new challenges and struggles to operate in the “new” world. Countries around the world experienced shutdowns/lockdowns, which meant that many companies lost access to offshore suppliers. In response, they had to rapidly rethink their procurement, distribution, logistics and overall supply chain strategies. However, fast forward a few months into 2020,and now the world is beginning to reopen, and organizations are given the unique opportunity to rebuild and restrategize in the wake of such a massive disruption. The pandemic will have long-lasting consequences on global supply chains and has thrust sustainability into the limelight for policymakers and strategists. Companies can take advantage of this opportunity to rethink their supply chain strategies and implement sustainable supply chain measures to ensure long-term viability (Karmaker et al.). As a result of implementing these practices, organizations can reap the long-term benefits as well as positively impact various aspects of the world. Sustainable Supply Chain Drivers A study conducted by a group of researchers from the University of Science and Technology in Bangladesh concluded that there are a set of sustainable supply chain drivers that would greatly benefit organizations that implemented them. A few of these drivers include efficient disruption risk management, collaboration among supply chain partners to ensure materials supply, and building sustainable procurement strategies considering COVID-19 (Karmaker et al.). By placing an emphasis on these drivers of sustainable supply chains, organizations can not only begin to recover from the effects of the pandemic but can also expect long term benefits. Sustainable practices can help with agility, flexibility, viability, and present organizations with stronger supplier relationships (Markets Insider). In addition, by adopting sustainability drivers, supply chains around the world can be more environmentally conscious and progress can be made towards environmental conservation. Effects of Sustainable Supply Chain on the Environment There are many reasons for companies to pursue sustainable supply chains whether it is for corporate social responsibility, public relations, or a genuine desire to affect positive change on the world through their business’ actions. Prior to the pandemic, the value of supply chain sustainability was reflected in stock prices and public relations campaigns. As consumers began to concern themselves with how a company was sourcing its materials, manufacturing, or testing its products, organizations needed to implement sustainability measures in order to appeal to consumers and to elevate their stock prices. However, with the pandemic, the value of sustainable supply chain shifts not only to operational/organizational benefits, but also greater environmental benefits as well. One practice that is popular amongst sustainable supply chain efforts is green procurement which is the process of purchasing materials, goods, or services that have a lower environmental impact over the lifetime of usage. Practices such as “green procurement mitigate over exploitation of resources and therefore [have] a great environmental impact” (Abdui Global). By focusing sourcing efforts on renewable materials, supply chains relieve some of the strain on the world’s resources. Instituting these procedures can help companies engage in responsible resource management and ensure long term procurement sustainability. In addition to green procurement, Lean Six Sigma, a method to reduce waste and errors produced by an organization, is something that can be implemented into more supply chains in order to achieve sustainability. Lean would work to promote the recycling of resources and would benefit organizations by ultimately reducing or eliminating the amount of waste generated, ensuring maximum potential is achieved from resources. Materials managers, procurement specialists and other key sourcing functions can try to strategically source raw materials that they can reuse/recycle in the case of future global supply chain disruptions. Conclusion Overall, sustainable supply chains are extremely beneficial to organizations trying to excel in a pandemic stricken world. Companies around the world should take this opportunity to rethink their supply chain strategies in order to build a stronger global network. This will enable their supply chains to handle disruptive events, should the world face a similar situation in the future. Sources: https://doi.org/10.1016/j.spc.2020.09.019 https://www.abduiglobal.com/sustainable-procurement-strategy/ https://markets.businessinsider.com/news/stocks/business-reporter-sustainable-supply-chains-won-t-just-help-the-planet-survive-they-can-also-protect-your-business-during-a-pandemic-1029267930# AuthorTrupti Valsangikar, RUSCA Blog Committee The COVID-19 lockdowns worldwide have caused many non-essential businesses to shut down their stores temporarily. One of these businesses is the Sweden-based clothing retailer H&M. In July of 2020, at the beginning of its third quarter, H&M reported that 900 out of the 5,000 stores worldwide were temporarily closed. Similarly, H&M announced that it would permanently close 250 of its 5,000 stores due to decreased financial figures. Net sales dropped 19% during the third quarter, and while sales started to pick back up in September, they were still 5% behind last year’s numbers (Freidman). Due to a lack of revenue, H&M decided to ramp up its efforts online using artificial intelligence. The closure of several in-person stores and subsequent lack of earnings means that H&M is now putting more of an emphasis on their online shopping platform. Chief Executive of H&M Helena Helmersson said that “speed and flexibility will be even more important in the future, particularly in the supply chain”(Helmersson). In essence, the significant increase in online shopping enlightened H&M as to its need for a more efficient system to meet customer demand and expectations. H&M provided no specifics in its statement about how it would improve its supply chain function. Still, according to Errol Koolmeister, the lead engineer of the AI Foundation at H&M Group, the company is planning to become more digital and data-driven through the use of artificial intelligence. Artificial intelligence (“AI”) refers to computers and machines performing tasks that generally require human cognition. In the supply chain, AI can assist transportation by finding routes to deliver products efficiently; it can also help with customer support and package tracking. But most importantly, for H&M’s purposes, AI can be used for demand forecasting (Torres). The recent surge in online shopping led to H&M’s digital transformation faster than expected, but H&M wants their new AI technology to “reach the customer and stay atop their mind”(Koolmeister). The company will focus on building new reusable machine learning components to be used throughout the organization. This new AI technology will monitor consumers’ shopping habits to provide the company with data about which items are most popular among consumers to make sure the supply stays constant. It will also help H&M predict market demand to ensure that it can keep up with consumer behavior and will not lose money on unwanted products. But most pertinent for the everyday consumer, this AI technology will allow for personalized customer experiences, such as recommending products based on previous shopping behaviors (Kotorchevikj). Koolmeister admits that H&M is behind the curve when it comes to AI implementation and that they don’t have all the answers relating to how AI technology can help their company be profitable, because the AI division of the company only started in 2016. However, H&M’s recent application of this technology to their business shows that they are working to catch up quickly. Ultimately, as this pandemic continues to drive e-commerce and online shopping experiences, H&M and other similar companies will be forced to rethink their online presence and how that will affect their bottom line. Sources: https://www.nytimes.com/2020/10/01/business/hm-will-close-stores-and-ramp-up-digital-efforts-as-online-sales-rise.html?searchResultPosition=4 https://www.supplychaindive.com/news/HM-retail-machine-learning-artificial-intelligence/586554/ https://read.hyperight.com/ai-driven-retail-how-hm-group-does-it/?utm_source=TowardsDataScienceWeb&utm_medium=articles&utm_campaign=DIS2020 |
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