An effective digital supply chain is founded on a real-time, end-to-end view from raw materials to last-mile delivery. A digital supply chain uses software to track every element of product fulfillment. This includes the source and status of:
• Materials and inventory necessary for production
• Human resources and equipment required for production
• Customer orders indicating the necessary level of production
• The distribution network
Digital supply chains have a number of advantages over traditional methods. The three primary benefits are efficiency, agility, and insight.
Implementing a digital supply chain requires comprehensive tracking of all resources, typically using enterprise resource planning (ERP) software. Gaining such a granular, real-time, end-to-end view of resources increases asset efficiency from equipment to materials and labor. By maintaining a persistent view of the entire supply chain, manufacturers can order only what they need, only when they need it.
By the same token, a digital supply chain makes possible far greater agility in adapting to adverse conditions. For example, if a global auto-parts manufacturer discovers one of the key ports they source materials from is closed due to bad weather, they can immediately pivot to an alternative supplier in another location.
Similarly, if there is a sudden spike in demand, real-time visibility of supply can be used to rapidly source the extra resources required to meet it. This in itself can become a major competitive advantage; ambitious SLAs serving as a key differentiator.
Adopting a data-driven digital supply chain can yield insight across the enterprise. Unifying information from each stage may uncover systemic issues. Real-time visibility can help to drive better decisions.
Manufacturing delays might delay customer orders, for example. For many manufacturers, these interconnected pieces of information might previously have been siloed, unrecognized as related. Such a cross-departmental analysis can spark collaborative problem-solving and innovation that benefits the organization as a whole.
Cloud computing and the Software as a Service (SaaS) model have made the tools of a digital supply chain relatively accessible to businesses. However, digitizing the supply chain requires more than mere software.
Achieving a digital supply chain requires fundamental changes to the way your organization approaches its supply chain. One key factor is orchestration amongst each link in the chain. For full visibility, you will need all your suppliers to participate in your network, as well as each of your own departments.
Successful implementation requires a strong vision of what you’re trying to achieve. Be clear about the business objectives you’re hoping to achieve in the process of digitizing your supply chain. Digitization is not a one-size-fits-all process. Your objectives will guide you through the appropriate steps for your unique organization.
The ideal digital supply chain has visibility of every element. Any holes in data are blind spots that could present challenges later down the line. Data collection must be cross-functional, standardized, and centralized; which may meet resistance in some departments.