What is a Supply Chain Orchestration Platform?
Coordinating all critical activities across the supply chain is called supply chain orchestration. A supply chain orchestration platform is a computerized application that allows transparent collaboration in real-time, allowing better supply chain management.
Thanks to the need to move goods across continents to meet e-commerce and global supply chain requirements, manufacturers and merchants are constantly under pressure to shorten planning cycles, reduce lead times, and hasten deliveries. Shorter planning periods and efforts to minimize pipeline inventory have increased the importance of transportation in the overall process. Still, lack of collaboration leads to issues with excess inventory and under-utilized carrier capacity.
Supply chain orchestration includes all activities in the “order to cash” conversion cycle, from the beginning sales order to stock requisition and delivery; warehousing and storage to picking and dispatch; delivery of goods to the concluding cash collection. Key objectives include maximizing resources and assets, optimizing order throughput, and minimizing waste.
Achieving these objectives requires integrating processes into a seamless flow of accurate information that increases task enablement, process monitoring, and change control execution. These processes include:
- Demand planning
- Sales order flow
- Resource planning efficiency
- Warehouse throughput
- Inventory control
- Vehicle usage and costs
- Delivery efficiency
- Invoicing and cash collection cycle
- Regulatory compliance
- Adherence to corporate requirements
Growth in Supply Chain Complexity
McKinsey and Company, the global management consulting firm, has forecast that by 2025, emerging markets will consume two-thirds of the world’s manufactured goods, and these goods will be consumed in a country other than the one in which manufactured.
Their insight shines a light on the changing nature of today’s supply chains. They are becoming more global, not only in terms of who’s filling and delivering an order but also in flattening potential markets. Companies that want to grow need to consider how they will deal with the supply chain complexity that comes with this global environment.
How Supply Chain Orchestration Platforms Work
Supply chain platforms are transforming traditional data and workflow integration. Today’s supply chain landscape includes shorter lead times, numerous shipping options, and more extensive product portfolios.
To react swiftly to rapidly changing market conditions, supply chain managers need increased transparency, faster status updates, more accessible data sharing with partners, lower costs without sacrificing value, and reduced freight spending overall.
The supply chain orchestration platform helps to accomplish all this and more. With just a glance, it allows users to:
- See what’s working and not working within the chain
- Respond immediately to problems as they arise
- Maximize both human and technological resources
Specifically, an effective supply chain orchestration platform creates all of the following advantages.
Transparency reduces risk by letting all parties know what is happening upstream from them in the supply chain. It minimizes stakeholder concerns and increases satisfaction. Decision-making and the ability to hedge disruption are improved by real-time feedback.
Faster Status Updates
The supply chain orchestration platform tracks orders throughout the supply chain, resulting in faster and more accurate status updates. Supply chain managers can optimize order flow, helping to reduce costs.
Easier Data Sharing with Partners
End-to-end supply chain visibility promotes data sharing and reduces data duplication with partners and suppliers, increasing the ability of all to get an accurate glimpse of goods moving through the chain.
When communication and administration are located in one place, the entire supply chain can be managed better from a single location at a lower cost. The core of an effective supply chain orchestration platform is order management, providing the flexibility to automate even complex order flows.
Users in the digital supply chain ecosystem can improve their work quality and increase their output when using a supply chain orchestration platform. By integrating key processes into one seamless information flow, the platform improves their ability to monitor processes, increasing value to the businesses involved.
Reduced Freight Spending
By leveraging collaboration and making trades seamless, a supply chain orchestration platform reduces inefficiencies and, as a result, reduces overall freight spending.
In 2019, total logistics expenditures as a percentage of sales revenue were about 11%. Transportation costs accounted for 50.3% and inventory carrying costs for 21.8%.
Today, supply chain success is measured by consistently achieving on-time, in-full order completion in the most efficient way possible. No longer is cost reduction alone the primary focus.
As market globalization, free trade, and outsourcing continue to increase, the ability to build and leverage supply chain networks and processes will increasingly determine the success of supply chains and stakeholders.