Analyzing Urbanization's Profound Effects on Supply Chain Management

This report examines the significant effects of urbanization on supply chain management. It highlights the challenges posed by increasing urban populations, including traffic congestion, rising logistics costs, and the need for personalized deliveries. The report emphasizes the importance of technological advancements such as IoT, cloud services, 3D printing, and predictive tools to address these challenges. It also discusses solutions like city distribution centers, just-in-time deliveries, and the use of telematics to manage disruptions. The report further explores the changing demographics, the need for flexible supply networks, and the importance of partnerships to meet evolving customer demands. It also provides insights into the future of supply chain management in the context of rapid urbanization, emphasizing the need for innovation and adaptability.

This continuous evolving phase of urbanization affects the way
customer shop and the way it is delivered to the end customers. It
is essential for a company to understand and analyze the
preferences, purchasing behavior and need of an individual in
order to select the deliveries. The overall the aspect of
urbanization leads to have high level of spending in logistics.
Moreover, Council of Supply Chain Management Professionals
advises shipper to do personalized deliveries to their customers
quicker. There are several researches which talk’s about
complexity of logistics operations with rise in urbanization. It is
important to get involved in the technology which would be more
innovative and technologically advanced to avoid the risk of
increasing traffic congestion. There are several barriers to the
current city supply chain management system: with constructing
more building, there is a less space left for parking and unloading
goods imported by the industry (n.a, 2013).
There is traffic congestion and the companies are having high
operating cost of warehouses. Hence it is recommended to have
city distribution center in each city because with growing
customer needs, the deliverables will be increasing and hence to
have effective supply chain management. With having several
positive effects of urbanization on supply chain management, the
city faces challenges too; hence the city center will be able to
provide efficient and sustainable movement of goods in cities.
The report talks about impact of urbanization on supply chain
management in detail and related solutions (Karl, 2017).
It has been observed in the past 4 to 5 decades that the urban
population has been continuously on the rise. We can see that
rural population is reducing and urbanization is happening at a
rapid pace due to the change in standard of living and economic
growth. Young workers today prefer to stay in cities and try
reducing the travelling expenses. The lifestyle is also changing
very quickly.
With a rapid change in urbanization, companies need to think a
lot on the shifting demographics. The companies need to align
their organization’s strategies accordingly. For supply chain
vendors, it is necessary to know where their customers live and
work. The companies would have to increase the channels for
product reach in order to meet the growing demand and
changing demographics.
Urbanization will definitely cause more spending for the logistics players. The
shipping companies need to deliver personalized services to different
customers. We no longer live in a world of commodification, but we live in a
world of personalization and customization. The supply chain vendors would
have to invest more in technology in order to remain relevant and agile in the
market with more millennial. The supply chain vendors need to invest in
technologies such as Internet of things, Cloud services, and 3D Printing,
predictive tools, GPS devices, RFID tags and Smart Sensors. The customers today
can order products form anywhere at any time and hence companies need to be
on their toes to meet the rising dynamic demands (Peterson, 2017).
The buying power of people across the globe is increasing and hence supply
chain vendors need to respond ‘Just in time’ to make up for the deliveries.
Today, the supply chain vendors need to use telematics to make sure that in
case of unexpected disruptions, the deliveries would be rescheduled or
redirected. The businesses today are concern about the disruption that has
come in traditional systems of deliveries. The world is growing digital today and
customers are more than ever connected.
Challenges
As per research reports like Frost & Sullivan, almost 70% of the population on
the globe will be living in cities. This would raise the bar for all companies to
deliver products in real time and would drive tremendous competition. The
number of deliveries of products would increase drastically, causing issues such
as traffic congestion, air pollution, etc. Most of the deliveries would be either
same day deliveries or next day deliveries (n.a, 2019).
There are couple of other challenges such a as shortage of power, water as well
as health and safety. More deliveries would case more requirements of drivers
for logistics. A lack of supply of drivers in comparison to rising demand for
deliveries would infuse losses for the supply chain ecosystem. Labor crisis can
be a crucial aspect of urbanization. Cost of production may go up as the
approach of producing in low labor cost countries is fading away. Companies
need to produce and deliver product on the same day and hence alliances and
partnerships would play a major role (Bretzke, 2013).
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Most of the cities today do not have the infrastructure to handle the growing
urbanization. The facilities are very scarce and more people coming to live in
cities would only make the situation worse. Huge mega cities create enormous
amount of waste which is difficult to manage based on current facilities.
Solution to tackle the urbanization
After studying the challenges raised by the urbanization, let us now discuss about
the solution which can be used to deal with those challenges.
Ensure that the supply chain of your organization becomes more responsive. Most
of global supply chains till now were designed to produce goods in low cost
countries and gains profit on capitalizing the available resources and opportunity.
This approach is no more effective with growing needs and usage of products in
phase of urbanization. The benefits would go to those corporations which are
able to produce products in varying quantities & at different places based on
available demand. It will enable businesses to provide quick delivery (chauhan,
2014).
It is important to invest in technology to make the supply chain faster and
accurate. It is essential to import the technology to collaborate with partners in
order to make products available at each corner of the world and that results in
increasing market share. From a technological perspective, 3D printing is one
technology that would help the supply chain ecosystem to deliver the products
just in time. Printing an object that is required could be done in seconds and
dispatch for same day deliveries rather than going with traditional process of
sending requests to industries and getting products after days. Moreover, truck
platooning and self-driven trucks can be used to tackle the issue of labor crisis
arising due to urbanization and its demands.
It is recommended to build supply networks which are more diverse and flexible,
allows you to operate in most emergent scenario in the industry. For instance,
companies like UPS are expanding their horizons by Access Point program where
in the packages can be dropped or picked up from local shops or petrol stations
that are nearest to the customer. This would also reduce the individual home
deliveries and thereby reducing traffic congestion in the city. Even Amazon has
started similar services in the US (Ascutia, 2017).
It is even advisable to avoid the massy and small framework of supply chain
process. The supply chain network should be designed in a way that enables us to
reduce the financial burdens and enhancing the level of consumer services. it
would make us more fragile and simple. For example, AmeriQuest Transportation
Services, delivers comprehensive fleet management solutions which enable
companies to minimize the costs by maximizing the productivity, leads to be a
part of more competitive things.
Introduction
Urbanization and supply chain management
Urbanization and supply chain management Solution to tackle the urbanization
How has urbanization affected supply chain management?
2008
•Off peak
deliveries
•Priority EDI
2010
•Locker boxes
•Real time
solution
2012
•Smart truck
with sensors
•Electric fleet
2015-2020
•Self monitoring
vehicle
•Cloud logistics