Why it is essential to embrace Digital Supply Chain?

Ashish Dass, a Technology Evangelist pens down the importance of investing in Supply Chain Digital Transformation explaining the challenges associated and solutions provided.

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As pandemic’s repercussions, volatility has become the new normal which has affected the industries adversely. The unprecedented supply chain disruption caused has had severe operational and financial consequences, with planners having to address issues including fluctuation in demand, surges by segment, supply shortages, inventory placement challenges and reduced productivity. In simple example, that we can relate to, is in the automobile industry. You would be seeing a major imbalance between the delivery of new cars and their wait time. The way it works is that a car manufacturer either makes the car based on parts they manufacturer themselves or source them from 3rd party vendors which are then finally used to assemble and make your car ready. Then comes the logistics of having the car delivered to the customer. Any delay in this whole, chain creates a ripple effect in the full supply chain delivery and things start to fall apart. The result being price fluctuation, inflation, dissatisfaction in the customers resulting in economy being adversely affected. This is true for most industries.

Consequently, every industry, being from manufacturer to consumer, healthcare to automotive, are showing a deep desire to transform digitally their manufacturing and supply chain processes. A digital supply chain is a set of processes that use advanced technologies and better insights into the functions of each stakeholder along the chain to let each participant make better decisions about the sources of materials they need, the demand for their products and all the relationships in between.

Investing in supply chain digital transformation ensures your supply chain can harness and scale the technology and innovation that promise business growthrisk mitigation, and cost optimisation benefits.

Developing advanced supply chain capabilities makes strong economic sense and gives companies the agility needed to respond to disruptions. Digital supply chains are more customer-centric and aim to meet futuristic three pillars of excellence in demand fulfillment: speed, personalisation and choice.

Despite this being revolutionary for the logistics segment, more than 50% of organisations have not yet actively started to build a roadmap for supply chain digital transformation. Like any change or disruption, the process of digitalising the supply chain has also its set of challenges which if considered, the benefits can come faster with the journey become smoother. Some of the challenges that an organisation needs to acknowledge and address are:

The complexity and lack of flexibility of underlying processes, structures, and networks – The processes are not thoroughly understood and analysed before digitising them. Although challenging, as it involves cross-functional as well as cross-company processes, simplification needs to be considered to reach impactful results.

Technology competence and employee qualification – Dealing with the ever-evolving technologies, training becomes time-consuming and the high pace of change makes it more difficult to be up-to-date. Furthermore, supply chain managers are often not information technology experts. Functional as well as technological knowledge needs to be merged.

Along with all above stated challenges, the most challenging one is to have a Proper Change Management. The challenge of accepting that a change is required and then working towards changing your processes to make them more efficient. Many organisations think, a current system cannot be put on hold while we work on the newer systems.

Having stated some of the above challenges, it’s imperative to answer the question, do we have a choice? The answer is no we don’t. The sooner we understand and act on it, the better the organisation will be able to, not just cope with the current disruptions but also be more efficient and ready for the future.

A digital supply chain provides cost effective alternatives to each bottleneck that we come across, faster and cheaper than others. Hence, optimising the supply chain has become a hot topic for every CEO of every company. It has reached a stage that business continuity is now given more importance than just cost alone. Statistics say that 85 % of CEO’s think that digitalising the existing supply chain will drastically enhance cash flows and reduce DSO (days sales outstanding), in turn improve customer satisfaction and their share of the pie.

Gartner surveyed more than 500 supply chain professionals to better understand supply chain technology focus, initiatives, value and challenges.

  • 38% of organisations are improving supply chain technology to support end-to-end processes as we speak.
  • More than half of supply chain organisations will have invested in artificial intelligence (AI) and advanced analytics by the year 2024.
  • 8 technology trends will accelerate supply chain digital transformation over the next several years.

To summarise, tomorrow’s supply chains will be connected and self-orchestrated ecosystems. Next-level supply chain ecosystems will be far more sophisticated than today’s supply chains. One focus will be on connecting the supply chain with other functions across the enterprise, such as R&D (e.g., design for supply chain), finance, sales and customer service (e.g., enabling online and other new customer channels). Leaders will also use digital technologies, such as Internet-of-Things (IoT), dynamic enterprise management and global supply chain visibility solutions, to establish a two-way, near-real-time connectivity across the entire supply chain for better visibility and effective decision making.

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