Advance Digital Techniques in Supply Chain Management
Many companies have used digital SCM technologies to improve service levels and reduce costs. The inability to connect disparate digital systems, provide end-to-end visibility into the SCM and crunch massive amounts of data, among other issues, has prevented them from achieving the full potential of their SCM. These become show-stoppers, as the amount of data getting generated is humongous.
Now, thanks to the wide availability and adoption of much more powerful digital technologies, including big data, advanced analytics and cloud-based solutions, companies are generating dramatically better RoI.
A study shows that leaders in digital SCM are enjoying increases in product availability of upto 10%, more than 25% faster response times to changes in market demand and 30% better realization of Working–Capital reductions. They have 40 – 110% higher operating margins and 17–64% fewer cash conversion days. With the help of three key strategies, these agile companies are quickly leaving behind their less nimble competitors.
What Leaders are doing ?
1. Fixing Performance Gaps – applying digital technologies to relatively straightforward SCM problems, that are too cumbersome to address in conventional ways.
2. Innovating Business Processes – Digital SCM technologies are helping some companies achieve a steep change in performance in more complex areas. Just consider the potential of automated replenishment to transform manual processes.
3. Disrupt the Supply Chain – Leading companies are using digital SCM technologies to redesign their operating models and go–to–market approaches to generate significant growth in revenues and margins.
How to begin in this Journey ?
Think strategically and take steps that will take you in the direction that leaders are thinking. How ? Follow the leaders –
1. Find the Performance Gaps – Which are the business processes where tons of data are getting generated but largely sit idle without much value addition ? Most often, customer facing areas generate tremendous amount of data which can be harnessed into actionable customer insights, provided digitization is planned and integrated effectively. On the same lines, vendor management data often throws up tremendous insights to specific sourcing area or vendor behavior. The opportunities are endless. A well–thought through identification of opportunities that forwards business’s critical goals are the best candidates for advanced digital techniques.
2. Innovate Business Processes. Digital advancements provide immense opportunity in some of the more complex and often neglected areas. Customer delivery management is one such obvious opportunity. Earlier, companies had to depend solely on transporters for information for on–time delivery performance, which were often incomplete or unreliable. Now order processing can easily be integrated end-to-end, from enquiry stage to delivery and confirmation stage, by simple application of cloud technology using mobile phones. All leading online retailers have used integrated customer interface to enhance customer buying experience. To ease customer experience, Amazon, offers the Dash Button, an Internet-enabled device that consumers press — without having to log on to an account — to reorder laundry detergent, diapers, and other grocery items.
3. Change the Game through SCM – Amazon is one of the best example of technology driven SCM which delivers seamless process experience to customers. This is the key source of disruption that Amazon brings to one market after another. Mere technology adaption is not good enough – integrated planning, design and execution are the key besides ability to keep absorbing best features from emerging technologies, making it an ongoing march to excellence. Leading companies use digital SCM technologies to redesign operating models and go-to-market strategy to rev-up revenues and margins, like finding new routes to customers, decentralizing activities and substantially speeding up delivery, among other tactics.
Digital SCM has matured, generating substantial value. Organizations need to move quickly to apply the highest priority opportunities, to business and industry context. It is critical to find the right mix of fixing performance gaps, innovating business processes and disrupting the Supply Chain.