Supply Chain Getting a Digital Makeover

Supply chain transformations require both the integration of technology as well as co-operation among various teams to enable a smooth exchange of information.

FREMONT, CA: Supply chain is an integral part of any business that constitutes a broad range of activities needed to plan, control and execute a product’s flow. It represents a significant share of a company’s investments, which offers a vast scope for cost-cutting. Companies are incorporating various technologies into their processes for the above purpose. However, despite the efforts being put in by the companies to improve the performance of their supply chain, few have unleashed the true potential of digital technologies. According to a recent McKinsey report, the average supply chain has a digitization level of 43 percent, which is the lowest of the five business areas that were examined. Based on the same report, a mere 2 percent of the surveyed executives stressed that the supply chain is one of the prime considerations in their digital strategies.

The disparity between potential and actual gains from supply-chain digitization can be reasoned by management choices and technology gaps. Technological gaps resulted from the stagnation of innovation in supply-chain technologies after an initial burst. Secondly, it has required some time for technological innovations to accumulate into new offerings. Currently, the improved digital solutions are available and the companies can leverage greater improvements in supply-chain performance. Utilizing the opportunity has proved surprisingly tedious for most of the companies. A basic error is to disregard operational changes that will let the companies take full advantage of digital offerings. However, fixing operations without the consideration of complementary technology improvements can be equally problematic.

Integration of suitable leading-edge technologies with revamped operations paves the way to a righteous approach to digitize supply chains. However, it requires an assessment of whether technology and operations are sufficiently integrated, and if the company possesses the organizational structure and talent to favor the innovations in the future. Here is a brief insight for the companies that will assist the senior executive in carrying out supply chain transformations:

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Evolution of Supply Chain Capabilities and Technologies

Supply chain management was among the first few business functions to experience substantial technology upgrades, as developers designed applications to leverage the data generated from the ERP systems. The applications streamlined transactional activities. However, they didn’t provide transformative capabilities for supply chain such as combining and linking cross-functional data from external and internal sources, warehouse management, unleashing the origin of performance by digging deep into ERP, which is crucial to make planning more precise and to anticipate and prevent problems.

More about Operations Practice

The thriving ecosystem of service providers and technology vendors offer digital solutions that match up with the current supply chain needs and expectations. User-friendly and powerful analytical tools are enabling to compile vast sets of unstructured data and gain useful insights from them. AI applications can be useful in automatically tracing performance problems to their root causes, and even estimate declines, and recommend the apt measures to managers. Major decisions can be brought into actions swiftly using systems that aid in adjustments across functions such as from operations and sales planning into other areas.

Meaning of Digital Transformation for the Enterprises

At the enterprise level, digital transformation refers to employing artificial intelligence, analytics, robotics, the Internet of Things, and other advanced technologies to store and process information automatically. Thus in the current scenario, supply-chain transformation is about establishing a vision on how applications can improve service, cost, inventory levels, agility, and continuously implementing organizational and process changes.

Thus, supply-chain performance goes beyond buying and installing new software or systems. Supply-chain management is a collaborative undertaking that requires changes in the ways that teams and employees share information, deal with conflicts and opportunities, reach a decision, and implement the right set of actions.