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What is Digital Supply Chain Management

With things in an uncertain place because of the ongoing pandemic, the time is ripe for a Digital Transformation. While most of the previous discussions in the supply chain system have revolved around a timeline of 3-5 years before the digitization transition even begins, circumstances have fast-tracked that discussion and thrust the onus onto the systems to fully embrace the digital transformation.

In a standard or analog supply chain, suppliers will receive orders by mail and this order is then converted into a bill of materials that are converted into a goods supply list in a semi-automated system. The information about the goods would be entered manually into a systems report. The companies demanding good supply from suppliers would invariably have supply adjustments which would put stress on the entire system. While global systems have transitioned from the entire analog system, some parts of it still remain in existence.

In the past few decades, logistics have transformed significantly. They used to be considered a simple function of operation that was overseen by sales and manufacturing that was all about smooth supply and customer delivery. Now, that is not the case, with several companies even seeing the merit in appointing specialized personnel in the form of a Chief Supply Chain Officer who leads an independent arm of supply chain management.

With such evolution has come a singular focus on the role of supply chain management and more advanced functions within the system such as planning based on analytics and an integrated Sales and Operation Planning process. The supply chain system now creates a more integrated operation from customers to suppliers.

Digital Supply Chain Management (DSCM) is all about managing the challenges created by today’s hyper-competitive business environment. It explores and solves opportunities and hurdles, developing an agile and customer-responsive supply chain. Such a digital transformation program helps discover the future of supply chain management today.

A Digital Supply Chain management would require two things - an overhaul and complete use of technology in every area of the supply chain, and professionals who have an entirely new set of skills to understand and operate these new technologies. This electronic transformation would be enabled by a whole host of new technology such as:

  • Artificial Intelligence

  • Big Data and Predictive Analytics

  • Robotics

  • Machine Learning

  • Cloud Computing

  • End-to-End Digital Connectivity

  • The Internet of Things

  • Blockchain

These are only a few of the technologies that can form a part of the digital supply chain. The one thing that is common to all of these technologies is a digital communication and the requirement of a robust digital infrastructure. It would create an ecosystem where information would be freely and instantaneously available.

The use of electronic sensors would upgrade tracking capabilities and give real-time tracking data of goods movement and ensure end-to-end visibility from manufacturing and transportation to the entire logistics process. The end result would be a truly Digital Supply Chain where the whole system is manageable intelligently with the right amount of goods available based on information, requirement and performance of the overall dynamics.

To facilitate such a transformation, there would be a massive need for ancillary support and significant revamping of infrastructure. But also crucial while undertaking such an endeavor would be the following:

Knowing your current situation and risks

Being acutely aware of the current situation and state of things in the supply chain system is of critical importance. As an organization, you cannot have unrealistic expectations when you have a vision in place. The suppliers and the risk feasibility involved have to be looked at. The best choice is to be realistic and understand the risks involved so you can take the correct decisions in the process to transition to digital.

Planning strategy

Knowing the effects of potential changes, an organization is better positioned to create a system with suppliers. A clear discussion between all parties ensures that a Digital Supply Chain Management system is made that is mutually beneficial to the supplier as well as the organizations. This way the system can be robust and have more extensive parts for it to be successful.

Long-term vision and sustainability

It is essential to realize that the incentive to save money can prompt individuals and organizations to introduce measures that pose significant risks while focusing on the short-term benefits. It is therefore vital to cover all bases and see the larger picture, where sustainability is at the core of the business.

Analysis and thorough research

Supplier analysis is another key component in the digital transformation of a supply chain. A good supply chain is resilient and delivers the desired and expected returns. So using prior experience and information to make smart choices in transitioning towards digitizing is elemental.

Staggered implementation and redevelopment

While a motivated push for digital transformation is necessary, creating a plan for a good system is the first part. The other part is execution and that should happen in phases. Creating a pilot project which can be analyzed to update the system is also important constantly. After studying what works and what doesn’t, organizations should launch the digital system in areas where there is a potential for maximum return to ensure good returns on the system upgrades. Since there is a lot of technology and software involved, a core part of the system will be to easily adapt and evolve with requirements given the dynamic nature of current businesses.