The New Changes In Material Sourcing And Management

As we head into 2020, business leaders across the globe must make conscious efforts to drop the status quo. In every part of business, a new wave of thinking must envelop all concepts, productions and sales initiatives. Let’s look into the new changes in material sourcing and management!

The New Changes In Material Sourcing And Management

A big indicator of the changes to come in China. Once a developing economy, it was the source of cheap labour and cheap materials. However, experts acknowledge the fact that China will have to depart from this era in its nation and start to develop high-quality products if it wants to compete with the world’s economies.

This brings us onto the background question is, how will material sourcing and management change in this decade? If you own a retail business, this is a burning question you need answers to. The logistical challenges have improved in some areas while political uncertainty may hamper any progress made. These are the issues to tackle now.

The political influence

Is political interference of any kind, good or bad for material sourcing? Free marketers will say it’s always bad. However, one could argue there is no free market economy in the world right now, so geopolitical risk is inevitable. Which leads us into some uncertain and possibly dangerous times. If you’re a company that requires crude oil, you’re in a spot of bother right this moment. The Strait of Hormuz is a volatile part of the world currently, with reports of tankers being attacked or even impounded by the Iranian authorities. The US has put extensive tariffs on China and China has responded in various kinds. Large corporations like Apple, GM Motors and Ford are having to relocate their Chinese plants as a result.

Going into 2020, it’s critical for your business to understand how important political influence can be in material sourcing. As tariffs come into play, the extra cost will become your burden as suppliers will have no choice but to increase prices. Start looking around the world for different suppliers and stop relying on the same old sources. Emerging markets such as Brazil and India are definitely viable options. However, your logistical planning will need to alter as and when you change suppliers. Dealing with new rules and regulations pertaining to the countries you’re working with, must also be taken into the costing plans.

Full-scale logistical management

The business owner has more logistical options than ever before. It’s not just better technologies that have made this possible. There’s simply more choice in the world. Whenever the competition level rises, some cheaper options and features suddenly open that were not there a few years ago. Small business owners could only track and manage their material imports after the cargo ships had been unloaded. Modern supply chain management (SCM) tools and newer cooperative incentive, means you can do this now. This means rather than waiting to be told when your materials are ready for transport by the port unloading company, you can utilize GPS tracking to know when it’s arrived in port.

Firstly, this requires great communication and openness from your import supplier. Good relations with foreign sourcing companies is critical. Yet, you need to take this opportunity and develop your own material management software. It’s not the same as inventory management, although both should work together. It’s a new decade, which calls for new enterprise software development. Developing scalable software, you will improve every facet of your business. Automation is the new gold standard, therefore work to develop software that has a few human walls as possible. Utilize the decade-long expertise of such a software development company and create a niche, finite yet easy-to-use software for material logistical management.

Increasing sustainability in production

Is quickly becoming apparent that sustainability is no longer a virtue, but a necessity. Businesses can no longer hide behind charitable donations and attending climate awareness summits. You have to implement sustainable practices in order to not be penalized by increasing aggressive government policies emanating from entities like the European Union. It’s far from just a social issue, businesses can’t afford to be nonchalant when it comes to production techniques that produce waste. Material management plays perhaps the most critical role, only rivaled by production techniques and solutions. Utilize materials in more efficient ways by relying on your design teams to not need as much material for stress tests, heat resistance, ruggedness and longevity, etc. 

Any material which is not used in the production line, must be caught, captured and collected in the manufacturing facilities. Requiring new rules for workers, you will thus possibly need to add new training to your employee development program. The HR department must work with new compliance laws to cut down on waste, improve employee training and awareness as well as create recycling strategies for the work floor. Hiring sustainability employees and or creating a new department for this task, should be up for serious consideration.

Machine learning

Last year, the most significant change in material management was the development of AI and machine learning. It was viewed as the most impactful technology within the industry. With data accumulated by machine learning software, the value chain is able to be more thoroughly assessed. Machine learning would incorporate weather changes and patterns that emerge in shipping journeys. 

Machine learning is also playing a huge role in material procurement. Purchasing managers have to go through repetitive tasks every day to refill stocks and order materials from supply chain agents who you don’t have a contract with. Machine learning can be integrated into your procurement software, so it can work seamlessly with as little human intervention as possible. Used to identify patterns and study human cognitive behavior, machine learning would be a fast and easy way to cut down the workload for your managers while replenishing the material inventory in your business. 

Already this year, political interference in global business is having an effect on the markets. However, full-scale logistical software would allow you to visibly track your cargo on shipping lanes and when it has arrived at a port. Integrating machine learning in the procurement process will allow your sourcing managers to strengthen contacts, firm up internal communications and still maintain material inventory each month. 

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Stephanie is a single mom to a teen with Autism. She is a new homeowner and starting a new chapter! Feel free to contact Stephanie for more information on how she can help your company.

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