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Supply chain digitalization should lead your digital transformation

Jonas Mehrhoff
| July 21, 2021 |
4 min read

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Key points:

 

 

 

Manage your supply chain more efficiently than ever before

Digitalization is no longer a future concept. Digitalization is happening now as we speak. Most companies are investing a huge amount in their organization's digital transformation to sustain themselves in an ever-increasing competitive and uncertain world. Whether it's medical supplies, automotive parts, or raw materials – supply chains are vulnerable to many disruptions. Companies are only able to manage these uncertainties if they shift their focus from managing people doing mostly repetitive tasks to designing and managing information and material flows. A digital supply chain provides companies with real-time data to give full transparency over the supply chain, enabling proactive management. The benefits of supply chain digitalization are endless, end-to-end visibility and control allow companies to reach their full potential.

 

What is supply chain digitalization?

Digitalization of a supply chain is not an easy undertaking and encompasses a wide range of topics covering both new technologies and organizational changes. On the technology side, this includes integrating data from the entire supply chain ecosystem, standardizing, digitizing, and, ideally, automating operational processes and tasks to create full transparency and visibility across the entire supply chain. It is equally important that the people using the technology are able to use it effectively. A holistic digital mindset must be embedded in the organization that encompasses technology and can cope with complexity, uncertainty, and change. New skillsets have to be developed and structural changes need to be made in order to make the best possible use of the technology and achieve the expected benefits.

 

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The three key benefits of supply chain digitalization

1. Improve supply chain resilience

The world is more volatile now than ever before, the covid pandemic made this very clear. In the past year, supply and demand were so uncertain that many companies have gone bankrupt. Logistics is no longer about availability and demand. Even if you have the supply to address the demand it is not as easy as it was before because of country restrictions and political disruption due to covid. This ripped the supply chain and brought out more defects than we could ever imagine. The pandemic forced companies to reimagine their supply chain to be as resilient as possible in this volatile world. Establishing visibility and flexibility is crucial to thriving in this industry.

Being flexible is essential to remain competitive with the ever-changing demand and increasingly challenging supply of goods and materials. Having all required data at one’s fingertips enables companies to plan ad hoc processes. With real-time visibility and control, managers are able to shift resources between partners, ensuring that the product continues to flow no matter the disruption. Flexibility is key to managing a successful supply chain, especially with today’s vast disruptions.

 

2. Improve supply chain agility

It is essential that your business is able to quickly respond to changes in demand and supply. Digital supply chains improve responsiveness; supply chain teams can take confident action as their data comes from a single source of truth – ensuring they remain on top of what is happening in different parts of their supply chain.

 

Digital supply chain management offers a 25% faster response to market demand
changes
- Boston Consulting Group

 

Digital supply chains allow organizations to better understand future trends with predictive analytics. It analyses both internal (inventory status, demand, and more) and external (climate conditions, national holidays, market trends, and more) factors to extract meaningful insights for more dynamic precocious forecasting. This enables supply chains to forecast future demand and plan for inventory levels that reflect consumer-buying patterns. Forecasting helps companies stay agile, minimizing operational costs and increasing revenue.

 

3. Improve supply chain efficiency

Digitalization and automation of operational tasks and processes like the automatic placing of purchase orders based on predefined criteria or automatically receiving updates on purchase orders and shipment status will boost your supply chain efficiency. Teams do not need to waste any more time to answer questions like “where is my shipment” or “does my inventory cover the projected demand” by searching through different sources like carriers and forwarders tracking sites or chasing colleagues. A digital platform gives teams the answers to all of these questions. This also allows for better and more efficient communication and collaboration internally and with partners like vendors, carriers, and forwarders. All parties have the same data on hand and time can be spent making decisions rather than manually searching and consolidating data followed by a discussion that focuses more on if the data are correct than solving the issue.

With accurate data, supply chain teams can ensure that important KPIs like container or truck utilization are met. Improving efficiency will eliminate supply chain waste and decrease your overall supply chain and logistics spend and finally increasing profits.

 

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Leverage supply chain analytics to improve network performance

A digital supply chain gives your team real-time data and precise insights into shifts in demand, inventory status, material availability, delayed shipments, and much more. It is a comprehensive resource for supply chain analytics – helping decision-makers oversee and manage global business activities.

Having in-depth analytical data helps companies understand the full impact of any disruption so that they can be prepared to address these issues before they impact the top-line, damage customer relationships, or hit the bottom line.

A lack of synchronization and collaboration between different parties within the supply chain is the main reason for poor order fulfillment rates and unnecessary logistics costs. Eliminating the dependency on your partner for data and establishing transparency across partner networks can avoid this.

End-to-end transparency and real-time supply chain analytics help you drive business activities with accurate KPIs.

 

Why you should not wait to digitalize your supply chain?

 

Organizations with effective supply chain digital transformation roadmaps are +3x as
likely to see their digital supply chains succeed -
Gartner

 

Supply chains are complex. Managing them efficiently without proper insights and control is almost impossible. A digital supply chain platform will give you visibility across your entire supply chain network, allowing for purchasing and logistics teams to have a single source of truth to make the right decisions and control logistics flows in the most efficient manner. As a result, all involved teams can concentrate more on better planning and more tactical and strategic tasks rather than wasting time to find out where shipments are and chasing after vendors whether they are shipping material on time.

Over the next couple of years, more than 80% of organizations plan to develop the capabilities for a digital ecosystem. Digitalization of the supply chain is no longer a ‘nice to have' for companies. It should be on the top of your company's digital transformation agenda to ensure you stay ahead of the competition and grow the business with a scalable supply chain.

Supply chain visibility helps you compare available vendor’s performance, logistics rates, and credibility. Analyze and choose the right one who meets your price requirements and has the capacity to meet your orders.

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