Why supply chain digitisation is no longer optional


Why supply chain digitisation is no longer optional

Today’s supply chains are undergoing a digital transformation into more data-driven, cloud-based processes.

In a data-driven world, navigating the challenges of today’s supply chains requires an unprecedented level of agility. This calls for supply chain tools that deliver network-wide trading partner connectivity to enable real-time visibility, demand and supply planning, and production scheduling insights. Fortunately, modern tools deployed in an organisation’s technology stack can digitally transform the supply chain, revealing new opportunities for innovation across the entire network.

At the same time, automation and advanced analytics delivered in a digital environment can synchronise production and distribution activities to match demand.

The network value for digitisation

Modern businesses run on data, and yet much of the data they need is stored outside their four walls. According to Ernst & Young, up to 80% of a large company’s supply chain data is likely in the hands of other companies and the volume of data is growing exponentially, and this can be overwhelming to even the most successful operations.

When large volumes of data are left unmanaged, locked up in silos, or spread across disparate systems and partners, data and data insights can become incredibly complex to manage, even more so when data quality is lacking or impossible to decipher. For a digital transformation of the supply chain to succeed, organisations require data strategies that will unify these complex datasets under one integrated system with the proper visibility for relevant stakeholders so the data can be properly stored, organised, analysed and made actionable.

Unfortunately, many organisations report that a lack of proper visibility prevents them from tackling the challenges that stand in the way of digital transformation.

Understanding the need for end-to-end visibility

Today, a digital network of real-time information must be available in order to see, control, and proactively manage inventory and shipments from the production source to their final destination. But a lot can happen in between, especially when so much of an organisation’s supply chain data resides with other companies and partners. Improving transparency, collaboration and visibility between stakeholders means accessing real-time information about all of the processes that occur before and during transit — including planning, sourcing, production, handling, transport and last-mile delivery.

Advanced, cloud-based, digitally transformed networks are connecting supply chain partners, events and devices, so stakeholders can respond quickly and decisively to disruptions, seize opportunities, and orchestrate and fulfil demand from anywhere along the supply chain. But getting to this point is a challenge. Organisations have long struggled with complex supply chain orchestration because they rely on disparate or legacy systems and disconnected, manual processes.

In a modern supply chain, these outdated ways of working can slow down the speed of communication, creating silos and bottlenecks, and straining supplier and trading partner relationships.

Aligning strategy with customer demand

Customers have always expected their products to be delivered on time and in full, and meeting this need builds customer trust. This has not changed. In a digitally enabled marketplace, however, the time to meet these expectations, generate trust and keep customers happy has accelerated to a point of almost total disruption. Though online retailers can often absorb losses in their logistics costs, many organisations cannot say the same. The supply chain must meet a holistic balance between all relevant stakeholders to create and sell quality products, ensure profits, maintain sustainability and keep customer satisfaction levels high.

When new technologies and customer expectations disrupt industries — changing consumer markets for both B2B and B2C operations — supply chains often bear the brunt of the impact. Traditional supply chains must evolve alongside new technologies to meet the pressures demanded by more complex operations. Organisations must think in reverse — instead of forcing their traditional supply chains to keep up in a changing playing field, they should focus on aligning their supply chains with modern tools and business models, so they can deliver to customers better and more efficiently.

Making sustainability initiatives matter

Producing affordable, ethical and environmentally conscious goods or supplies has never been easy. As supply chains face more regulatory scrutiny — as well as evolving regulations across countries and borders — a digitally enabled and networked supply chain can be better positioned to make use of sustainable materials and produce less waste, while also sourcing these materials ethically. That’s not to mention creating working environments, such as in warehouses or logistics operations, which put human welfare at top of mind.

There are three ways to reduce the impact of these challenges: Locate critical issues across the whole supply chain; link supply-chain sustainability goals to the global sustainability agenda; and assist suppliers with managing impact — and make sure they follow through. Technology is critical to achieving these goals. Modern supply chain tools can be used to analyse and understand production and distribution activities to match them with changing customer expectations as to where and how goods are produced. This allows the organisation to better understand what issues the supply chain faces — and where they’re happening.

Supply chain visibility increases the opportunities for new programs to succeed, as well as the ability to view and understand working conditions to eliminate existing and potential partners if they cannot meet ethical standards. This is the objective of the UN Sustainable Development Goals that were established to help countries achieve sustainable development goals (SDGs) by using integrated solutions that can ‘define development of the future’ — and mobilise collective intelligence.

In supply chain terms, it’s a matter of visibility and sharing it with all relevant stakeholders to create more collaborative and transparent processes.

Building a new foundation for change

Merely adopting modern, cloud-based solutions isn’t enough to modernise a supply chain and create a more valuable digital network. Processes and systems must adapt as the solution (or solutions) streamlines old ways of working. Manual invoicing, spreadsheets and traditional control towers utilising outdated communication processes all reinforce siloes throughout the network. If achieving end-to-end visibility is the goal, these silos must be broken down. Digital processes can automate these activities, while also making them more transparent, improving visibility and enabling stakeholders to manage the operation of their supply chain in real time.

Data management

Traditionally, managing large, complex datasets, while ensuring quality, was highly manual. It required having the right people with the right skill sets to analyse data and create actionable insights to inform proactive decision-making. Modern business intelligence (BI) and data analytics tools have become much more user-friendly in recent years, democratising data and allowing every user — or at least every relevant user — access to the data they need, when they need it, so they can make timely decisions. These data management tools are cloud-based and device-agnostic, which means reports can be generated on the go for users on mobile devices in the warehouse, out in the fleet or back at the home office on desktop computers, without having to rely on IT or a dedicated analyst to run the reports. However, efficient date management begins at the source, which must guarantee better quality of data, provide the ability to filter out the noise from important data and facilitate actionable outcomes.

Warehousing

Warehouse operations have changed, which means warehouse management must change as well. Capacity challenges with warehouse space utilisation, increases in SKU counts, operational challenges in the e-commerce and omnichannel realms, along with rising fulfilment costs and labour shortages, are only some of the challenges modern warehouse operations encounter. Global e-commerce retail sales have also consistently grown by 17 to 20% year over year, and capacity and fulfilment will only become more challenging in the years to come. This is where advanced warehouse management solutions (WMS) come into play.

Using a WMS is a fundamental building block for the adoption of many other technologies, and yet many warehouses do not use such a system. From picking and packing to utilising inventory space and optimising labour needs, the right WMS can orchestrate across a disparate network of facilities, synchronising B2B and B2C operations and dynamically adapting to constant change, which legacy systems simply cannot do. This approach to warehouse management requires advanced warehousing capabilities with highly configurable rules, built-in labour, task and inventory management, and 3D visualisation, which a modern WMS can provide.

Logistics

Moving the flow of goods from source, warehouse, distribution network and end customer can’t be done with old-school logistics systems in a competitive marketplace where customers have come to expect next-day fulfilment. At the same time, the necessary skill sets to deliver on these operations are becoming hard to find. Adding to this is globalisation and the speed at which consumers can access and purchase products in omnichannel marketplaces.

Speed, accuracy and costs must be aligned to meet customer demand. That requires logistics solutions that can provide complete, multimodal, global visibility to stay on top of capacity uncertainty, as well as rate fluctuations and volatility. Organisations must be able to leverage WMS tools and processes to think and see beyond the four walls of their warehouse operations in order to improve performance. Warehouses and logistics centres can no longer operate in the silos that prevent end-to-end optimisation, but they must be integrated into the supply chain network for enhanced inventory visibility. By seeing what’s available to ship at the factory, what’s in transit and what’s at the DC, scenarios can be tested to best align supply with demand, ensuring that shelves remain stocked and orders are fulfilled efficiently and cost-effectively.

Forecasting and demand planning

Keeping up with forecasting and demand planning challenges requires agile solutions that can anticipate and prepare for seasonality issues, promotions, stockouts and more. These efforts can no longer be managed with manual, disparate processes. Advancements in periodic item forecasting and intelligent baseline forecasting have helped to reduce the manual planning effort and smooth the impact of one-off events and sporadic demand. Meanwhile, periodic item forecasting provides a direct benefit to the user by factoring seasonal changes to decrease planning time and provide more precise statistical forecasts.

With a secure, cloud-based solution, users from every point along a supply chain can digitally share and align on plans, forecasts and orders to obtain early warnings of potential issues and help to assure supply. This can also improve logistics throughput, beginning at origin, with solutions that automate supplier packing, labelling and shipping processes. That way users can generate advance shipping notices to streamline receiving at distribution centres and warehouses to ensure packing and labelling accuracy to enable direct ship and cross-dock programs.

Communicating with the entire supply chain

Modern supply chain systems are built with the understanding that they will need to connect and integrate with other systems. Legacy systems and manual processes simply are not. A supply chain solution that provides this full integration across systems and partners can create the new foundational visibility and end-to-end optimisation necessary to thrive in a modern, digitally enabled marketplace.

How technology helps optimise supply chain processes

True supply chain end-to-end optimisation requires global, highly available, highly responsible application services to manage the movement of materials across a digital network. These cloud-based, digitally-enabled solutions can be the foundation to creating a global network of supply chain partners. But to support collaboration and hand-offs between trading partners, organisations must be able to work with a wide range of systems, such as enterprise resource planning (ERP) software, transportation management solutions (TMS), warehouse management solutions (WMS) and supply chain planning solutions (SCP). Minimising information latency is crucial for creating true end-to-end visibility so stakeholders can make optimal decisions in real time, based on trusted data that can be accessed, updated and analysed as products move from order, to manufacturer, to shipment, to warehouse, to distribution centre or shelves, to customers.

These applications will need to support a wide range of interaction modes, including mobile devices, AI and machine learning-enabled digital assistants (for voice and process automation), as well as warehouse handhelds and other IoT-enabled devices for shipping and receiving, fleet tracking, container tracking and more.

Final takeaway

A digitally transformed supply chain is one that has not only adopted modern technology tools but is also data-driven — leveraging predictive and prescriptive analytics for optimal decision-making. Organisations must begin their digitalisation strategy with tools that can intelligently sense and respond to changing supply chain needs in competitive marketplaces, while also integrating data, processes, systems and visibility across sourcing, warehouse and distribution operations — from end to end. This requires agile solutions that can deliver enhanced performance in markets where customer demand is continually evolving.

End-to-end supply chain optimisation does not end with adopting the right digital technology solutions for supply chain processes. Needs will change over time. Instead, it begins when the networked enterprise integrates supply chain partners together.

Image: ©stock.adobe.com/au/Unique Vision

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