This guest blog comes to us from Megan Ray Nichols of Schooled by Science.

Over the past few years, supply chains everywhere have embraced digital technologies. This trend isn’t unique to the logistics industry, but this sector has developed a particular interest in digitization. Analysts and research firms have talked about the digital supply chain repeatedly, but does it really matter that much?

A lot of people have made lofty claims about what digital transformation in the supply chain can do. These grand predictions can understandably make some professionals question their authenticity. While some of these claims may be overly optimistic, digital supply chains are a significant movement that no company should ignore.

Here’s why businesses should care about supply chain digitization.

Traditional Supply Chains Are Inefficient

Disruption for disruption’s sake isn’t something companies should pursue. Substantial changes should always serve a purpose, and supply chain digitization does. The fact of the matter is that traditional supply chains aren’t efficient. In 2018, more than half of supply chains around the world experienced disruption.

Digitization won’t fix all supply chain disruptions and inefficiencies, but it can substantially improve them. For example, 54% of truck drivers wait between three and five hours at a shipper’s dock, costing companies more than $1 billion annually. Transparency and efficiency gains through digital tools like fleet tracking software and automation can dramatically reduce those wait times.

Digitization makes information like package location, product quality and consumer trends accessible, often immediately so. Traditional methods can’t offer that, so they come with barriers to efficiency.

Digital Supply Chains Expand What’s Possible

The digital supply chain doesn’t just fix historical issues. It provides tools and resources that companies may not have even imagined a few years prior. With new technologies and processes emerging almost every day, the possibilities keep expanding.

Take smart glasses, for example, which can project visuals like picking orders or item locations in front of workers’ eyes. These hands-free technologies were once little more than science-fiction, and now they lead to 15% improvements in efficiency for companies that use them.

Technology like self-driving trucks seems futuristic now but will one day be standard. Already, 16% of logistics companies are investing in it. If supply chains wait too long to prepare for new digital technologies, they’ll quickly fall behind.

Modern Companies and Customers Expect Digital Services

If nothing else, the digital supply chain is significant because the rest of the world expects it and is becoming increasingly digitized. If supply chains don’t follow suit, they’ll become obsolete.

A 2017 McKinsey study found that supply chain digitization had the most potential for boosting revenue of any business area. Despite that potential, only 2% of surveyed companies focused on supply chains in their digitization efforts. That’s a tremendous oversight.

Today’s companies and consumers expect services that match their already digital lifestyle. For example, 79.3% of customers expect free two-day shipping, which is either impossible or impractical to offer without digitization. If supply chains want to be competitive, they too must embrace the digital. 

Supply Chain Digitization Is Becoming Standard

At this point, most supply chains have adopted digitization to some extent. As the years go on, the benchmark for digitization will rise higher. Digital supply chains won’t be an advantage in the future, but a necessity.

Supply chain digitization is inevitable. Embracing this trend can lead to success in this brand new world.

Thanks, Megan!

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