The ongoing Covid-19 pandemic has profoundly impacted the global supply chain. While eCommerce and online retail are uniquely positioned for rapid growth in today’s business climate, companies with traditional or linear supply chain models find it harder to adapt.
Thankfully, this change has led to the emergence of advanced technologies, which provide a unique opportunity for organizations to leverage the digital supply chain network to reach new levels of operational effectiveness. This guide to digital supply chain transformation is full of helpful information for businesses looking to adapt to the new paradigm to develop their supply chain into a more collaborative model.
Understanding Digital Supply Chain Management and Supply Chain 4.0
Today, Supply Chain 4.0 refers to introducing advanced technologies, like Internet of Things (IoT), big data analytics, blockchain, AI / ML, autonomous mobile robotics (AMR), and more. These new technologies enable the reorganization of traditional supply chains into the interconnected, open supply chain operations we know as the Digital Supply Network (DSN).
This shift from sequential supply chain operations to his new digital model sets the foundation for how companies will compete in the future by integrating information from different sources and locations to:
- Better response to changing market conditions
- Drive production and distribution,
- Create a digital record of the supply chain,
- Enable advanced analytics of real-time data, and
- Translate actions from digital inputs into physical outcomes.
Whether you consider this new supply chain model as a set of supply chain management best practices or simply a cluster of technologies to be deployed, Supply Chain 4.0 provides substantial opportunities for companies to enhance the productivity, profitability, and performance of their unique supply chain.
Supply Chain Digitization is no longer an option
According to a McKinsey Global Survey of executives, digitization of the supply chain is the largest trend affecting companies in the post-Covid environment.
“Companies have accelerated the digitization of their customer and supply-chain interactions and of their internal operations by three to four years. And the share of digital or digitally enabled products in their portfolios has accelerated by a shocking seven years.”
Figure: 1Digitalization of customer interactions
When asked why their organizations did not implement changes to their supply chain before the pandemic, more than fifty percent of respondents said that supply chain digitization was not a top business priority. The Covid-19 crisis has eliminated this barrier and highlighted the need for modernization.
Executive leadership teams are now highly motivated to implement new supply chain risk mitigation strategies designed to alleviate the impact of current supply chain disruptions, as well as ant future global crises.
Consumer expectations are also on the rise: the online trend of the last several years has led to higher service expectations, and a much stronger granularization of orders. If supply chain operations want to keep up with customer service, order fulfillment, delivery, and other “value-added” tasks, more comprehensive, enterprise-wide overhauls will be required.
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Benefits of Modern Supply Chain Management
Modernization of supply chains enables companies to not only address changing requirements and overcome global supply challenges but also improve the overall speed, efficiency and performance of their entire operation.
Improve Proactive Decision-Making
Traditional supply chains utilize top-down management and communication for merchants and vendors alike. Distributors looking to grow their product lines tend to focus on reconciliation, monitoring, and reporting defects, delays, or other types of disruptions early on in the supply chain cycle.
Monitoring tools, modern ERPs, and other digital solutions help companies make better proactive decisions that increase efficiency, remove waste, and keep operations running smoothly.
Increase Agility and Avoid Disruption
The Covid-19 pandemic proved that flexible supply chains are susceptible to unpredictable economic changes, natural disasters, and political pressure. Digitizing your supply chains provides excellent supplier diversification and makes it easier to enact sourcing changes, especially during hard times.
Create a More Resilient Supply Chain
The most resilient supply chains are built on a solid foundation of transparency and efficiency that enables them to scale and adjust as circumstances change. This flexibility provides greater freedom for businesses when onboarding new suppliers, particularly in new industries or geographies. Resilient supply chains also help organizations better respond to changing demand, launch new product lines or roll out support to additional regions.
Digital Supply Chain Tips: How to Build a Digital Supply Chain
Creating a modern supply chain is an enormous undertaking. Still, this article will help prepare you for your digital transformation and make integrating advanced technology easier for everyone involved in the process.
Define Your Vision
Start with a clear vision that aligns with your enterprise goals. These goals should be related to specific business objectives, and include things like:
- Improved supply chain visibility,
- Better and faster decision-making,
- Automated operations, and
- Integrated customer engagement.
Assess Existing Resources
The next step in digital transformation is identifying the things you need to achieve your goals. The best way to identify those capabilities is to scrutinize your existing resources alongside the new technologies that might replace them. Ask yourself the following questions.
- Data collection and analysis – Can data be accessed quickly and used to draw actionable insights?
- Legacy systems – Will existing systems support your new goals? Is the technology aligned with business objectives? Are these digital solutions best suited to achieve the desired outcomes?
- Workforce skills – Does your workforce have the skills to work with and adapt to the new business model?
Utilize Data and Analytics
In a modern digital network, supply chain professionals can rely on real-time data to make informed decisions and collaborate effectively with suppliers, partners, and more. Access to real-time data also enhances visibility across the supply chain and helps supply chain managers identify potential disruptions before they happen.
Moving towards a more modern supply chain will become more and more critical to capturing new markets in the future. Developing your supply chain into a flexible, open, agile and collaborative digital model requires an enterprise-wide approach, careful planning, and close collaboration with internal teams and partners.
Need help with legacy solutions and ageing customizations. Implementing modern enterprise resource planning software like Microsoft Dynamics 365 Supply Chain Management can help you achieve a 360-degree view of your supply chain, better anticipate potential disruption to your operation, and adjust before it becomes a problem.