Digital Supply Chain
The first three industrial revolutions that completely changed the landscape of our modern society are steam engine, the era of science and mass production, and the inception of digital technology. This changed the way of our work, play and live. And now, the time of the fourth industrial revolution is powered by cloud technology, machine learning, mobile, the Internet of things (IoT), and artificial intelligence (AI).
For better enhancement of any business, a well-functioning supply chain is important. And it has more impact when a communication network between all members, trading-partners, and activities involved in a business process from the manufacturer to the end-user is transparent. And this is possible only when the traditional supply process has collaborated with the above emerging trends. this is nothing but the digital supply chain. Because of the dynamic growth of the sector, the primary goal of the digital supply chain is to set the appropriate vision to increase efficiency and to make the strategy to get higher profits to the organization.
The digital supply chain manages the complete series of activities that includes tactical, strategic planning of movement of raw materials from the supplier to end-user, also the financial, material and information flows are managed and controlled. Hence, in short, we can say the integration of business processes in a digitized way is nothing but the digital supply chain.
Why towards Digital?
Companies that implementing digital technologies into their supply chain can enhance their service levels immediately because digitization results to develop new business models and new strategies. For instance, forefront company such as Adidas offers greater product customization with a shorter response time.
Limitations of Supply chain
For better enhancement of any business, a well-functioning supply chain is important. The SCM solutions of the very first twenty decades had to face some greater challenges such as cost efficiency, disruption, and risk alleviation because those solutions are developed beyond the extent of their company limitations. Such companies require trading -partner transparency, visibility, and strategic planning to reduce interruptions.
As a result, unify information of scattered data across different processes, sources, and supply chain systems became the primary struggling factor of any organization. To achieve this condition, management and control over the complete supply chain should be improved. Hence it is an obvious rise of irrelevant risk exposure, interruptions, delays, and increased costs.
Digital supply chain as a future
Applying a digital supply chain within an organization, businesses are automatically at leverage because it has great benefits like- increases efficiency and reduces manual errors, simplifies transportation, reduces manufacturing risks involved in the supply chain.
Along with manages the investments in multiple areas such as resources and transportation. For example, the digital supply chain involves several emerging technologies like radio frequency identification (RFID), GPS tracking, smart labels, and barcodes. With the help of these tracking of material goods during transportation can be identified.
Integration of cloud technologies and web services, helps the digital supply chain to reduce data redundancy and to increase transparency between trading partners.
Transformation into a digital supply chain
Digitization brings about a Supply Chain, which will be more flexible, faster, more granular, more accurate, more efficient. For example, to read a physical book we have been placed an order then we were getting it. Nowadays, as soon as the payment is received, we get an immediately downloaded copy of the E-book. Hence, digitization helps to improve efficiency and cost reduction.
Steps to a Digital Supply Chain
- Understand the organization’s digital vision and current status of the supply chain.
At the very first step, make an appropriate decision by discussing with trading partners about the digital experience to be delivered to the end-users of the organization. and analyze the supply chain efficiency required to formulate the solutions for risks involved in the current trades. - Define the business model and strategy and integrate it with the digital vision.
At this point, you will have to develop an environment such that everyone related to the business will have a comfort zone to communicate about the common vision of the organization. You will have to aware of each-and-every change in the system so that after implementing that model within a system benefits will be shown to both sides. As a result, a well-designed ecosystem will be developed which can help to supply and services across the business entities to prevent layoff. This ecosystem also assures that implementation of the digital supply chain has trends such as artificial intelligence, analytics, mobile, and IoT which are capable to accomplish the requirements of the supplier, manufacturer, and business partners to build an appropriate business model.
Prioritize digital technology investments and have a sustainable, long-term approach because of today’s wider organizational priorities, supply chain leaders tend to focus upon building the future digital supply chain instead of boosting their today’s bottom line. They need to formulate the proactive solutions to maintain their system position in varying business and financial conditions in the future competition as a key factor of any successful business entities is sustainability.
Digital supply chain takes a closer look at the biggest trends that are set to shock the space in future
Supply chain management (SCM) has stepped into the new era of the digital economy. Digitalization technology completely makes the make-over of the supply chain. Artificial Intelligence, Blockchain, Internet of Things, Cloud Computing, and Big Data are the biggest players in the evolution of SCM.
4.1. Artificial Intelligence (AI)
By implementing digital technologies within the system, companies tend to focus on increasing efficiency. AI is the best proactive solution to cybersecurity, a primary concern for all businesses. AI integrates techniques such as machine and deep learning to develop an integrated system that can solve the real-time errors at speeds.
AI helps in making decisions related to supply chain, enhancing services, lowering cost, and improving speed. Some of the most promising applications are:
- Improve prediction system of demands to better match available supplying goods at a lower cost.
- Predict the transportation and manufacturing maintenance requirements
- Check the warehouse stock availability and initiate the re-order.
- Select secure carrier of the transaction and correct transportation mode
- Handle the possible risks and interruptions
4.2. Green Logistics
Though the digital supply chain has a promising impact on business growth, at the same time, maintenance of sustainability and environmental protection is important for any business. Hence, green supply chain management practices are adopting by many firms such as manufacturing, mining, and agriculture. The main motive of green SCM is maintaining sustainability and avoiding the environmental damages caused by supply chain practices. Meanwhile, existing SCM practices such as raw material production, distribution, and material waste harm the environment, also a source of pollution. Therefore, to adopt green practices such as green manufacturing, green packaging, and reverse logistics in overall SCM operations is required. Appling greener logistics within the organization, the company promises to protect the environment from damaging through transportation, procurement, inventory management, warehousing, distribution.
4.3. Big Data
Today’s Big Data has not any predefined format. It is mostly in an unorganized way because it is gathered or derived from any internet applications, from any customer’s membership programs and other resources. Therefore, we can say that Big Data includes large datasets having high velocity with continuously growing data acquisition. Hence, with predictive analytics, Supply chain firms have a better understanding of customers, demand requirements, business intelligence, when Big Data is correctly integrated within the organization.
4.4. Blockchain
Blockchain is a digital, distributed transaction ledger that is spread over multiple systems owned by multiple entities having the same data. Today’s blockchain plays an important role in the emerging trust economy, which is a core part of any supply chain strategy. Along with this, duplicated records across the network enables records to be public and regularly updated.
Therefore, today blockchains promise to build transparency in transactions, manage the records, and other data-driven practices. In-short, blockchain plays an important role in expediting SCM.
Autonomous vehicle technology was initially stepped-in with the blockchain for other non-supply chain applications. Today, it is being developed for managing transportation disruptions and improving the efficiency of over-the-road transport.
For example, companies like Tesla, Uber, Google, and Daimler are working to develop fully autonomous vehicles.
Conclusion
There’s a fourth industrial revolution is happening all over the business world. The number of organizations is taking part in a race of digital transformation of their supply chains. Implementing various digital technologies within the organization, companies expect tremendous improvement in the revenue, also in processes from automation to collaboration with the partners. To achieve this, supply chain leaders require to identify the opportunities within their organizations, as well as with their trading partners.
An important thing is an integration of IoT, blockchain, and AI systems offer the formulating solution upon data transparency, visibility in the supply chain, trust factor between the trading-partners, and quick evaluation of insights through AI systems. This is the start of this transition, but it is great to see a changing landscape of how supply chains could be reflected the ever-changing nature of digital by stepping-in the digital age and go with the flow.
E-commerce has changed the way we work, play, and live. Whatever the direction of the flow of digitization of the supply chain during 2020 and beyond, it is confirmed that companies in the supply chain ecosystem remain smart and work with a systematic approach to achieve sustainable success.