The rapid growth of technology has led to advances in the supply chain and, in particular, the digital supply chain. As the century unfolds, we are seeing a more joined-up supply chain, with efficient, robust, and technologically advanced systems integration.

Here, we explore the benefits that digitalization, bolstered by smart usage of big data and data analytics, is bringing to the supply chain in terms of increased profitability and reduced waste.

The supply chain exists to streamline the processes involved in procurement and as a way of increasing efficiencies business-wide. Not only will efficiency remain at the heart of the supply chain, but with digitalisation enabling high levels of connectivity, we’ll see greater transparency and collaboration across different departments.

In addition to ensuring the security of valuable information assets, companies also have the challenge of achieving an appropriate level of sustainability, while pioneering and advancing the digital supply chain overall.

• How does Globalization Affect the Supply Chain?
• What is Digital Transformation in Supply Chain?
• What is Supply Chain Globalization?
• Why is it Important to Control the Supply Chain?
• How can Supply Chain be improved?
• What is the role of Supply Chain?
• What is The Impact of Globalization on Supply Chain?
• How The Digital Economy is Impacting The Supply Chain
• What Does Digitization do For The Supply Chain?
• What Are The Major Factors Influencing Supply Chain?
• Impact of Globalization on Supply Chain Management
• Impact of Digital Tools in Supply Chain
• Benefits of Digital Supply Chain Transformation
• Digital Transformation in Supply Chain
• Digitalization in The Value Chain Opportunities And Threats
• Impact of Digitalization on Supply Chain Management
• Supply Chain Digital Transformation
• What Are The Advantages of Supply Chain Globalization?
• What Are The Disadvantages of Globalizing a Company’s Supply Chain?
• How Digital Transformation is Impacting The Supply Chain in Manufacturing
• How do You Digitize a Supply Chain?
• Why is Amazon a Supply Chain Leader?
• How do Companies Integrate Supply Chain?
• What Are The Five Basic Components of Supply Chain Management?
• How Has Digital Technology Impacted The Supply Chain?
• How The Digital Economy is Impacting The Supply Chain
• How Digitization Makes The Supply Chain More Efficient
• Why is Digital Supply Chain Important?
• What is Digital Supply Chain
• 5 Key Trends in Supply Chain Digitization
• Impact of Digitalization in Procurement
• Digitalization in Supply Chain Management And Logistics

How does Globalization Affect the Supply Chain?

Globalization has dramatically changed how manufacturers operate, offering an opportunity to reach new customers in new markets while at the same time exposing firms to greater competition. Meanwhile, raw materials and supplier relationships must now be managed on a global scale.

Read Also: How to Invest in Technology Innovation

Just as there are benefits and costs of globalization, there are similar pros and cons of a global supply chain. In particular, companies need to manage the related risks.

With the onset of globalization, managing supply chains has become more complex and business-critical than ever before. The recent disasters in Japan and Thailand have highlighted the need for effective risk management along the supply chain for manufacturers to minimize disruptions and resume normal business conditions quickly in the event of an outage.

When a company’s operations are under its own control, there are fewer moving parts. As a result, the company has greater access to information. In this type of scenario, it is much easier to identify, quantify, prioritize and mitigate risk for better decision making.

In an environment that has become increasingly global in nature, there are more parties involved and less information available at any point in the production process. This makes it much harder to identify, quantify, prioritize and mitigate risk for better decision making.

There are three major factors that impact supply chain risk: Increasing supply chain complexity, decreasing access to information and greater need for higher quality faster, all for a lower cost. The ability to anticipate and address risk effectively has been severely handicapped by complexity.

Now that manufacturers are outsourcing more work to suppliers across the globe and are managing second and third-tier suppliers, it has become difficult to track, trace, and monitor production.

Increasing complexity

Supply chain complexity continues to increase in a number of ways. Companies are outsourcing more aspects of their business to globally distributed supplier networks. The manufacturing process has become infinitely more complex than a simple assembly line.

Manufactures today need to manage multiple product lines, which are each assembled from parts coming from different suppliers. And, those parts may require sub-assembly by other suppliers. Confusing already, isn’t it?

In addition to all of this, manufacturers need to manage logistics, knowing where and when products need to be to meet demand across the globe.

The large numbers of geographic markets where products are now being sold continues to increase. With this growth has come an increasing volume of regulations that must now also be complied with, especially if you manufacture life science or aerospace products.

Complex supply chain partnerships simply can’t be avoided, offering manufacturers an efficient, cost effective strategy to access new markets to develop and deliver products in otherwise untapped regions.

Lack of data

As companies continue to expand globally, operational decisions will be made regardless of whether all the right information is available. Unfortunately, if the proper communication and collaboration systems aren’t implemented, a lack of data correlates directly to an increase in risk. When organizations don’t have the right information to make an informed decision, a higher level of risk exists that an undesirable outcome will occur.

So, what does this all mean when something goes wrong or there is a supply chain disruption?

Because of globalization, it means that there is an increased likelihood that companies will be exposed to and impacted by more adverse events, such as natural disasters, political and economic instability, supply disruptions, economic volatility and more. If you operate in more markets with more partners, the odds are you will be more likely to face one of these disruptions.

Let’s look at the Thailand floods as an example. Disk-drive companies were hit hard after key suppliers were knocked out of commission. The companies needed to reroute work to other suppliers not affected by the floods. Without the correct, real-time data of when, where and how much supplies were affected, it is difficult to quickly regain stability.

These events are hard to manage. Manufacturers need to find a way to succinctly manage multiple suppliers across a number of regions.

As a result, the value of supply chain visibility has increased significantly. This capability helps to significantly minimize risk of loss, order delays and reduced quality. Manufacturers that take a wider, more holistic perspective across operations can better manage complex supply chains as well the aspect of inventory management.

By implementing technologies that can increase visibility into the supply chain, manufacturers can more easily collaborate and communicate with suppliers. Not only will processes instantly improve, but the ability to prevent (or at least minimize) disruptions will help to increase the bottom line.

Need for greater quality, faster, cheaper

With new markets for customers comes new competitors. When you are competing on a global scale for supplier partners, the sky is literally the limit. Anyone can now compete, so demands can become elevated, especially if a big OEM order is at stake.

Competitors may literally be “betting the company” to get a specific order, so could be very aggressive when bidding. This situation occurs regularly, such that it has now become a big challenge and new source of risk to global manufacturers. How can you be sure that your “low cost bidder” really has the capability to deliver your complex supplier sub-assemblies on time and to specifications?

Further, how well will they perform if you need multiple design changes or other modifications across your global organization? Will they still be able to provide you with the necessary traceability and operational intelligence so you can stay lean and remain a low-cost provider?

In the end, a global marketplace has been both a blessing and a curse, to an extent. While new markets have opened up, greater risk now exists, which could potentially impact the survivability of your company.

And, as some of these risks could even compound with each other, it is now critical for manufacturers to increase their visibility into not only their own operations but those of their suppliers. With this much risk in play, any system that can help mitigate excess risk is well worth the investment.

What is Digital Transformation in Supply Chain?

For to get the full understanding of what digital transformation is with regard to supply chain, we will now consider 20 points that will shed more light on the topic.

1. Companies mean different things by the term “digital supply chain transformation.” For some companies, it means replacing manual, paper, and pencil processes with digital data and process support. For some companies, it means using autonomous mobile robots and other forms of robotics in their supply chain.

For some, it means applying machine learning and artificial intelligence (AI) to supply chain Big Data. And for some, it means getting better digital data to support an end to end supply chain involving multiple tiers of a company’s supply chain.

2. If a company is focused on digital projects designed to substitute manual processes that exist inside the four walls of the enterprise, that company’s digital and supply chain efforts are immature. For example, putting a warehouse management system in to replace paper and pencil data in the warehouse would be a limited form of digitization. It is something companies should have done years ago.

3. However, if jumping on the digital bandwagon allows supply chain executives to get money for warehouse management systems or similar internally facing supply chain solutions, I’m all in favor of it. Supply chain technologies typically have a payback of less than two years and are critical building blocks to building robust capabilities.

4. Filling in the information black holes that exist in most companies end to end supply chains would be a digital transformation project that is operating at a much higher level of maturity. This means connecting with suppliers, customers, and key supply chain partners up and down multiple tiers of a company’s extended supply chain.

5. Whether a company if focused on robotics, filling information data gaps inside the four walls of their enterprise, or getting better digital data to supply the end-to-end supply chain, AI and machine learning will have a role to play.

6. For an extended supply chain, digitally connecting to trading partners is critical. A new market known as Supply Chain Collaboration Networks (SCCN) has emerged to facilitate this. This market garners over $3 billion in annual revenues and is growing at a double-digit rate according to market research from the ARC Advisory Group.

7. A supply chain collaboration network is a collaborative solution for supply chain processes built on a public cloud, many-to-many architecture that supports a community of trading partners. Many-to-many refers to both many participants in a network able to collaborate with many other partners, and many participants being able to access many, many sources of normalized event data critical to supply chain operations.

8. How could a brand-new market already have over $3 billion in revenues? Because it is not new at all. Rather if reflects the growing importance leading industry analyst firms attach to this solution set because of the increased focus of many companies on digitization.

Gartner calls this market Multi-enterprise Supply Chain Business Networks, IDC calls it Multi-enterprise Supply Chain Commerce Networks, and ARC uses the more concise term Supply Chain Collaboration Networks. In short, it is fairer to say this is a newly named market than a brand new market.

9. The collaboration network market is comprised of companies with EDI VAN solutions – Descartes, OpenText, TrueCommerce, IBM, etc.; solutions that use to be labeled industry marketplaces – Elemica, InforNexus, E2open, etc; and supply chain applications build on a public cloud many-to-many architecture.

The many-to-many application solutions are particularly common in the transportation management and execution space where Descartes, BluJay Solutions, E2open, Transplace, C.H. Robinson and FourKites all offer solutions.

10. Networks offer distinctive advantages including communication and partner management, benchmarking analytics that leverages the network data, and the ability to much more easily access and leverage supply chain third-party data (particularly downstream and risk data) stored in the hub. Networks can also serve as a collaborative system of record for cross-party transactions.

11. There can be “network effects” associated with the SCCN market that work to make the leading suppliers increasingly more dominant over time. Once connected to a leading network, trading partners can ex-change electronic supply chain information with each other. The value of the network increases with the number of trading partners connected to it.

The addition of each new company enables that company to communicate with existing customers on the network. For networks with the Supply application, it permits existing users of the network to do business with the new customer on the network.

12. The message formats support supply chain processes that include Plan, Source, Make, Deliver, Returns, Supply Chain Risks, and Supply Chain Finance. In some cases, true supply chain applications ride on top of the platform to support Plan, Source, Make, etc. processes. ARC’s market research shows the Deliver and Source categories to be by far the biggest messaging/application categories.

13. Nevertheless, there are some interesting niche collaboration network solutions. The value of the network is industry and application-specific. So, it is possible for smaller suppliers focused on an underserved industry to prosper in their specific niche.

14. Connectivity does not always need to be through the network. OpenText and IBM tout their ability to connect their customers to their network to facilitate supply chain collaboration.

But they also point out that there may be trading partners that a company may want to connect to their supply chain control tower directly, not through the network. Both suppliers offer a variety of integration tools. This is referred to as a “hybrid” strategy for supply chain collaboration.

15. The industry analyst firms that do supplier selection guides, tend to position collaboration network suppliers with a broad set of supply chain applications and large networks as leaders.

But providers of robust Deliver and Plan applications can provide a good payback for their customers based on the high ROI associated with transportation management and supply chain planning applications. The ROI of these applications is marginally improved through connection to a network, but good even if not connected.  

16. A supply chain control tower would also represent a high level of digital maturity. Control tower is a term that implies real-time visibility. But visibility to what? Shipments? The integrated business planning process? Finished goods inventory? The status of work on the factory floor? Supply chain risks? Ideally, it is all of these.

17. Further, through connectivity to real-time risk and ETA data, and the ability to do continuous planning to mitigate the effects of unexpected events, a collaboration network platform supports a holistic conception of what a control tower should be. Supply chain risk and planning applications are the most important SCCN applications surrounding robust control towers.

18. Supply chain risk solutions are based on an end to end map of a customer’s supply chain, their suppliers (maybe even second or third tier suppliers), how the goods flow from specific factories and warehouses, through specific ports, and so forth into a company’s supply chain. 

These solutions monitor hundreds of thousands of news and social media sites for terms like factory fire, port explosion, and many, many related terms, in order to perform very early warnings of a problem in an extended supply chain. Supply chain risk data can also be based on real-time data on ETAs of important inbound or outbound shipments.

19. Being able to tap into the supply chain plans provides a much richer predictive capability than control towers that only use execution data. Supply chain planning done around real-time events is known as continuous planning.

Continuous planning requires the ability to understand what sorts of unexpected events matter and which don’t. It also means planning must be done at a very granular level. Forms of data aggregation in planning require that assumptions are used. This is far from optimal.

20. In addition to continuous planning, networks can support orchestration. If you look at the definition of orchestrated, you will see the word “arrangement.” One furniture retailer ARC wrote about that is using a collaboration network solution from Infor Nexus had a global supply chain.

They sourced furniture globally and delivered the furniture to customers’ homes in the US. Tight orchestration – the intricate sequencing of work done by their 70 plus import suppliers shipping from 90 or overseas factories, 25 carriers, 7 logistics service providers, and themselves – allowed them to flow product through their warehouses with opportunities to optimize inventory.

When you are doing intricate supply chain planning outside the boundaries of an enterprise, that planning is better described as orchestration than optimization.

What is Supply Chain Globalization?

Supply chains are the networks of buyers, sellers, intermediaries, and vendors involved in the production and distribution of goods and services. The interlinking transport and communication that facilitates the trade and commerce is also part of the supply chain.

The globalization of the supply chains means that goods produced in one part of the globe can be transported to another part of the globe and indeed, each component of the goods thus produced can be made in different countries. For instance, if we take the Apple iPhones, different parts are made in different countries including China, and the finished product is shipped to the United States and Europe where it is sold.

Some Examples of Disruption of Supply Chains

The implications of the globalization of supply chains is that in case of a breakdown in one part of the globe of the supply chain, the whole network is impacted leading to delays and disruptions in the transport and movement of goods. This means that any disturbance in one country in the supply chain impacts the entire supply chain leading to chaos and confusion.

This is definitely one of the negative impacts that the globalization of the supply chains has for manufacturers in the global economy. For instance, because of the Fukushima Earthquake in Japan, the delivery of components in the electronics industry was impacted leading to all round disruptions and delays in the supply chain.

Similarly, in recent years, disturbances in India have meant that the supply chains for services have been disrupted which has impacted the BPO and the IT sector to a great extent. The remedial measures for such a negative impact would be to have backup suppliers and have backup sites for the suppliers themselves so that they do not let the buyers down because of any disruptions.

Globalization has many advantages and disadvantages. In a similar manner to globalization creating prosperity, the fact remains that globalization of the supply chains creates problems as well. Hence, the implications for this are that each of the party in the supply chain takes precautions and ensures that the network is not disrupted in case of any disruptions to the place of operations or in the transport and communication links.

We cannot rule out globalization completely and hence, we must take appropriate measures to safeguard against the perils of the process. This is where contingency planning and business continuity planning come into the picture and this is where the capabilities of the stakeholders determine the success or otherwise of the supply chain.

Why is it Important to Control the Supply Chain?

The supply chain refers to the resources needed to deliver goods and services to a consumer. Not surprisingly, the importance of supply chain management is an integral part of most businesses and is essential to company success and customer satisfaction, according to the Council of Supply Chain Management Professionals.

Indeed, if you operate or own just about any kind of business, you cannot over-stress the importance of supply chain strategy, says Megan Batchelor, executive editor at “The CEOWorld Magazine.”

In an April 17, 2018, article, aptly named “Supply Chain and Its Importance When It Comes to Cost Management.” Batchelor defines supply chain management by noting that a business’s supply chain is the system that the firm employs to get its product to consumers, from initial production to delivering the final product.

Supply chain management helps lower the cost of doing business, says Batchelor, adding that it provides a way for a business to form a competitive advantage without needing to lower its prices while allowing it to deliver orders more quickly to customers. The Council of Supply Chain Management Professionals says that supply chain management is important for a number of specific reasons because it:

• Boosts customer service: Customers expect products to be delivered quickly and on time. The importance of supply chain strategy is that this process increases customer satisfaction.
• Reduces operating costs: Supply chain management allows a business to decrease the cost of purchasing and production.
• Improves financial position: “Firms value supply chain managers because they help control and reduce supply chain costs,” says the council, adding that this can result in dramatic increases in a firm’s profits. 

“For instance,” says the council, “U.S. consumers eat 2.7 billion packages of cereal annually, so decreasing U.S. cereal supply chain costs just one cent per cereal box would result in $13 million dollars saved industry-wide as 13 billion boxes of cereal flowed through the improved supply chain over a five year period.”

How can Supply Chain be improved?

When business people talk about supplier management, they refer to the systems, technology, and procedures that connect a supplier to a customer. An efficient and performing supply chain helps a business save money, thanks to faster client deliveries, shorter factory processing times, and better inventory management. This, in turns, reduces spoilage and decay. To increase your company’s performance, pay attention to the following key elements.

1. Improve your distribution network

Your company’s distribution network is the operational hinge you should build around. Distribution affects everything from delivery tracking to sales strategy. The main goal is to improve your distribution network, which you can do through a holistic approach or a cluster view.

In a holistic approach, you review essential parts in your distribution network and try to figure out how the parts work in sync. For example, look at your purchasing software and see how it works with your delivery system. Does it communicate well with production foreman or warehouse managers?

If it’s not as efficient as you’d like it to be, you can identify where changes need to be made. Unlike a holistic approach, a cluster view groups charts, graphs, and other details together to help you keep an eye on the process for a specific function in the company.

2. Devise a distribution strategy

A distribution strategy is integral to an effective framework for supplier management. It allows a business to have a better idea of what it takes to shorten delivery times, reduce goods decay, and improve customer service. Supplier management and the broader field of supplier chain management help a company plant the seeds of long-term financial stability. 

Supply chain management experts David L. Anderson, Frank F. Britt, and Donavon J. Favre indicate that formulating an effective distribution blueprint helps a business achieve profitable growth, especially when corporate managers think strategically about revenue, cost, and asset utilization.

When formulating your distribution strategy, keep an eye on things like warehouses, cross-docks, production facilities, and customers, along with the location, number, and network missions of suppliers. Set an overall goal for your distribution and implement tactics that are in sync with your overall strategy.

For example, if you want your company to receive an industry award for timely delivery, figure out all key stakeholders (delivery teams, production supervisors, etc.) to partner with and essential processes to improve.

3. Monitor cash flows

Cash flow monitoring is a fundamental tool that various organizations use to improve supplier management. It is important to track payment terms and conditions with several groups within the supply chain, forging an efficient plan to understand the technology used for monetary transfers.

Said simply, companies must clearly understand how to pay suppliers and logistics companies, how often to pay them, payment tools, and any expenses that get passed to customers.

Payment technology, in the context of supplier management, refers to equipment used to pay vendor bills, like point-of-sale machinery, the electronic pad the warehouse staff signs when receiving goods and shipment tracking software.

4. Establish information conduits

Information conduits are channels businesses use to share important data, like tracking information, with key partners. To establish proper information conduits, make sure data is distributed promptly and properly to pertinent recipients. For example, if your factory foreman needs more materials, this information should be conveyed to purchasing managers as well as store room supervisors and delivery personnel.

5. Track your inventory

By utilizing tracking software or internal spreadsheets you design, you can monitor the whereabouts of your inventory. This will help you know how much of your product you have, how much you need, as well as if anything happens to it (damage, decay, theft, etc).

It is important your staff knows how this system works so they can effectively log information, as well as participate in routine inventory assessments. Other things to consider are the location and quantity of inventory, including finished goods, work-in-progress items, and raw materials.

Supplier management plays an integral role in your company’s overall commercial strategy. You can improve supply chain performance by keeping tabs on what business partners do, ensuring everyone collaborates effectively, and tracking your company’s assets.

What is the role of Supply Chain?

Supply chain management maintains the balance between the demand and supply and involves activities right from procurement of materials and converting them into finished goods to ensuring delivery at the right time to reach the end-consumer. 

Hence, supply chain management is the lifeline of an organization. It needs to be really efficient to keep the operations running like a well-oiled machine. A streamlined supply chain management chain can enhance customer relationships, lower down operational costs.

What are the main functions of supply chain management?

The Role of global supply chain management primarily comprises five functions mentioned below:

1. Purchasing

This is the first function of supply chain management. It pertains to procuring raw materials and other resources that are required to manufacture the goods. It requires coordination with suppliers to deliver the materials without any delays.

2. Operations

The operation team engages in demand planning and forecasting. Before giving raw material purchase order, the organization has to anticipate the possible market demand and number of units it needs to produce. Accordingly, it further sets the ball rolling for inventory management, production and shipping.

If the demand is over anticipated, then it could result in excess inventory cost. If the demand is under anticipated, the organization wouldn’t be able to meet customer demand, thereby leading to revenue loss. So, operations function plays a critical role in supply chain management.

3. Logistics

This function of supply chain management requires immense coordination. The manufacturing of products has commenced. It needs space for storage until it is shipped for delivery. This calls for making local warehouse arrangements.

Let’s say; the products are to be delivered outside the city, state or country limits. This brings transportation in the loop. There will also be a need for outstation warehouses. Logistics ensures that products reach the end-point delivery without any glitches.

4. Resource Management

Any production consumes raw materials, technology, time and labour. However, all the processes need to be efficient and effective. This phase is taken care of by the resource management function team. It decides the allocation of resources in the right activity at the right time to optimize the production at reduced costs.

5. Information Workflow

Information sharing and distribution is what really keeps all other functions of supply chain management on track. If the information workflow and communication are poor, it could break apart the entire chain and lead to mismanagement.

What is The Impact of Globalization on Supply Chain?

Globalization is, for better or worse, a good thing for your supply chain, your business and the world at large. It’s true, globalization poses substantial risk to your business but only if you do not take steps to insulate your supply chain from the worst of its effects. Because the benefits that globalization will bring to your business far outweigh the risk. Here are some of them.

1. Reach new customers in new markets around the world – Globalization simplifies communication between business owners, vendors, and customers and therefore makes it easier to reach new markets and stay connected with customers no matter where they are in the globe.
2. Expand sourcing opportunities – Globalization makes it possible for businesses to secure a diverse selection of workers, materials, and products from regions of the world that were previously out of reach.
3. Offer a larger selection of goods and services – Globalization increases your sourcing opportunities which means it also increases the range of products and services that you can provide for your customer.
4. Grow and expand the scope of their business – Globalization makes communication near-effortless, which make it easier for markets to expand and diversify, thus providing more opportunities for business owners to capitalize.
5. Save money and increase profits – more options to source from and to capitalize on means more chances to save on spending and a greater chance of profit.

How The Digital Economy is Impacting The Supply Chain

The digital economy refers to an economy that is based on digital computing technologies where business is conducted through online and mobile devices using the internet-of-things (IoT). In the digital economy, value is created through the technology-enabled links between people, machines, channels and organizations.

All this is giving rise to awareness and willingness to apply analytics to everything, not just to strategic initiatives, but to day-to-day tasks. Advanced analytics aided by machine learning algorithms will automate the repetitive work demand planners do regarding managing data and information as well as uncovering key insights allowing them to work smarter and more efficiently.

As such, digitalization of the supply chain will require companies to manage product replenishment based on actual consumption rather than transactions.

What Does Digitization do For The Supply Chain?

Digitizing the supply chain is the movement toward a completely integrated sequence of planning and production solutions that work in tandem to create a more visible supply stream across each touch point of the value chain.

The end result is a more responsive, agile, and transparent supply network that can readily adapt to a host of industry-wide unknown variables such as inventory shortages or overages, modifications to orders, and availability of resources.

Through this integration and digital transformation, companies can experience lower production and operational costs, accelerated lead times, and enhanced reporting and data analysis capabilities which can fuel better planning and production programs.

To achieve these goals, companies must leverage a pervasive integration strategy that eliminates multi-suite applications and incorporates planning and reporting solutions into a single module that’s accessible and shareable across a company’s value chain.

The value proposition of a digitized supply chain in large part resides in the breaking down of cross-organization silos and collaboration barriers — two key obstacles manufacturing companies must overcome when dealing with a multitude of partners, suppliers, and production hubs or facilities in disparate parts of the world.

In addition, the rise of Big Data, cloud computing, and other data storage and management platforms, means companies will have greater data gathering, reporting, and analytics capabilities. This means companies can review and share large amounts of data in real-time to create better demand planning strategies.

What Are The Major Factors Influencing Supply Chain?

The supply chain industry has been significantly altered by globalization, the new normal of a world facing a pandemic, and the emergence of new technologies that provide ways to improve processes. While developments are still unraveling quickly, there are numerous keys to supply chain optimization that remain relatively constant.

1. Important Supply Chain Metrics

Organizations need to consider how varying tax codes will impact operations, so business decision-makers should consider utilizing supply chain management systems and monitoring numerous metrics.

Consider these measurements for tracking materials to generate better supply chain analytics:

• Inventory
• Percentage of electronic data capture (AIDC)
• Granular metrics for high-cost supplies
• Costs of procedures
• Standard product identifiers

Tracking each of these KPIs becomes easier with a mobile data collection solution. Barcoding and automatic data capture ensure that material movements are collected perfectly and in real time for your ERP.

2. Inventory and Electronic Data Capture Percentage

In regard to effective inventory management, it is crucial to have inventory tracking methods for perishable inventory, such as those used by hospitals or food companies. Expiring products can be problematic in terms of wasted money and effort. These costs fall primarily on the provider.

Significant money can be saved with a real-time inventory solution in place.

If data is not captured with digital automation (e.g. barcode scanning) and standardized, then you aren’t collecting the high quality data necessary for quality decision making. These insights can be as simple as understanding what products are being purchased in what quantity from which suppliers.

Accurate data can also be leveraged for more agile decisions, such as re-allocating work to staff due to a sudden change in customer demand.

3. High-Dollar Products and Procedural Costs

While monitoring supply chain metrics are important to effectively control overhead, granular data can be useful for oversight of high-cost materials. An example of this would be tracking supply cost per case of goods that are used for a specific manufacturing order for a certain customer. Or semiconductors that require tracking by expiration dates and lot numbers.

Automated data collection is especially useful in this respect. The visibility gained by instant material data can inform continuous improvement strategies, as well as financial and supply chain integration.

Mobile barcoding and data collection can ensure big-ticket items, like equipment and expensive parts, can be found anywhere, anytime. Real-time asset tracking software can easily integrate into an ERP mobility solution.

4. Industry Standards

As always, one of the most valuable metrics for material handlers in regulated industries is the tracking of unique product identifiers. Not just SKUs, but lot and serial numbers, among others. The ability to monitor these as components or ingredients are used in the manufacturing process is crucial for regulatory compliance.

Doing it by hand is next to impossible. Traceability software automates this process, shielding your organization from undue hardship during an audit or recall. The investment quickly pays for itself – and more.

Benefits include better usage tracking and recall preparedness. Digital automation of the data collection process creates the possibility for truly effective spend analysis, supply chain optimization and comparative research.

However, the value of this data can only be realized if the data is correct to begin with.

5. Human Supply Chains

Now, more than ever, supply chain companies are realizing a pressing need for investment in human-centric technologies. Essential workforces can only do so much on their own without organizational support. People-augmenting technologies like mobile software can lighten the burden for over-stressed frontline staff, decreasing turnover and absenteeism.

But the benefits don’t end there. Extending your ERP with mobility increases productivity per worker while also reducing costs and increasing accuracy and throughput. Mobile can be used to enhance sustainable social distancing as well. It is expected that more distribution and manufacturing companies will realize the value of mobile solutions as a new form of PPE to protect employees.

Impact of Globalization on Supply Chain Management

Global and local organizations alike must be more prepared than ever for any event, anywhere in the world, that could force them to either find a new supply source or reroute their supply chain. To aid their ability to react, many companies are turning to complex new technologies that augment best practices.

Others are exploring new, increasingly global sourcing options. In addition, every organization needs to determine its risk tolerance in the following areas and implement the right supply chain management framework for its operations:

Product costs vs. supply dependency: Switching to a low-cost supplier might mean being dependent. At the same time, mid-market organizations may not have the purchasing power advantage and global sourcing opportunities that larger competitors have and may need to go with the lowest product cost just to compete.

Intellectual property (IP): Theft is on the rise, and standards (and enforcement) vary greatly by country. Large organizations may have the “pick of the litter” in terms of offshore manufacturers. Mid-sized manufacturers may not be so lucky.

Offshoring vs. outsourcing vs. nearshoring vs. insourcing: Before determining the right business model, consider all relevant factors—wages, transportation costs, shipping times, training, workforce output, time to hire, quality, traceability, sustainability, local business practices, government policies and restrictions, etc. And once you choose a business model, continue to reevaluate it against your risk tolerance and business objectives.

Technology: New technologies emerge every day to “revolutionize” the supply chain, but not all technologies are alike. Focus on implementing and training your team on demand planning tools that actually predict and manage volatility, not tools that give you point-in-time data or best-estimate approximations, SCRM for mitigation and supply network planning and optimization and finally logistics monitoring and visibility tools.

Image: Today’s consumers have more options and want to know where products came from and how they were manufactured. What’s more, information is readily available to consumers, and with the prevalence of social media, bad news spreads fast. If you don’t know from where all of your products are sourced and who is making them, you could risk a PR nightmare that leads customers directly to competitors.

Impact of Digital Tools in Supply Chain

Several technologies have emerged to help life science companies across the globe excel in an increasingly digital economy. According to Capgemini, IoT and automation are the leading technologies deployed at one or more sites at scale in the supply chain, with blockchain, advanced analytics, and artificial intelligence right around the corner when it comes to large-scale implementation. Here we’ll look at what these technologies mean for the life science supply chain.

IoT

The IoT holds real potential for optimizing supply chain operations, especially in companies’ need to collect data from across millions of devices and measure performance in real time. IoT devices provide real-time visibility of operations throughout the manufacturing process, from production through distribution.

Manufacturers can embed IoT sensors in most items moving through their supply chain, gaining unprecedented visibility and traceability of parts for assembly, finished goods, and more.

“Other potentially impactful supply chain use cases are in preventative maintenance, sourcing, manufacturing, logistics, demand management, and services,” Gartner reported last year. “These include improved asset utilization, higher uptime through remote monitoring and maintenance, improved customer service by better understanding customer behavior and needs, and proactively responding to and shaping customer demand.”

Automation

Automating operations and systems can streamline work along the supply chain. For many life science companies, capturing and managing supplier data often entails dealing with data manually using a paper-based or partially electronic system, and then not updating the data regularly.

Digital supplier and supply chain management solutions can be leveraged to collect and process real-time information automatically, thereby eliminating the slow, time-consuming effort of manually gathering, entering and updating data.

In operational processes, for instance, automated systems such as robotics and radio-frequency identification (RFID) can free up supply chain professionals from handling certain mundane processes to focus on more valuable tasks. This has the net effect of lowering operating costs and improving productivity. Manufacturers can expect the role of workers to be reimagined by machines and technology, not to be superseded by them.

Blockchain

Blockchain is a decentralized, shared, immutable distributed database of transactions, and it has the potential to be very disruptive. Smart contracts, traceability and authentication, and other highly decentralized supply chain management functions are considered key candidates for blockchain, although most supply chain blockchain projects are still pilot projects.

Citing serialization and track and trace as significant opportunities for blockchain application, Accenture research indicates that 64 percent of life sciences organizations are currently deploying blockchain, with another 30 percent planning to deploy it in the next few years.

According to a recent PwC report, the pharmaceutical supply chain likely contains the significant potential for near-term adoption. For example, a pharmaceutical company could check the history and provenance of products through the immutable transaction history on the blockchain.

Advanced Analytics

As IoT data continues growing at a rapid pace, the data is often unstructured, disorganized and incomplete. The massive amount of supply chain data collected is of little use if a company can’t quickly, intelligently analyze and leverage it. Advanced analytics can play a major role in making supply chain data usable and delivering significant benefits.

Advanced data analytics are providing greater insights into processes, products and people, and in turn, enabling supply chain leaders to make better decisions to improve operations and business. Promising use cases include demand/supply planning and predictive maintenance.

For instance, Gartner says, “Prescriptive analytics can improve decision making in functional areas like supply chain planning, sourcing, and logistics and transportation, and can be deployed to improve end-to-end supply chain performance.”

AI

AI and machine learning technologies, which learn over time as they are exposed to more data, have great potential to transform supply chain processes. They enable companies to collect data from a variety of areas and apply self-improving analysis, and as they are integrated throughout the supply chain, they will likely facilitate the automation of repetitive tasks and deliver intelligence throughout the supply chain systems.

Capgemini research shows that “AI delivers significant transformational benefits, from reducing churn to increasing regulatory compliance.” AI can be used throughout the supply chain to find patterns, forecast future scenarios, identify and correct data errors, surface risks, elevate IoT insights, and improve material planning, order scheduling and logistics.

Benefits of Digital Supply Chain Transformation

1. Become More Forward-Looking

Supply chain entities have created bad habits when it comes to maintaining a backward-looking approach. in fact, 40.1 percent of supply chain entities work almost exclusively in this manner. However, most respondents in the SCDigest report indicate becoming more forward-looking is the greatest opportunity for use of the digital supply network.

2. Connect and Relate Data Sources

The Internet of Things (IoT) has become a fundamental aspect of a successful, modern supply chain. The IOT is responsible for many improvements in processes, preventive maintenance, and identification of better ways to move products.

However, the IoT relies on the sharing of data, and the DSN can catalyze the current limitations of the IoT exponentially. for example, connected devices in the IoT can be used to deliver its data across multiple sites, processes, and even organizations. As a result, a more connected system will naturally lead to more connections and sharing of such data.

3. Generate Data-Driven Plans Through Data Visualization

As data becomes more available, this data will be applied to advanced analytics opportunities.  Additionally, the use of data visualization capabilities will make applying data simpler. For example, providing a manager with data from yesterday’s transactions is great, but giving a manager a graph with what time performance faltered will go much further in allowing the manager to change today’s operations to prevent the failures of yesterday.

For example, the following graph, produced by A.T. Kearney, emphasizes how data visualizations tools arise from the use of digital technologies, which may be applied to augmented reality, customer self-service opportunities, cloud-based tracking and processing, and precision, local technologies. In fact, the image itself is a form of data visualization.

4. Improve Collaboration

Since data visualization tools help make changes in both the digital and physical aspects of the supply chain, collaboration will be improved.

5. Enter the World of Digital Products and Services

Modern services and products are not necessarily physical. Apps, Netflix, Pandora, and Uber represent real enterprises that are based on the Internet. Some apps, such as Etsy, go a step further by directly linking the creation of goods with customer-generated designs.

As a result, the need for embracing change is essential. The manufacturer, a third-party between the seller and the customer, needs to receive customer- or seller-generated data and apply it to production.

Digital Transformation in Supply Chain

The digital transformation of supply chains has been underway since 2010, but COVID-19 kicked it into top gear.

The pandemic brutally exposed the shortcomings of a near-complete dependence on single-sourcing of raw materials and finished goods. Organizations’ supply chains were ill-prepared, and faced a total stoppage of supply due to facility closures.

At the same time, customer demand precipitously dropped for many products while skyrocketing for others, such as sanitizers, cleaners and toilet tissue. Thus, an already precarious system was hit with enormous demand variability. A lack of key data upended demand-management models, including those based on artificial intelligence and machine learning.

In response, companies are taking the following steps:

Multi-sourcing of supply. They are finding alternative sources globally, evaluating different manufacturing methods, modifying designs to reduce parts and identifying replacement materials.

Investing in alternative materials and manufacturing processes. They are collaborating with international suppliers on lower-risk alternatives, identifying “at-risk” components and refining manufacturing and distribution capability — all for the purpose of de-risking supply to the fullest extent possible.   

Responding to trade wars. Current trade tensions have impacted supply chains by limiting goods flow. Meanwhile, manufacturers and suppliers that have cultivated stable supplies for years are facing a sudden drawdown in demand and being forced to explore new markets with fewer resources. This trend is placing a tremendous strain on the existing supply chain, with uncertainties affecting every stage from production to final delivery.  

Focusing on flexible and resilient supply chains. Organizations are looking to eliminate redundant processes, automate wherever possible and electronically link with suppliers and distributors for near real-time status of orders.

Increasing the use of technology. The industry is adopting cloud-based tools for on-demand cost and manufacturing intelligence in the product-design phase; alerting customers and networks about sudden variabilities across regional supplier bases; and using technology to map and link tiered supplier networks.

While COVID-19 has catalyzed the need for swifter and more focused action, the transformation was already well underway prior to the pandemic due to a number of factors, including:

Raised customer expectations. Internet-based giants such as Amazon.com Inc., Uber Technologies Inc. and Airbnb Inc. have raised the bar on personalized customer experience. A variety of e-commerce fulfillment models, including pickup at store and direct delivery to homes, is requiring quicker coordination between retailers, wholesalers, distributors and manufacturers. The entire supply chain is being driven by more demanding customer shopping preferences, leading to an increased focus on digital capabilities.

Technology trends. The availability of faster and cheaper processing, cloud capabilities and data modeling and analytics is enabling closer coordination between supply-chain partners. Software providers are enhancing applications in a number of areas, including shipment tracking, data integration at hand-off points, alerts about local supply disruptions, tiered supplier network mapping and overall supply-chain visibility.  

Commodity pricing and delivered cost. The push to lower commodity pricing and seek alternative sourcing is driving the frequent review of raw materials, production and distribution. This is leading to further enhancements of applications for acquiring better information on suppliers.

Emphasis on speed to market of new products and services. Product lifecycles are continually being shortened. As a result, it becomes more critical for supply chains to provide accurate information on the cost of design, materials, manufacturing and service.

Global volatility and trade uncertainty. Over the past decade, the world has encountered extensive geopolitical uncertainty. Organizations must continuously monitor changes in systems, processes, regulatory frameworks and technical maintenance requirements. The effort increases overall supply-chain management costs, and motivates companies to adopt digital capabilities to help minimize them.

Digitalization in The Value Chain Opportunities And Threats

Two of the biggest benefits that supply chains can take from digitising their processes are speed and cost. Taking your operations to the next technological level can significantly cut the time it takes to make strategic decisions, whilst also boosting operational efficiency.

By improving pricing and operating costs, manufacturers also believe they will see increased sales from more digital processes.

End-to-end transparency is the ultimate goal for a number of supply chain operators, being the crucial component to achieving significant efficiency gains. In a system with end-to-end transparency, every member of every step along the supply chain network will have access to all data.

Digitizing processes can enable improved visibility and provide real-time insights into the supply chain, giving people along the chain full control.

During the COVID-19 pandemic, countless supply chains have been crippled around the world due to their outdated systems. Traceability can fall apart when certain aspects of the network have to close due to unforeseen reasons. Many processes that revolve around deliveries still run with a face-to-face, paper-based signature.

Whilst social distancing measures are in place, this can be difficult – if not impossible – to carry out, causing further disruptions to supply chains. Using a digital approach to these typical systems can eliminate the need for face-to-face interactions, improving business both during and after the COVID-19 pandemic. 

Potential Threats

Beginning the journey towards digitising your supply chain can be costly and time-consuming, but clearly worth it. Whilst finding the correct technologies and strategies is crucial to success, nothing will work if you don’t have the right team in place before getting started.

The shift revolutionizes from the ground up, so you will have to ensure that your employees are prepared for and on-board with a radical culture shift. 

No two companies operate in the same way, which makes it impossible to lay out one clear strategy to implement digitisation. In addition to putting the right team in place with the right leader, ensuring your business is secure from cyber threats is crucial.

As the world becomes more interconnected and digital-based, the risk of cyber-attacks becomes increasingly prominent. Taking action to protect your business and network from cyber threats should be one of your top priorities when looking to innovate and introduce new technologies.

It is clear to see that digitizing your supply chain and your company is not only the logical next step, but the necessary one. With financial and time-saving benefits being just two of the significant benefits from it, the sooner you begin the process the better. However, ensuring your company is prepared for it must be the number one priority.

Impact of Digitalization on Supply Chain Management

In looking at supply chain management as it currently stands, Page Executive identified five trends:

Digitalization will drive increased efficiency

Supply chain managers who are willing to invest would be wise to look at IT integration, an area where 70% of managers are planning significant investment with the rise of newer technologies and a drive to modernization.

This investment will create jobs and assist the faster adoption of web-based processes in the supply chain. An example is real-time technology, where customers and employees can be confident that stock levels displayed on their screens reflect reality in the warehouse at any given time.

With this greater supply chain visibility, managers can now monitor how different processes are performing at any time, from sales to logistics, leading to better informed inter-departmental transactions.

Big data analytics will improve profitability and save time

Big data and predictive analytics will provide networks with greater data accuracy, clarity and the ability to work cohesively in order to achieve improved contextual intelligence over various individual networks.

One such example is forecasting demand: retailers in Russia found that book sales went up in cold weather. Some online booksellers such as Ozun, therefore, increased the number of book recommendations whenever the temperature dropped.

Outstanding accuracy and the ability to react at speed will prove useful where business models are based on short product lifecycles. As Accenture found, 36% of companies agree on the need for greater IT integration across the supply chain as mentioned above, but 41% of companies said big data meant faster and more effective reaction time to supply chain issues (source: Global Operations Megatrends Study on Big Data in Supply Chain).

The proliferation of the Internet of Things (IoT) will mean greater interconnectivity and sophistication leading to intelligent algorithms. To further enhance supply chain performance, these algorithms will ‘learn’ human planning behaviors and be able to predict the decisions that will need to be made.

Mobility will become the norm

As the power of big data is applied to increasing efficiency and saving time, mobility will become standard. Infrastructure improvements will continue to advance supply chain workflows. Supply chain managers will be released from their desktops and laptops as they switch to mobile devices and tablets.

Supply chain updating in real time requires managers and their teams to have easy access to core systems. In order to achieve true mobility, companies and managers alike must understand the importance of IT integration and ensure they hire people with specialised knowledge in the area, with a particular emphasis on security.

In collaboration with their mobile business solution providers, supply chain managers will need to determine which functions and processes are prime candidates for mobilisation.

With many companies and supply chain managers still reliant on older systems, the transformation to mobile working will take time to implement. There is likely to be an incremental cost, too, as managers undergo training and budgets are reassessed.

There will be a shift in hiring talent

As technology continues to advance, the type of talent being hired will change as skill gaps become apparent. Traditional training methods will no longer be relevant, creating demand for new training methods and new roles to be filled.

For managers, this change will mean seeking out people who are comfortable with modern systems, with a knowledge of big data and deep analytics and experience with new technologies.

Soft skills are equally important given the degree of adaptability required. Skills such as agility and being a fast learner are essential for businesses adopting change and they will look for talent with these skills in the future. The challenge will be finding that talent.

While globalization has widened the pool of talent, frequent technological change creates a need for highly specialized skills.

We’ll start to take drones seriously

Drone technology is still in its infancy. However, many large corporations are testing drone technology and starting to take it seriously. The prospect of reducing their environmental impact, lowering costs and accelerating the supply chain has great appeal. This revolution will create new positions and trigger the search for newer, more diverse talent.

Big players like Amazon, which recently partnered with the British government to test small delivery drones, have been pioneers in this arena over the last year. Nevertheless, there is huge untapped potential to use drones in warehouses to pick and move products.

Using drones to deliver products to the consumer is still a long way off. However, as capabilities improve daily (for example, better battery life and smart technology), drones are becoming a more commercially feasible option. It is reassuring that companies like UPS are testing drones for the emergency delivery of medical supplies.

Supply Chain Digital Transformation

A ToolsGroup and Spinnaker’s survey of supply chain professionals demonstrated that only 7% of companies had been reaping any benefits of digitized supply chain planning. The pandemic appears to change all that. In their survey of 200 brands, QIMA reports that two-thirds of brands accept that COVID-19 is accelerating their supply chain digitization.

Getting these plans off the ground presents similar challenges, and many supply chains lack the capabilities to develop, test, and scale their technology initiatives. According to Gartner, less than half have defined or plan to implement a supply chain digital transformation roadmap, and over 50% don’t have a roadmap for supply chain digital transformation.

Supply chains can quickly find themselves on the losing end by failing to keep up with the technological and economic changes happening around them. According to The Fung Group’s Pamela Mar, the digital divide is growing among the top, innovative supply chains and the bottom, overspecialized, and rigid ones. 

How can organizations start their digital transformation in supply chain management for a resilient, future-proof supply chain? Brands must act early on to execute on a strategy while the competitive advantage and opportunities are there. Those with an open-minded, digital-first mindset will foster innovation, empower teams, and drive operational excellence.

What Are The Advantages of Supply Chain Globalization?

Globalization has unlocked a plethora of new opportunities for supply chain management, from expanded sourcing opportunities to expanded markets. These opportunities beget two larger opportunities: the chance to save money and the chance to increase efficiency. Let’s take a closer look:

1. Expanded sourcing opportunities. A world market offers businesses opportunities to secure a diverse selection of workers, materials, and products. This larger selection of goods and services often means the opportunity to select higher-quality or lower-cost options.
2. The opportunity to reach new customers in new markets. Just as globalization offers more materials and laborers, it also offers new customers in new locations with new needs.
3. More room to grow. New technologies and a shrinking globe mean that it is easier for companies to grow generally: to produce more, offer more, and sell more. Expanding borders also means expanding businesses and corporations. 
4. More opportunities to save money. Globalization’s biggest benefit is that increases options: options for source materials, options for workers, and options for transportation. More options mean more chances to save on spending and increase profits.

What Are The Disadvantages of Globalizing a Company’s Supply Chain?

Although the new opportunities associated with a global marketplace are numerous, globalization also presents a new set of challenges for supply chain management, from how to increase the scale of operations to how to manage the risks that come along with crossing borders and circumnavigating the globe.

To successfully take advantage of the positive aspects of globalization, those working in the supply chain must first overcome the following negatives:

1. Large-scale management issues. The opportunity to grow business goes hand-in-hand with the issue of greatly increased supply chain complexity when it comes to management. Companies must scale up all aspects of their business as it grows across borders, which can cause problems that stretch the globe. Inventory issues and distribution issues are high on the list of problems encountered by going global.
2. Greater risk. Having materials, factories, and customers all over the world means being at the mercy of global events, from natural disasters to port closures, to political uprisings. Globalization requires that supply chain managers have detailed risk management plans in place and that they are prepared when disaster strikes. 
3. Global competition. You are not the only entity with access to supplies, products, and labor around the world – you now have a lot of competition scattered across the globe. Globalization necessitates that supply chains are highly efficient and well-run in order to stay competitive in a global market. 
4. Information collection challenges. With different aspects of your supply chain scattered around the world, and with an increasingly complex process for getting products to customers, data collection and oversight can be huge new challenges. While big data analytics is helping some supply chain managers tackle the issue of information collection, it is still a large problem that has emerged alongside globalization. 
5. Legal issues. Operating across borders means operating in countries that very likely have different laws and regulations. For example, secret product details may not be safe in China, where they have less stringent intellectual property laws. In another example, a country where you have a factory may have very different employment laws than another where you have an identical factory. 

How Digital Transformation is Impacting The Supply Chain in Manufacturing

With supply chain management shifting its focus from reducing costs to driving growth and mitigating risks, the need for companies to make a digital transformation is more real than ever. With automated processes and near real-time information, companies can respond more quickly and accurately to any potential business disruptors.

The digital transformation of supply chains involves painstakingly creating the so-called digital twin concept, which models and mirrors the actual physical supply chain network.

With automated processes and near real-time information, companies can say goodbye to inefficient manual processes and costly investments in unneeded assets (e.g., inventory), and respond more quickly and accurately to any potential business disruptors.  

Most supply chain decision-making will be automated to take into account massive information streams too large for humans to handle and/or recognize optimal patterns (of which many may be counterintuitive). Automated processes can also accelerate decision-making, improving customer service and reducing costs.
 
When decisions require human attention, advanced analytics and machine learning will evaluate trade-offs (e.g., margins, revenue, return on asset [ROA], or risk profiles) and recommend scenarios based on objectives. Humans will rarely need to determine which scenarios to run. Intelligent systems will automatically spin up the best scenarios and present them for quick comparison and decision-making by business analysts (planners).
 
Aside from the technological changes, how will digital supply chains impact the supply chain planning process? Companies will have to add continuous-based planning enabled through supply chain visibility and automation. Cadence-based planning sets the plan, whereas continuous-based planning is used to sense alterations to the plan, analyze potential alternatives, and respond in an optimal way.
 
The extent of process automation through algorithmic planning, machine learning, workflow, and events will determine whether additional human resources are required to accommodate continuous-based planning. To some extent, continuous-based planning takes place even today, but in an informal way often referred to as firefighting (rush orders and expediting) and with less than optimal results.  

How do You Digitize a Supply Chain?

To achieve a successful transformation of the existing system into a digital one, the development of an organized process is key to implement and integrate the necessary technologies. This is important in order to avoid unnecessary delays and interruptions in the delicate process of upgrading an existing operational system.

1. Consider your starting position and the risks involved

The very first step is to realize the current situation of your supply chain, what risk each supplier brings, and assess feasibility. All the potential risks need to be analyzed thoroughly and you must formulate solutions on how such possible complications can be prevented.

As soon as you are aware of the risks involved, it becomes easier to take proactive steps and set up preventive frameworks in a timely manner. Normally, this step involves assessing the maturity of your suppliers and the overall risk involved.

2. Define your strategy

At this stage, you will be aware about the effects of potential changes, and you can then encourage communication with the business entities involved. The aim is to create an understanding where they can be honest with the common goal that you want a system that will benefit both sides.

Having a clear discussion about such matters will show inclusiveness and build the existing trust and confidence between you and your business partners. In this way, more insights can be acquired about what is more likely to work for both sides and provide the basis for how the foundation should be set.

Consequently, this will also ensure that the digital management system will be adapted to your needs and the needs of the suppliers and other business partners.

3. Have a sustainable, long-term approach

It is important to have measures in place that will help your system in the long run. A good way to do this is by taking proactive steps to ensure system stability over time and in varying business and financial conditions. Keep in my mind that a reactive approach is prone to interruptions, delays, and at times, system shut down. Being proactive allows you to safeguard your business from such unnecessary situations.

Besides, the key is to realize that the urge to save money can lead individuals and organizations to adopt measures that can create big risks whilst focusing on the short-term benefits. This is why it is essential to cover all bases and see the bigger picture, as sustainability is a core value of all good business entities.

4. Conduct proper research and analysis.

A proficient supply chain is resilient and delivers the desired and expected returns. Investing time in supplier analysis is vital to achieve such level of effectiveness. One of the best practices is to set up a contract with appropriate knowledge of just how aware your suppliers are of the potential risks involved.

As much as suppliers are expected to do their own risk analysis, it doesn’t mean that they necessarily are. The most important part of this step is that all questions about expectations and mutual obligations need to be answered by this point.

5. Invest in capabilities

It is certain that one of the biggest challenges is to find top digital talent for operations. Many digital leaders get started early by investing in the skills and expertise. They aim to build competence in areas such as automation, predictive maintenance and the Internet of Things (IoT).

Digitization of supply chains is key to encouraging transparency and visibility while controlling replenishment, maintenance, production, transportation, delivery and customer satisfaction, as well as driving efficiencies and mitigating risk. To make this happen, companies need to find the right employees and at the same time provide the right training to handle these new technologies effectively.

The good thing is that leading training providers offer eLearning solutions especially suitable to fill the digital skills gap. For instance, scenario-based training videos are the best way to help employees experience real job situations and allow them to stay prepared for any challenges. Besides, e-learning solutions such as gamification makes learning more enjoyable.

Why is Amazon a Supply Chain Leader?

Amazon has changed the face of retail through its use of bold supply chain strategies and the deployment of innovative technologies. The online retailer’s history is one of rapid growth and relentless innovations. It’s reshaping the supply chain and leaving competitors scrambling to catch up.

In 2004, 10 years after Amazon was founded, its annual revenue was just under $7 billion. According to Statista, by 2018, revenue reached almost $233 billion. In fact, Amazon is the fastest company to reach $100 billion in sales revenue, taking only 20 years.

From its inception, Amazon has been growing approximately 20% per year. It grew by over 20% from 2018 to 2019. Currently, it enjoys nearly 14% of gross global e-commerce sales. Many believe Amazon is aiming for $1 trillion in yearly revenue.

If you take Amazon’s roughly 20% yearly growth rate into the calculation, it should reach that goal by 2027.

Whether or not the company achieves that goal by then, its transformation from a simple online bookseller to the most formidable force in the retail industry is remarkable. One of the driving forces behind that transformation is its innovative and highly efficient supply chain.

Amazon’s continuous efforts to deliver products to the customers in the shortest possible time are putting intense pressure on other retail industry giants across the globe and thus changing the way supply chain management works.

The rate of Amazon’s innovations in supply chain management has been mesmerizing, making it difficult for lower-volume competitors to keep up. Amazon is forcing its major competitors to invest more in supply chain automation, lessen the overall product delivery time, increase the number of warehouses, and even engage in product manufacturing.

Its acquisition of Whole Foods is also a bold declaration of its move to embrace brick-and-mortar retail, and further emphasizes the convergence of traditional retail and e-commerce strategies.

Most importantly, Amazon’s unique supply chain strategies and continuous technological innovations have already changed the way supply chain management works. With impending advances in robotics, drones, and other autonomous vehicles, one can only guess what innovations are next for Amazon.

How do Companies Integrate Supply Chain?

There are several different levels of supply chain integration. Generally, the first step in integration would be to select specific vendors to provide specific inputs, and develop an agreement for them to provide a set amount of inputs during the year at a set cost.

This ensures the company has the materials it needs to produce its expected output of computers during the year. Our computer company might sign a contract with a large supplier of circuit boards, for example, that requires it to deliver a specific quantity at specific times during the year and sets a price that will be in effect during the contract.

A higher level would be to integrate the companies more closely. The circuit board provider might build a plant close to our assembly plant, and we might share production software so the circuit board company can see how many boards we’ll need in the upcoming week and can build them as we need them to meet sales demand.

An even higher level is called vertical integration, which is when the supply chain of a company is actually owned by the company. For example, our computer company could purchase a circuit board company in order to ensure a dedicated supply of components.

What Are The Five Basic Components of Supply Chain Management?

Supply chain management can be said to have 5 attributes or components that need to be looked into to ensure sustainability and effectiveness. What are these components that define a successful supply chain management strategy?

1. Planning. Planning process are the critical to allow supply chains to operate at maximum efficiency. Proper planning allows for both inventory and operational resource levelling. Controlling supply by source planning and managing demand by demand planning allows the organization to have a better handle on cash flow and ability to meet customer needs.

Data that churns from the planning process also allows companies consolidate shipments to enjoy better economies of scale and even indulge in some predictive analytics to enjoy more accurate forward looking projections.

2. Sourcing. In any organizational set-up it is always ideal to work with vendors who are not only capable but also able to adapt to the customer’s requirements and preferences. Vendors must also be able to consistently meet demand, especially during seasonal surges and not expect the customer to place orders during seasonal lulls.

It goes without saying that the vendor must also adhere to required specifications of the customer and be able to identify non-conformance to standard to their end, before the product is shipped out to the customer. When negotiating with vendors, it is best to align on delivery lead times and order lead times, with clear expectations of performance expectations.

3. Making. The making process can involve actual raw material to finished goods manufacturing or it can include repackaging, re-kitting, bundling, assembling, dressing or staging.

Read Also: How to Achieve Technology-Driven Revenue Growth

This process must be optimized for to create minimum variance in outcomes (increase predictability of the process itself), to minimize or eliminate non-conformance to customer requirements. The manufacturing process is almost always a space for continuous improvement even in the most high tech of automated production lines.

4. Delivering. The delivery channel must be robust and stable. It must be able to bear the load of sudden spikes in demand and have business continuity procedures in place for common logistics problems such as port congestions or inclement weather. In many organizations, the supply chain function is low in priority when compared to a sales function, however it must be given funding to improve itself to keep up with business needs.

5. Returning. It is inevitable that customers will want to return the product. This could occur due to a variety of reasons such as damage, non-conformance to quality specifications, defective products, products nearing or past expiry dates or erroneous products/quantities being shipped. The return process is a critical component of the customer experience and is closely related to the refund process.

How Has Digital Technology Impacted The Supply Chain?

With its ability to cut costs and timescales, digitalization is the answer to many supply chain pain points. Digitalization will invariably heighten efficiency as systems are updated and integrated, making life easier for everyone involved in the supply chain.

But the most exciting development will be drones. While far from perfect, drones open our eyes to new possibilities and the direction that whole industries from retail to manufacturing might take. A wave of new talent will need to be hired to understand and execute these changes and bring supply chain management

How The Digital Economy is Impacting The Supply Chain

In the digital economy,value is created through the technology-enabled links between people, machines, channels and organizations. All this is giving rise to an awareness and willingness to apply analytics to everything, not just to strategic initiatives, but to day-to-day tasks.

Advanced analytics aided by machine learning algorithms will automate the repetitive work demand planners do regarding managing data and information as well as uncovering key insights allowing them to work smarter and more efficiently.

As such, digitalization of the supply chain will require companies to manage product replenishment based on actual consumption rather than transactions.

How Digitization Makes The Supply Chain More Efficient

The supply chain today is a series of largely discrete, siloed steps taken through marketing, product development, manufacturing, and distribution, and finally into the hands of the customer.

Digitization brings down those walls, and the chain becomes a completely integrated ecosystem that is fully transparent to all the players involved — from the suppliers of raw materials, components, and parts, to the transporters of those supplies and finished goods, and finally to the customers demanding fulfillment.

The goal of the digital supply chain is ambitious: to build an altogether new kind of supply network that’s both resilient and responsive.

But if companies are to make the digital supply chain — or perhaps more properly, the digital supply chain ecosystem — a reality, they can’t just gather technologies and build capabilities. They must also find people with the right skills, and manage the shift to a culture that’s willing to carry out the effort. In other words, they must transform their entire organization.

The digital supply chain, as we envision it, consists of eight key elements: integrated planning and execution, logistics visibility, Procurement 4.0, smart warehousing, efficient spare parts management, autonomous and B2C logistics, prescriptive supply chain analytics, and digital supply chain enablers.

Companies that can put together these pieces into a coherent and fully transparent whole will gain huge advantages in customer service, flexibility, efficiency, and cost reduction; those that delay will be left further and further behind.

Why is Digital Supply Chain Important?

The primary aim of the digital supply chain is to deliver insights to increase efficiency and to produce higher profits for the organisation.

Relatively few companies have unlocked the full potential of digital technologies. A recent McKinsey study, for example, found that the average supply chain has a digitisation level of 43%, the lowest of five business areas that were examined. A mere 2% of the surveyed executives said the supply chain is the focus of their digital strategies.

The same McKinsey research suggests that on average, companies that aggressively digitise their supply chains can expect to boost the annual growth of earnings before interest and taxes by 3.2% – the largest increase from digitising any business area – and annual revenue growth by 2.3%. From a financial perspective, then, digitising the supply chain is an important investment.

What is Digital Supply Chain

A traditional supply chain model can be briefly summarized as the networking between all individuals, organizations, and activities involved in a business process from the manufacturer to the end user.

A digital supply chain carries out traditional supply chain functions with the aid of digital technology such as radio frequency identification (RFID), global positioning systems (GPS) tracking, smart labels, and barcodes.

5 Key Trends in Supply Chain Digitization

The supply chain continues to evolve rapidly, keeping pace with the breakneck technological advancements of the modern era. Though it can be difficult for supply chain managers and business leaders to stay on top of these changes, it’s crucial to do so if you want to maintain the integrity of your supply chain and see your business succeed.

Rather than treading on the heels of change, your organization should try to get ahead of the trends that are shaping the future of supply chain management.

1. Artificial Intelligence and Automation

The use of artificial intelligence (AI) and automation is on the rise in many supply chains. Automation allows you to streamline repetitive tasks, while AI — which attempts to mimic human intelligence and “learn” — can assist with more complex, challenging tasks. 

In a world where speed and precision are crucial for success, both AI and automation are valuable ways to speed up your supply chain and remain competitive in your niche. Despite concerns about robots taking over human jobs, AI and automation are everywhere. If you don’t use them, your competitors will, leaving you far behind as they enjoy greater levels of success.

From making improvements to your assembly line to powering digital twin technology and everything in between, there are countless ways to incorporate AI and automation into your organization’s workflow.

The key is finding tasks and processes that will help you save time or energy; often, the best tasks are time-consuming, complicated, or extremely rote. By turning these kinds of tasks over to a robot or computer, you and your staff can spend more time on projects that only a human can do, giving you an even greater return on this investment.

2. Increased Focus on Sustainability

As a growing number of consumers prioritize the environment, more businesses have increased their sustainability efforts, which are now seeping into the supply chain. Because there are so many different opportunities to focus on sustainability, you’ll need to tailor your efforts to suit the unique needs of your organization. 

In the coming years, businesses may turn to more extreme or drastic measures in the name of environmentalism. Some may choose to commit to sustainable manufacturing processes or attempt to become zero-waste.

However, these attempts at sustainability may not be sustainable for businesses in the long-term. Such large shifts require a complete overhaul of each step of your supply chain, from how you source raw materials to how your products are transported to customers. 

This, in short, can be overwhelming and difficult to keep up with. It’s best to start with something small, such as updating your packaging design, as your organization adjusts to these changes or crafts a plan to make larger shifts. By making changes gradually and deliberately, you can increase your organization’s long-term commitment to sustainability, without overlooking any crucial steps or getting burnt-out.

3. Customization

You can expect to see an increasing level of customization in different parts of the supply chain. You may have to segment your supply chain, building a customized strategy and approach for each segment. 

Your customers, in particular, will likely continue to expect a personalized experience with your business. It can be difficult to keep up with mass customization demands, and you’ll have to consider different ways you can keep up.

You may need to look into customizing your own manufacturing, ordering services like CNC machining and injection molding as you work to build prototypes and accelerate production without sacrificing quality or precision. 

Increasing customization becomes more realistic as you work on improving other aspects of your supply chain. For instance, you may find it easier to manage personalized customer orders if you can automate your order processing system, perhaps putting “standard” orders in one area and personalized ones in another. Essentially, if you look for ways to simplify other areas of your business, you can devote more time and attention to customization in your products.

4. The Internet of Things

The Internet of Things (IoT) is a network of physical objects that, powered by sensors and software, are connected to the internet. The IoT already plays a significant role in the supply chain, particularly when it comes to logistics, but with increasingly diverse applications, it will likely continue to grow in importance. In just a few short years, 50% of large companies could be using IoT and other advanced technologies to support supply chain operations.

In addition to providing more oversight in operations and transportation, it’s thought that the IoT can be used to improve warehouse management, fleet tracking, inventory control, and even technological and mechanical maintenance.

IoT technology could even be used to create entirely smart warehouses and fleets, increasing the efficiency and accuracy of multiple areas of your supply chain. The value of the IoT cannot be overstated, as 

Depending on what kinds of IoT devices you use, you can use them in conjunction with other pieces of technology for even greater benefit. For instance, the information collected by a sensor in one of your warehouses could provide valuable data that helps you automate other processes, such as forecasting and asset tracking. This high level of integration will be essential as the supply chain becomes increasingly digital. 

5. Digitization

Digitization refers to the practice of putting information into a digital format. When it comes to securing the future of the supply chain, digitization is non-negotiable. Experts believe that effective digitization can make your entire supply chain more streamlined, mobile, and dynamic — all of which are highly beneficial for your organization’s bottom line. 

If you haven’t gone fully digital, keep in mind that the transition can be challenging. You have to find the right kind of technology to meet your organization’s needs, implement it correctly, and work out any internal difficulties.

However, you can’t afford to not digitize. It’s already the present, and it’ll only become more integral to the supply chain in the future. If you are unwilling or unable to digitize your supply chain, you’ll likely struggle to succeed going forward.  

Impact of Digitalization in Procurement

Digital influences all areas of procurement – both the tangible and intangible, including negotiations with suppliers. As such, procurement has a particular role to play in the development of digital transformation, so much so that we speak about procurement 4.0.

Drones, self-driving trucks, robots, AI (artificial intelligence), IoT (Internet of Things or Big Data) 3D printing and augmented reality are the main digital areas that have a tremendous impact on purchasing power. Their role is to replace humans for the repetitive and ‘boring’ tasks (a process referred to as automatization or cognitive technologies).

The key is to analyze how automization can positively influence the business environment, changing a businesses’ agility to react, and significantly changing its entire value proposition and overall organization.

Vodafone’s digital procurement strategy aims to create synergies by connecting the HR department with the procurement team, with the aim of re-thinking and simplifying whole processes. They also mix employees from different generations to create a resource pool of digital know-how and experience. This changes the whole culture of the company and diversifies the way people work together.

To succeed, a digital procurement strategy is necessary for all procurement experts and must be implemented intelligently. Digital technologies can help procurement increase their collaboration, analytics and engagement using a portfolio of tools along the entire procurement value chain, including planning, sourcing, contract management, order delivery, payment control and supplier management.

Digitalization in Supply Chain Management And Logistics

Today, digital advances such as big data and optimization tools, remain the most visible driver of change in the supply chain. However, they are not the only trends that are exerting a major influence. Here are five trends driving digitization in supply chain management and logistics:

1. Collapsing product lifecycles: 

The cycle of development, launch, growth, maturity and decline is accelerating in many market sectors and particularly for consumer electronics, software and other tech products. Product lifecycles are estimated to have halved over the last decade and will likely shrink by another 50 percent by 2020 – thanks to growing practices like 3D printing.  

What does this precarious environment mean for supply chain management? It calls for more proactive forecasting and planning using prescriptive and predictive analytics, as well as the use of on-demand warehousing models. This increases accuracy and helps avoid the costs of obsolete inventory. 

Time-to-market is another piece that is an increasingly important success metric for brands. The pressure to ideate, design and deliver at the speed of digital is raising new risks and cost concerns.

2. Outsourced Manufacturing

Unimaginable a few decades ago, outsourcing manufacturing services has become a common practice in almost every industry. This trend is particularly pronounced in electronics manufacturing where product differentiation increasingly comes in the form of software innovation. 

The last decade brought significant growth to Electronic Manufacturing Services (EMS), with no signs of slowing down. With more original equipment manufacturers focusing on their core business, the EMS industry is estimated to grow to $580 billion by 2020.  

In exchange for the reduced financial risk that outsourcing affords, new supply chain risk is introduced in the form of complexity. Companies that outsource must develop better visibility and supply chain orchestration tools and processes while picking outsource partners that can manage the additional risk.

3. Globalization

Thanks to improved transportation, communications and IT systems, companies now have the ability to select suppliers located anywhere in the world. By 2020, 60 percent of companies expect to be sourcing from more countries than they do today.

Trade-offs for lower labor costs can include supply chain interruptions ranging from natural disasters to political unrest and even military operations. Predicting and planning for these issues requires local insights, powerful technologies and domain expertise.   

4. Generational Expectations

Millennials and Gen-Z consumers have radically different expectations when compared to any other generation. The modern supply chain is being transformed to accommodate these technologically savvy customers, who: 

• Want instant access to customized products 
• Do their research before buying 
• Favor socially responsible products and companies 
• Embrace the sharing model

5. Supply Chain Savvy in the C-Suite 

There is growing recognition in today’s organizations that the supply chain is more than a tactical function of the business – it is essential to success. The transformation of the Chief Procurement Officer into the Chief Supply Chain Officer demonstrates the expanded scope and importance of this role.

Supply Chain professionals are claiming their seat at the table when it comes to discussions involving sales, operations and even design. Digitization in supply chain management and logistics is enabling broad access to visibility, which is quickly becoming a prerequisite for competing in the global marketplace. 

After many years of incremental advances, supply chain management is poised for a major shift in its demands and capabilities. Organizations hoping to compete amidst these emerging trends and market drivers must redefine their supply chains to embrace complexity.

By utilizing actionable insights and intelligence, companies now have the power to thrive in today’s rapidly changing digital economy. Learn how Jabil InControl™ SaaS applications transform the entire supply chain ecosystem, leveraging the cloud, real-time connectivity, and advanced, predictive analytics.

Finally

Businesses that have a strong supply chain management system in place always put great emphasis on all the components listed, and also ensure that management, as well as the teams at various levels, play by the rules.

Profit is the bottom line and to make sure that the business achieves it, it is essential that the supply chain does not have any gaps. Any snag should be dealt with immediately and the weak links repaired or removed.

Demand and supply are two of the most important aspects of a business. For any business to be successful, trends, with respect to demand and supply, need to be studied carefully while implementing an effective plan of execution.

A supply chain management system is required not just for the timely manufacture of goods; it is also a very critical system for ensuring that consumer requirements are met effectively.