Blog

The fourth industrial revolution is creating a disruption that is forcing companies to think about the ways they are designing their supply chain management. Emerging technologies are replacing the old and traditional methods.

Moreover, new trends, customer expectations, and the need for transparency at every level are driving the change. Digital technologies are bringing a new era to supply chain management where suppliers and customers come together in a new way.

Transportation of goods via road, rail, and sea has had its challenges, and delay in product movement has been a routine phenomenon affecting every company, either in manufacturing or delivering, from online grocery companies, automakers to big pharma companies.

Businesses today make it necessary to respond instantly, which can happen only when the whole supply chain network is at your fingertips with real-time updates.

India’s supply chain needs to be ready for this next leap for a more agile, responsive, and transparent network that can readily adjust to unknown variables across the industry, such as availability of resources, modification of orders, shortage or excess inventory, and so on.

In the past few decades, the complex network of logistics at various levels — from sales or manufacturing and ensuring the supply of production lines and delivery to customers — has shifted to an independent supply chain management function led by a Chief Supply Chain Officer (CSO) in many companies. In the past couple of years, this focus has been changing very fast.

Technological disruptions like Big Data and analytics, machine-to-machine connectivity and human-to-machine interaction, 3-D printing, automation, AI, and AR are causing a radical digital transformation at every level of the supply chain, which promises to reduce inefficiencies, lower costs and make it more flexible.

A completely digitised supply chain relies on intelligent and integrated solutions instead of manual inputs. But most companies do not really understand what a digitised supply chain is. It is not just a supply chain where you change outdated technology with the latest and best technological platforms.

It is about creating a whole new way for the company to operate its supply chain management strategies — procurement of raw material to production to the customer, a system of networks that communicate with each other along with redefining the entire supply chain management for optimization of processes, restructuring planning and even production strategies.

A digital supply chain helps companies enjoy the benefits of interconnected supply chain partners. It reduces information delay to near-real-time levels, stops miscommunication and is cost-effective. Let us look at the many benefits of a digital supply chain:

Lead times minimised: Reduce the lead time for procuring raw material or identifying the productive capacity so that orders get executed much faster.

Just-in-time (JIT): JIT has become accessible. With JIT manufacturing, now, every enterprise can adopt and enjoy digital supply chain by ensuring critical decisions and pushing last-minute deliveries, thus optimising decision-making and saving costs.

Forward-looking supply chains: With more shared and analysed data, digital supply chains help companies predict future requirements instead of operating reactively.

Eliminate glitches: Out-of-stock products lead to a loss of revenue. A digital supply chain ensures your company is never out of stock, nor overstocked — leading to heavy discounting in the long run.

Improved financials: Low lead times and a JIT approach in the digital supply chain not only helps reduce capital requirements, but also improves cash flow because less money is tied up to keep excess warehouse stocks.

Accessible data: All day-to-day data points are collected and recorded for future use. The use of cloud technology, IoT, and Big Data methods help optimise business processes.

Making change happen

It is quite clear that a digital supply chain is efficient as well as cost-effective. And, to kick off the digitising process of the supply chain, the C-level staff of an enterprise should first learn about the benefits of digital transformation.

They should analyse the existing supply chain process and identify the segments that need improvements on a priority basis. An experienced digital supply chain partner can ensure that the transformation process is managed in a way that brings in the maximum benefits.

According to management consulting firm McKinsey, transformation into a digital supply chain requires two key enablers — capabilities and environment. Digitisation capabilities need to be built in the organisation, but typically also requires targeted recruiting of specialist profiles.

The second prerequisite is the implementation of a two-speed architecture/organization. It means, while the organisation and the IT landscape are established, an innovation environment with a start-up culture must be created. This ‘incubator’ needs to provide a high degree of organisational freedom and flexibility, besides state-of-the-art IT systems to enable rapid cycles of development, testing, and implementation of solutions.

(Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of YourStory.)