There have been many transformations in the global economy, brought into sharp focus recently as what was considered “normal” has fallen by the wayside for many industries. It’s clear that in many cases, inefficient companies that lack resilience are falling behind while those who are focused on technological adaptation and process agility are racing ahead.
Digital transformation is enabling business success and an upward trajectory of growth for those wishing to embark on this fundamental change. Business leaders across the globe are asking: Are my core functions embracing digital transformation and preparing my business for the decade of uncertainty ahead?
Companies that invest correctly in a holistic approach to digital technology to transform their business will often reap rich dividends on their investments. We expect the supply chain function, which pervades both inbound and outbound processes, to play a vital role in enabling companies to realise success.Supply chain competencies will further emerge as a key factor for companies that seek to expand into new markets or grow their product lines or share in existing markets. Supply chain executives will need to use digital technology to plan effectively and make business decisions more efficiently to gain a competitive advantage without jeopardising already tight margins.
The Rise of Digitally-Enabled Supply Chains
The world is becoming more digitised by the day, and the pace of digitisation seems to be accelerating.
Digital technology is reshaping the supply chain dynamics, leading to the emergence of disruptive market challengers and forcing leaders to re-think their position and their processes.
Much more than replacing paper processes with digital equivalents, digital transformation goes to the heart of the business operation itself, encompassing people, data, technology and processes.
We’ve identified some of the larger technological trends that will become stronger in the next few years and could play a crucial role in driving supply chain, and business, strategies.
Blockchain technology is revolutionising supply chain management by enabling transparency and end-to-end data sharing across the chain with all the parties involved without compromising data integrity and security.
Research suggests that blockchain technology will enable savings of over $30 Billion by 2024 in the food and beverage sector alone. The promise of increased efficiencies is expected to drive the demand for blockchain solutions in supply chain functions.
Cryptocurrencies, built on the principles of blockchain technology, have emerged as an innovative medium to settle local and cross-border financial transactions. These transactions are transparent and faster, possessing the potential to disrupt the traditional financial systems.
Cryptocurrencies use, especially in blockchain-enabled supply chains, will increasingly become more common with its legalisation as legal tender by an increasing number of national governments.
Gamification (within supplier relationship management – SRM), one of the promising examples of the growing long tail of blockchain applications, is an exciting new trend that can boost the productivity of supply chain participants and encourage healthy competition among partners.
It helps the supply chain executives incentivise productivity improvements, such as speed, and thus boost the overall competitiveness of the business. Incentives can be distributed through smart contracts, a set of transaction protocols that automates transactions once the assigned task conditions, such as time limits, are fulfilled.
Smart contracts promote commitment-based task completion and motivate supply chain participants for continuous improvement.
Internet of things (IoT), the technology that connects devices, automates data flows between them, and enables them to operate as smart devices, has revolutionised the logistics component of the supply chain.
IoT provides seamless access to information about the movement of goods across the supply chain and a real-time dashboard of the chain. Thus, it has been aggressively adopted by the logistics industry, especially within the transportation sector with use cases such as GPS enabled fleets. IoT boosts data transparency across the supply chain and has the potential to unearth opportunities for process improvements and efficiency gains if combined with big data and advanced analytics capabilities.
Automation of the supply chain will enable businesses to be more efficient as technology is thought to minimise errors due to human intervention. This improves the overall efficiency of companies and supply chains by impacting processes such as inventory management, supplier selection, and customer interaction.
Robotic automation for performing standard repetitive operations can improve company productivity and is an attractive investment opportunity for supply chain-focused companies, such as Amazon. Long-tail applications such as driverless vehicles and automated deliveries through the inter-disciplinary deployment of automation and machine learning technologies will attract increased investment in the coming years.
Leveraging Technology to Address Contemporary Challenges
COVID-19 has resulted in societal changes such as stay-at-home regulations, work-from-home decisions, and remote learning adoption worldwide. These changes have contributed to the increased use of digital media and reliance upon e-commerce for shopping.
Meeting New Expectations
In this digital-first world, customers are learning to expect greater personalisation and better last-mile service delivery. Micro-segmentation and large-scale personalisation demands will pose additional challenges to the consumer supply chain.
Companies need to address these new customer expectations and build agile processes that serve this new paradigm in consumer behaviour. New delivery methods that are faster, flexible, and personalised will drive customer preference and loyalty. Convenience is king.
To meet this demand, advanced forecasting approaches, such as predictive analysis that uses external and internal data, will need to be built into the design of the supply chain processes where appropriate and be capable of handling fluctuating levels of demand driven by government policy and consumer behaviour.
The pandemic has additionally led to rising concerns about the ecological impact of supply chains. The disruption in global trade due to lockdowns has ignited a debate about promoting local businesses and reducing the vulnerability to shocks emanating from dependence on international supplies.
Green logistics, which encourages eco-friendly warehouses and reduces the carbon footprint on this planet, are being promoted by governments and preferred by customers, pushing supply chains to go green by reducing consumption of fossil fuels and adopting solar-powered or electric vehicles.
The Omnichannel New Normal
Omnichannel, a term used to describe a common platform for customers to conduct business effortlessly, provides a unified window for customers to make purchases, whether at a physical store or on an online platform. A single customer today has access to multiple channels. Thus, supply chains have to find a way of providing a unified and responsive experience across all platforms. An omnichannel approach benefits the supply chain teams as they have a single unified view of the demands and the fulfilment process. Therefore, an effective omnichannel strategy is essential today to achieve process efficiencies and a competitively differentiated yet seamless customer experience.
Forward-thinking companies should begin to develop the supply chain function to embrace the digital transformation opportunity as it can be a crucial differentiator in the post-pandemic economy.
In these times, business leaders should consider investing in technology platforms that support efficient and effective, agile supply chain processes that adapt to the changes demanded by the complex changes in the business environment.
By building a more efficient, sustainable, resilient, and smart supply chain that delights customers in this “VUCA” a Volatile, Uncertain, Complex, and Ambitious – environment. We’re confident that the businesses that are most responsive to market demands will gain customer trust and reap market share rewards.