How Supply Chain Digitization Can Transform Your Operations

Industry 4.0 is changing the way that products reach the marketplace. Manufacturers are adopting new ways of connecting their entire supply chain, making them more transparent, efficient, and flexible. With a wider range of competitors online and a greater demand for customization, manufacturers must adjust their supply chain to make sure they are both agile and competitive.

What is supply chain digitization?

Industry 4.0 is allowing manufacturers to take a holistic view of their complete supply chain. By using advanced robotics, connected sensors, and IoT data analytics, manufacturers can improve customer satisfaction and efficiency.

A digital supply chain is a series of digital products that connect a supply chain. Resource storage centers, product storage centers, transportation links, and manufacturing assets are connected with sensors and monitors that feed information into a centralized cloud system.

Traditionally, a manufacturer would operate in silos, with no effective way of having a thorough overview of the process from start to finish. Customers now expect faster turnaround times and higher levels of customization. This has put pressure on manufacturers to become more flexible and efficient.

Supply chain digitization provides valuable information at every step along the supply chain, in turn making it possible to iron out inefficiencies and meet the needs of customers.

What is the benefit of supply chain digitization?

A digital supply chain can be referred to as Supply Chain 4.0. Supply Chain 4.0 is much better equipped to face the increasing challenges being presented to manufacturers. According to McKinsey, Supply Chain 4.0 will lower operational costs by 30%, reduce lost sales by 75%, decrease inventories by up to 75%, and add a dramatic boost to the efficiency of the supply chain.

This is because supply chain digitization:

• Provides better service: Poor customer service can be caused by an inaccurate promise to a customer in terms of production and delivery, a wrong inventory profile, or products being out of stock.
• Costs less: Digital supply chains allow you to reduce the cost of the overall network by allocating resources more effectively. With the information supplied by a digital supply chain, you can minimize mileage driven, warehouse storage space and electricity used, unnecessary travel, and unnecessary production.
• Allows for better production planning: With the amount of data made available to you through a connected supply chain, you can streamline your planning processes. Although this process is traditionally done in a manual and time-intensive way, Supply Chain 4.0 can automate up to 90% of your planning procedure.
• Keeps accurate levels of inventory in stock: Excess inventory is the buffer between demand and supply. However, through the use of Big Data analytics and planning algorithms, your ability to predict future demand patterns will enable you to adopt the lean, ‘just-in-time’ principle, minimizing the need for excess inventory.

How do you start digital supply digitization?

To implement your digital supply chain, you need to make sure you have the right capabilities and environment. An organization needs to start implementing digital tools along the supply chain. This would include digital sensors and readers to assets, as well as Big Data analytics software. You may also need to hire specialized employees to aid the transformation.

Creating the right environment within your organization is imperative. To effectively implement a digital supply chain, an organization must give itself autonomy and flexibility to test and upgrade existing processes. A lean approach must be taken, whereby your digital supply chain is going through constant testing, innovating, and upgrading. 

Manufacturing companies that are able to effectively implement a fully digital supply chain will find themselves producing more for less, while staying ahead of the competition in an ever-evolving industrial landscape.