According to Forbes, 50% of the companies believe that digitalization has a huge impact on the company’s supply chain, logistics, and transportation operation. (2018). It is true to a great extent because the inclusion of digitalization in the supply chain has revolutionized the industry.
What is Digital Supply Chain Management Today?
Digital Supply Chain has two main meanings in the current understanding. It can refer to the digital aspects of a physical supply chain system. It can also mean the various digital companies involved in the delivery of digital products
It is important to understand this before we move forward. It refers to using the latest technology and its development such as IoT, blockchain, machine learning, IoT and predictive analytics to improve physical supply chain systems.
A common example of this approach is the concept of the next-generation supply chain by McKinsey. it revolves around the idea that the inclusion of technology, automation, and analysis can help make supply chains more efficient. Using technology in the manual processes helps improve customer satisfaction and reap bigger benefits.
Professional procurement, operations, commercial and technology teams collaborate to run these next-generation supply chain systems. All of these constituent elements come together to build a stronger and better supplier ecosystem for companies which results in more efficient and effective supplier relationships and internal processes – often resulting in higher profitability and other commercial benefits.
These teams try and find more efficient ways of carrying out the same tasks that they have been accomplishing previously, but it’s not always just about moving from pen and paper to a digital solution for the same process.
This approach helps increase efficiency, explore new commercial possibilities and improve the overall performance of the team. Simply put, the digital supply chain is the supply chain that has an additional layer of technology to enhance its performance.
The most common technologies in the logistics field are as follows:
Predictive analytics: predictive analytics uses data processing as a basis to determine the expected outcome of business and non-business moves. This predicted data helps improve the inventory and determine the expected customer demands in the future.
Replenishment solutions: There is a lot of competition in today’s world so creating an edge by being more available to the customer is a huge advantage. This is where the replenishment solutions come to use as they allow companies to handle their fluctuating customer demands better than others.
Robotics: Robotics allow companies to carry out tasks at higher accuracy and efficiency. Most of these tasks include assembly and picking.
IoT sensors: The IoT sensors assist in gaining real-time feedback from the market regarding the quality of manufacture or how the end user is operating the item in question. This feedback helps improve shortcomings faster and improve the overall services.
Benefits of Digital Supply Chain Management
Digital supply chain management allows all of the members of a supply chain group to interact with another in real-time.
From a logistics or operations point of view, this method uses transportation management systems (TMS.) Using TMS in the process allows the company to boost both visibility and communication throughout the process.
The aim of the TMS is to avoid delayed processes, human error, and other complexities that can reduce efficiencies and increase costs. For instance, you can automate bids and selection process which optimizes the whole process by using Digital Freight Matching (DFM), reducing the costs as a result.
Increased Cost Efficiency
Using digital supply chain management reduces the chances of making mistakes, mitigating risk and making better outcomes easier to reach. Digital systems eliminate the need for paper processes or documentation which makes the process faster and more efficient and provide an all-important audit trail.
These benefits help logistics companies save around 30% of their administrative costs and reduce their freight expenses to 20%, according to Freight Waves.
Companies that switch to digital supply chain management processes tend to have increased collaboration with their partners. Digital systems are often simpler and more transparent meaning everyone is on the same page.
By moving to the cloud, companies achieve clearer and efficient communication. This collaboration can result in better competitive performance and profit margins. This also improves the agility of these companies making it easier and quicker for companies to make real-time, insight-led decisions.
Although, most companies will have adopted some elements of digital supply chain management into their processes we’re starting to see more organisations realise that simply moving from paper to PC and from filing cabinets to inboxes and shared drives doesn’t constitute the leap forward you would expect.
To truly embrace the benefits of digital transformation – we must look beyond simply replacing old for new and consider step changes and paradigm process shifts that encompass people, processes, data and technology. It all starts with looking toward a panacea – what would be the best way of working if we were to start again? And how may technology support those organisational goals?