Effect of Urbanization on Supply Chain Management

This article discusses the effect of urbanization on supply chain management and the challenges faced by businesses. It explores the need for updated supply chain models to meet changing consumer preferences and the increased spending in logistics and storage. The article also suggests adopting new technologies and strategies to overcome the challenges of traffic congestion and increased costs. Additionally, it highlights the importance of personalized services and the need for investments in technology for efficient supply chain management.

The poster discusses about the effect of urbanization on supply
chain management. As the world is evolving, the consumer
preferences and habits are also changing and to meet the new
expectation of the consumer, one needs to have an updated supply
chain model to have an accurate ratio of deliveries at doorstep.
Earlier people used to visit the store for any purchases, now the
products are available at one click. One stop solutions are available
with increasing use of online sites. It has been observed that the
aspect of urbanization leads to have high level of spending in
logistics and storage. Moreover, the government consultancies are
recommending industrialist to have more personalized packaging
for customers. It leads to have more complex operations, to resolve
the complexity and make it smooth, the researchers suggest
adopting a new technology for efficient supply chain in future.
However, there are several challenges that need to be faced by the
management of suppliers due to urbanization, such as traffic
congestion and enhanced cost of operation, administration,
development and innovation. the challenges and solutions will be
discussed in detail in following section (Öberg & Graham, 2016).
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As we discussed, there are advantages and disadvantages of
urbanization on the supply chain management. The population and
customer needs are growing immensely, the preferences are
changing drastically. People are shifting to urban cities and hence to
cater the needs of each individual, it is suggested to have city
distribution center. The city distribution center will serve the group
of individuals staying in a particular city. The lifestyle of people is
changing and the way they used to order and receive things has
changed. Now each business aims to have just in time delivery or
quick delivery (n.a, 2013)
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With evolving the concept of urbanization, the corporate needs to renovate
their existing strategy to make it more efficient and accurate. The industry must
have multiple channels to reach customers. The industry needs to explore
different way by which they can reach the consumer such as air, rail, water. It
may cost the company more but the growing population is financially sound to
pay the amount. Not for everyone, but at least to provide such services to 1%
of the population, the company needs to have link to such supply chain
companies or airlines. The strategy to meet the efficient and cost effective
supply chain management, must thought in advance. the strategy should be in
line with company’s set of objectives and customer’s expectation (Dachs &
Derycke, 2017).
Let us explain the challenge of SCM businesses in relation with urbanization
with a small illustration (Ascutia, 2017); there was one company named as
timber exporters situated in Conakry. Conakry is a small city but many
companies are operating in this city due to favorable policies and environment.
The company is located at a distance of 620 miles from its manufacturing plant.
Till now they use to fill up the dozens of containers there & deliver them
directly to the terminal for instant shipping. Looking at the whole scenario, we
observed that the trucks took 2-3 days to complete the process and deliver
parcels to shipping area. This is due to heavy traffic. The authority has allowed
driving trucks for a limited period of time from 12am to 6 am in the morning.
The processing time was more than the required and expected. Many
companies failed to match the customers’ expected delivery date. Hence, many
corporations dealing in this business shut down due to high demand and
limited resources available. Now the timber exporters are have very stringent
deadlines with their clients, they did not have any option rather than having
own fleet of trucks or heavy vehicle to meet the demand. Hence they changed
their supply chain management processes and own the one to make it more
effective and accurate. The example clearly describes that the company had to
innovative in order to manage time and profits.
Here what they did is normal trucks load the material from border of the city
warehouse and reaches to terminal within a given time frame and the other
trucks must be waiting to unload and load to big trucks. Hence, there will be
multiple chains of vans, small trucks and heavy vehicles involved throughout
the process (sealedair.com, 2017). The tasks are divided and hence materials
are reaching at respective stage on time. All the trucks are running around the
warehouse and shipping zone parallel. It becomes more efficient and time
saving. This was a simplistic way to assess the impact of urbanization on supply
and logistics. it is analyzed that to meet the customer demands and retain its
business in the industry, timber exports did heavy investment and renovate its
processes. However, the investment varied with the industries. Here they did
invested in trucks. However, E-commerce business would require investments
in adopting new technology. There is no doubt that urbanization causes more
spending for the logistics players. The shipping businesses must provide
personalized services to their respective clients. We are no longer living in a
phase of commodification, but each individual seeks for personalization and
customization (open.edu, n.d.).
for the e commerce business, the logistic suppliers must invest in
technologies such as IOT, Cloud services, and Printing with the help of
3D technology, GPS related applications or RFID devices and Smart
Sensors. In today’s technological era, an individual orders product from
anywhere at any time, hence the logistic suppliers needs to have such
technology and processes which can facilitate their demands anytime,
anywhere (Moghadam, 2017) .
The rising demand leads to have huge number of deliveries per day, per
hour. The study says that each person will have one delivery every
minute across the region in future. This results in traffic congestion,
increased level of environmental pollution, etc. Majority deliverables
are of same day or next say (singh, 2015).
To retain its position in the logistic industry and maintain its existence
in the supply chain business, it needs substantial investment to run the
processes effectively. If investment is not done, it may incur huge losses
(chauhan, 2014). This results in enhancing the cost of manufacturing.
Earlier industry tend to go for low cost countries for production, now
the traditional methods of conducting the business has changed. The
industry needs to produce goods and services locally to meet the
customer’s just in time demands locally. The production of goods and
services taken place at different location in different qualities. Huge
mega cities create enormous amount of waste which is difficult to
manage based on current facilities. After studying the challenges raised
by the urbanization in front of supply chain management business, we
have some solution to minimize the impact. The supply chain of a
company must be designed in a way that is more responsive and easy
to follow. it has become essential to cultivate such culture in business,
which encourages to have innovation in the current processes. More
diverged and flexible processes must be incorporated (Peterson, 2017).
Introduction
Urbanization and supply chain management
Challenges and Recommendation
The effect of urbanization on supply chain management