What is the key difference between today’s supply chain and the benefits of the digital supply chain?
Look at your desk. What do you see? Anyone who sees paper, pen and computer sees the typical, modern supply chain. Upon request, can you provide the latest information on your current automation, performance metrics, data, IT application usage and financial management?
Chances are that much of this information is stored digitally. However, you would probably have to go through some of the physical, tactile documentation to find all the information. Also, is the information stored only on your computer or on a server? Well, how long will it take you for this?
This is a prime example of why the physical and digital supply chains need to converge. The use of paper in modern businesses and the supply chain is synonymous with inefficiencies. What happens when you have the right paperwork, but your business partners in another city have no idea what’s going on? The answer is simple: your information lives in a world of siled tracking.
This independent, disjointed tracking of data can feeling and appear efficient, but this methodology suffers from serious shortcomings. Information in one place does not necessarily lead to efficiencies across the organization, and increasing use of the Internet makes more data available. Still, supply chain giants are trying to embrace the digital world and increase efficiencies in the search for a more digital supply chain.
Unfortunately, the results of a 2015 report prepared by SupplyChainDigest (SCDigest) on the use of digital measures in the supply chain show that many supply chain partners are somewhat incapable of using data, analytics, KPIs and the like in the best digital supply chain. Let’s take a look at why this is important and what it means for the future of the supply chain.
What’s wrong with today’s hybrid supply chains?
Remember the opening example. This is a hybrid supply chain. Some information is digital, some is physical, and some information is kept separate from the broader enterprise in local, individual centers or silos. However, this model is not conducive to modern society. In 26 years, the number of people connected to the Internet has grown from 2.8 million to over 3 billion.
The number of connections increases exponentially every second. It is clear that 20-year-old processes are inherently inefficient when applied to businesses and consumers in modern society. Therefore, the only solution is to truly embrace the digital nature of the modern world, making it a fundamental part of modern supply chain management.
The digitization of the typical supply chain is the most significant change in society and history. explains Daniel McMurray. Dubbed the ‘third industrial revolution’, the digital revolution holds many promises for today’s supply chain partners, and the supply chain must change to meet the demands. However, much like extinct species of the past, how they adapt to survive depends on how well these beings respond to their environment.
Therefore, the true path of customization requires insights into process automation, KPIs, process management, data collection and analysis, organizational design, and full integration of IT applications across an organization that make up the Digital Supply Chain Network.
What are the advantages of the Digital Supply Chain Network?
A supply chain is only as strong as its weakest link, Accenture claims. For supply chain partners who are new to the digital supply chain network, the weakest link is actually every single process, communication, connection and point in the supply chain. Certainly, some level of process automation is beneficial, but this information is worthless unless compared to information from geographic, physical, or digital boundaries. When a supply chain partner leverages the scope and capabilities of the DSN, some real benefits are realized.
1. Become more future-oriented
Supply chain companies have developed bad habits when it comes to maintaining a backwards approach. In fact, 40.1 percent of supply chain companies work almost exclusively this way. However, most respondents to the SCDigest report say that becoming more forward-looking is the biggest opportunity for leveraging the digital delivery network.
2. Connect and link data sources
The Internet of Things (IoT) has become a fundamental aspect of a successful modern supply chain. The IOT is responsible for many improvements in processes, preventive maintenance and identifying better ways to move products.
However, the IOT relies on data sharing, and the DSN can exponentially catalyze the current limitations of the IOT. For example, connected devices can be used in the IOT to deliver its data across multiple locations, processes, and even organizations. As a result, a more connected system naturally leads to more connections and sharing of such data.
3. Generate data-driven plans through data visualization
As data becomes more available, this data will be used for advanced analytics. Additionally, using data visualization capabilities simplifies the application of data. For example, providing a manager with data from yesterday’s transactions is great, but giving a manager a chart showing when performance has stalled will go much further by allowing the manager to see today’s Change operations to prevent yesterday’s mistakes.
For example, the graphic below, created by AT Kearney, highlights how data visualization tools emerge from the use of digital technologies that can be applied to augmented reality, customer self-service opportunities, cloud-based tracking and processing, and precision and locality technologies . In fact, the image itself is a form of data visualization.
4. Improving collaboration
As data visualization tools help make changes in both the digital and physical aspects of the supply chain, collaboration is enhanced.
5. Enter the world of digital products and services
Modern services and products are not necessarily physical. Apps, Netflix, Pandora and Uber represent real companies built on the Internet. Some apps like Etsy go a step further by linking goods creation directly to customer-generated designs.
Therefore, the need to embrace change is essential. The manufacturer, a third party between the seller and the customer, must receive data generated by the customer or seller and use it for production. Additionally, the benefits of the digital supply chain can be seen in this chart by AT Kearney.
The age of the paper-based, silo-based supply chain is dying. As the use of local information for local production becomes obsolete, the need to leverage the digital supply chain network will be stronger than ever.
For supply chain companies, the question is not how increasing technology will help reach new markets, define new strategies, or reach more customers more appropriately. Instead, the question focuses on whether the technology can be implemented quickly enough to prevent a company from dying out.