Digital Transformation of Supply Chains

No matter what your company deals in, disruptive technologies are here to stay. A quick overview of these technologies provides an ability to see how they can be used to improve the supply chain. Everything that is enabled by technological advancement creates a platform for the digital supply chain. Just as we’re electronically connected every moment of our daily lives, so should our supply chains. The digital age is here and it will only continue to further permeate our lives.

There are several revolutionizing technologies like – Internet of Things, artificial intelligence, robotics, the blockchain, data analytics, virtual and augmented reality, drones and autonomous vehicles, 3d printing and additive manufacturing. There’s also cloud computing, simulation, cybersecurity, nanotechnology, mass customization and renewable energy. These are the backbone for creating the future supply chain 4.0.


How will these technologies shape the future supply chain 4.0?


A fully integrated digital supply chain with end-to-end transparency and integration enabled software is to be developed. It is coupled with sensor tracking and full traceability along with being dynamically adjustable.

The synchronised supply chain networks will be in play with multiple sources carriers and machines operating under a supply chain cloud. The dynamic network configuration and predictive inbound and outbound logistics will be complemented by blockchain technology which enables the electronic and independent verification and recording of events throughout the supply chain. Optimization with real end-to-end data management, predictive analytics and supplier connectivity will perform a significant function in the SCM system.

There will be a shift from data tracking on paper and spreadsheets to data analysis in the supply chain. It will enable better transparency and visibility as there is further scope for automated logistics. The digital supply chain will give managers better control over the entire logistics process as smart warehouses and manufacturing facilities enabled by drones perform a safety inspection and track the physical flow of goods.

This will lead to higher productivity in your company, reduced time to market, lower costs, better asset management and better overall financial performance.

To turn this utopian vision into reality, you also need to select the right supply chain professionals. Choose the ones who have the skills and capabilities that include strategic planning, full end-to-end supply chain expertise, technological expertise, management capability, the efficiency with data analytics and risk management.

The advances in digital technology are having a huge impact on the world around us. It is leading to big changes in customer behaviour. Today, connected customers behave digitally responding to social media trends and taking part in online conversations across a vast interconnected global community. However, many supply chains can’t keep up because they’re structured in a very traditional and sequential way.


Let’s take a look at how a typical company with a traditional supply chain would react to a sudden peak in demand.


A celebrity posts a picture of a bag on Instagram creating excitement and generating a sudden demand for the product across the world. The bag manufacturers demand forecast was based on data on previous sales. So when their sales reports show their product has sold out unexpectedly. This causes a sudden change in demand, then the company adjusts its forecast to reflect the new level of demand. Till the time they acknowledge this they are out of materials or the production capacity to make replacements.

So they call their suppliers but they also don’t have the materials available in short notice.

The contract manufacturer asks them to order new materials and hasten shipments leading to additional costs. Finally, when the materials arrive and the products are produced, they are transported to the stores. The transportation wasn’t planned for in advance which means premium shipping costs. In all, it took the company around four months to replenish their product.

Unfortunately, the customer just wasn’t going to wait that long. In the meantime, they bought a similar product from a rival manufacturer. With the unplanned additional costs and the unsold products, our bag manufacturer made a loss out of the whole experience.

But it doesn’t have to be like this.

The traditional supply chains must evolve into an interconnected, smart and highly efficient supply chain ecosystem. It can develop with layers to address custom solutions and digital operations. Companies who can set up and run such an ecosystem empower themselves to proactively manage and fulfil customer needs can quickly identify changes in demand and organize their supply chain accordingly.

In this way, they can transform their supply chain to have competitive advantage and use it as an enabler for new digital business models.


Now, let’s look at how a company with a digital supply chain would have reacted to a similar peak demand situation.


The company’s proactive sensing capability including social media tracking identifies a peak in demand early on. The production plan is adjusted automatically. There’s a direct link between demand and manufacturing and through that link, an updated demand plan is shared with all relevant suppliers who immediately include the new requirements in their material planning and adjust their manufacturing priorities accordingly.

Meanwhile, the customer can track the progress of the order keeping up-to-date on when it’s being manufactured and when it will be delivered. Throughout the process, the supply chain transparency solution monitors relevant supply chain data from a variety of internal/external

structured and unstructured sources enabling proactive risk management.

The company leverages an established flexible logistics network with a shared infrastructure for the last mile delivery to the customer.

Companies that leverage digital supply chain operations with the versatility and agility that’s needed in the digital age. This translates into happy customers and flowing profits.

Supply chains are extremely complex organisms and no company has succeeded in building one that’s truly digital. However, the companies that get there first will gain a huge advantage in the race to industry 4.0 and will be able to influence their technical standards in future.

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