Disruptive technologies are causing a transformative shift in the preferences and demands of the modern buyer, forcing businesses to operate and serve customers in new ways. This impact on supply chain management is particularly great.
Today’s consumers are very informed and connected. They are used to constantly receiving updates at their fingertips around how their orders are being processed, where they are in transit, and when they are scheduled to arrive.
Supply chain operations need to be able to serve customers in a dramatically different way; they also need to be agile enough to continue adapting to the evolving consumer preferences that will inevitably occur. One of the ways this is happening is through digital supply chains.
The Importance of a Digital Supply Chain
While some of your processes may already be digital, are you really unlocking the full potential of digital in your supply chain strategy? Before diving into specific steps to consider for more successful transformation, you must first understand the importance of a digital supply chain.
The real power of being a digital business is scalability. In traditional supply chains, you see a lot of manual processes, from phone calls to emails. While those may be effective tools, they cannot scale with the pace from a sudden spike in demand, especially for products that are new to the marketplace or have seasonal demand. With digitalization, the availability of real-time information of freight and inventory in motion brings more decision-making power and an understanding of supply and demand and where capacity is.
Even a digitally enhanced supply chain won’t stand the test of time, if it’s not built to continuously adapt to the changing industry. The ability to respond immediately to changes in the marketplace with real-time data at your fingertips is critical for survival and profitability.
Unlock the full potential of your digital supply chain
Before beginning the journey to a digital supply chain model, you must first establish a deep understanding of what your overall strategy is. This will be your guide as you examine the wide variety of tools and technology that supports a digital transformation.
Here are three steps and considerations you need to make in order to have a successful digital supply chain transformation:
- Build a baseline. Start measuring the efficiency and capacity of your current systems to gain an understanding of what change you can expect from adopting a digital model. Without a baseline, it’s difficult to adopt a new approach, model, or tool without first understanding the net effect. This will also let you track results over time to see if you are progressing and making assumed gains.
- Don’t forget how people fit into this new model. From a talent and workforce perspective, the digital supply chain is not a replacement for operations. It is a tool to optimize and enhance the decision-making abilities within those areas. Think about the skills and talent you need to implement and continuously drive this kind of transformative change. You’ll need access to an innovative, agile team that embraces change and learning opportunities.
- It’s more than software. Going digital requires a ground-up approach that is much more complex than just plugging into a software tool. It is a true transformation that includes re-engineering of your business processes, distribution models, strategic planning, and more. Companies making successful digital transformations are leveraging digital technology to create new infrastructures that are responsive, data-driven, and connected to broad customer and supply chain partner ecosystems.
In the 2017 MHI Annual Industry Report, 80% of manufacturing and supply chain industry leaders surveyed believe that the digital supply chain will be the predominant model within five years. These Next-Generation Supply Chains, as the report calls them, are evolving from the more traditional model of linear, desynchronized links into a more connected, harmonized network of trading partners.
Disrupt or Be Disrupted
It’s an exciting and transformative time in the supply chain industry. Barriers to supply chain challenges around visibility and connectivity are being broken down. Leveraging technology within supply chains has been—and continues to be—a valuable differentiator and competitive advantage. With the emergence of disruptive technologies like robotics and automation, the Internet of things (IoT) and predictive analytics, supply chain professionals are faced with a tipping point: disrupt or be disrupted.