With access to more technologies and tools than ever before, it is becoming increasingly necessary for businesses to optimize operations to improve workflow efficiency and accuracy. Across the globe, supply chain managers are looking for ways to go digital - leveraging robotic processes, automation technology and other electronic systems to accelerate production, increase visibility and reduce costs. However, because the concept of a digital supply chain is still in its infancy, the landscape of it is fraught with challenges and complexities. In this three-part blog series, we will be covering the benefits, latest trends, best practices and strategies involved in digitalizing the supply chain.
As with any new business venture, the first - and arguably most important - part is the planning stage. Transforming legacy systems into innovative solutions requires a specific and strategic approach. Often, companies are too quick to adopt a new technology and prematurely deploy it before proper training and planning have taken place. Doing so can result in major supply chain disruptions, production delays and inefficiencies that end up hurting the business's bottom line, rather than helping it.
Structure and strategy
A critical aspect of the preparation process is identifying which technologies to invest in. According to Supply & Demand Chain Executive, over the next year, 50 percent of companies will spend use as much as 40 percent of their budgets on digital technologies but the majority of them aren't using them effectively - which is to say that they are not leveraging them in a way that would provide them with a competitive advantage. And part of that problem can be attributed to the organizations failing to tailor the solutions to meet their specific needs. A Supply Chain Digest 2016 benchmark survey found that only 21 percent of companies said they had a clear digital supply chain strategy. Forty-one percent said they did not - whereas 37 percent indicated they had a partial strategy.
Identifying valuable investments
At this point, it's safe to assume that most supply chain leaders realize the importance of being responsive and adaptive in their business models and ensuring they are not being held back by outdated and inefficient processes. However, the benefits of digitalizing the supply chain can only be realized if it is done correctly - and investments are made in the areas that offer the most value.
For example, the SCDigest research revealed that the top areas where supply chain leaders said digitalization can offer the greatest benefit include:
- Advanced analytics (51.9 percent)
- Supply chain visibility (58.6 percent)
- Supplier system integration (43.9 percent)
When deciding which technologies to invest in, it is important to define key metrics and goals. The more in-depth and specific, the better. It is difficult, if not altogether impossible, to ensure that the right solutions are selected without knowing exactly what the current weaknesses are and where improvements need to be made to drive profitability. Furthermore, key performance indicators (KPIs) are important for ensuring that the new technology is operating effectively. Being able to track and monitor its progression is the only way for businesses to guarantee that they are optimizing performance.
Getting C-suite support
A major barrier many supply chain managers face when it comes to digitalization is a lack of budget - as well as a lack of support from upper management. Essentially, the two go hand in hand. In order for SCMs to get the resources they need to effectively adapt their operations and processes, they need to get the C-suite on board with the initiative.
Supply & Demand Chain Executive reported that more than 31 percent of companies say not enough interest in shown among executives in digitalization - and nearly 40 percent agree that they are simply not an organizational priority. The source added that, to overcome such hurdles, it is necessary for supply chain leaders to create "additional key performance indicators (KPIs) specific to digital performance that capture market share and more cross-functional governance."
A final component involved in the planning stage of the supply chain digitalization process is to figure out which key players will be involved. Which decision-makers need to have a say in which solutions investments are made in? Who will be responsible for implementing the new systems, training workers at all levels of the organization, as well as measuring and reporting its progress? Each department has different objectives it is focused on achieving - so it is important to make sure there is a healthy level of internal integration and collaboration throughout the process. This will help ensure that the digital supply chain benefits all parties.
The more thorough and careful you are in the planning stages, the more likely it is that the implementation stages will go smoothly - which is what we will cover in Part 2 of this series.