The supply chain of today is governed by the manufacturer, wholesaler, retailer, and businesses operating in between. Not only has the concept of a supply chain progressed by leaps and bounds during the last decade or so, but it is also one of the most critical functions for an organization looking to achieve its short-term and long-term business goals.
The supply chain, if perfected, is a critical weapon in this competitive environment. The incorporation of the digital transformation in supply chain processes will eventually lead to newer business models that directly influence the performance of the brands involved. This will eventually help you to turn your supply chain into one that is opportunity-centric rather than cost-centered.
The availability of analytics and relevant data also influences the need for more digitization in supply chain. All these digital metrics can be used within the SCM processes for optimization and to ensure that all facets of the supply chain management process are covered.
Why Do You Need a Digital Supply Chain Right Now?
I have the opportunity to attend Sapphire Now by SAP from May 7th to 9th 2019, and while there I’ll have the chance to hear a lot of different perspectives pertaining to the digital supply chain.
The importance of a digital supply chain is a key theme of this conference. As an SAP partner, I had the privilege to access some previews of what we can expect that helped me to understand why optimization is desperately needed here.
Trends in Supply Chain
Before discussing the importance of optimization in supply chain, we will first have a look at current trends:
Visibility and Connectedness
Visibility in supply chain has been around for quite a while, and is nothing new for managers. In the context of supply chain, visibility refers to being connected and having a tangible network with each other.
If asked about visibility or connection, how many of your supply chain partners would you actually be digitally connected to? Supply chain processes are distributed into unperceivable silos. The digital connection or visibility, which is a must-have and perhaps the most important part of the supply chain process, is one aspect that has been missing from the picture for some time now.
Besides the supply of materials, how many manufacturers would agree to being connected to the carriers responsible for logistics? Even if we expand the definition of supply chain to include logistics, we lack the connection that should have been a must.
Better Customer Experience
The end goal of all supply chain processes is to deliver better customer experiences. The delivery process should be optimized and corrected to avoid any errors, and any problems that come with receiving a product.
If your supply chain isn’t digital, you’re not just falling short of your competitors, but falling behind the trends in the market as well. The trends in the market have changed over time, and the focus now isn’t just on making the cut. The focus for organizations and manufacturers is to perfect the customer experience and make sure that the customers get exactly what they want. This can only be perfected by ensuring seamless incorporation of the digital supply chain into everyday business affairs.
If you don’t grasp the trend of digitization in supply chain and give your customers just what they are looking for, they will look elsewhere and switch to other manufacturers.
Sustainability, in both business and the environment, is a trending topic when it comes to supply chain. With the realities of climate change now upon us, environmental sustainability is a must for supply chain processes. These processes should only be performed when you have perfect connectivity and visibility. With these metrics present, you are aware of all that your supply chain processes are going through.
The single biggest notion driving organizations towards change in the supply chain is customer centricity. Organizations vying for a change in the digital supply chain must incorporate numerous changes, but it is the opportunity presented by customer centricity that is pulling them towards supply chain glory.
In this age of customer centricity, personalization is the key to standing out. Managers agree that a customer centric approach is the need of the hour and that they need to alter their offerings to fit this perspective, but they don’t realize that the personalization required for a customer centric approach requires exceptional quality in supply chain. Our current supply chain is extremely poorly equipped to handle the challenges that come with a customer centric approach.
In a bid to give customers the experience they require and truly embrace the concept of Industrial 4.0, organizations are looking to incorporate the digital supply chain within their setup.
Supply Chain Challenges
Challenges within supply chain that organizations and customers face are:
- Continuous Deliveries: Customers now have multiple subscriptions for products, and they require continuous delivery of products. This is hard for organizations to manage, but customers want the promises made in front of them to be met.
- Managing Personalization: As items become personalized, every customer has a new demand of their own. Meeting these demands requires exceptional personalization, which isn’t possible through current supply chain methods.
- Innovation Push: The supply chain should push towards innovation, rather than stopping it.
To solve these complications, companies require a digital supply chain that can help them stand with the wave of the time, and give the best to their customers.
How Digital Supply Chain Can Help with New Challenges
The digital supply chain comes with the goal of connecting everything so that organizations can connect everything around them digitally, and perfect the emotional reality as much as possible.
When looking at the digital supply chain, you can see that it is an integrated entity that covers multiple analytical and business processes. The supply chain covers all stages from the product design stage to the post customer servicing stage. The goal here for organization is to make the ultimate move towards a closed loop; a collaborative and planned supply chain.
The current complications in supply chain require the optimal connection of all facets in supply chain to be solved correctly. Regardless of the kind of business model that you have with you, it is imperative that you support the digital supply chain in your setup, and help improve connectedness, visibility and sustainability throughout it.
The ability to incorporate the digital supply chain within your organization would eventually help you achieve the following:
- Drive down all of the costs that were associated with traditional supply chain methods. Organizations want customer centricity, but it is becoming expensive to manage with the kinds of processes they were working with. The digital supply chain will help drive down costs to more manageable levels.
- The digital supply chain will help increase efficiency for all parties involved. From the manufacturer to the customer, all parties will experience enhanced operational efficiency.
- By increasing connectivity within processes, the digital supply chain will eventually help you meet customer expectations and deliver better customer experiences.
You can get started on this process today by ensuring that your whole IT system is working together. Collaborative efforts should be implemented to truly achieve a digital supply chain within your organization.
By Ronald van Loon