How to plan digitalization in supply chain management
Over the past three decades, the Supply Chain Management (SCM) functions have changed drastically due to the rise of technology and innovation in the operational logistics management, and revolutions in information integration and analytics.
With terms such as ‘digitalization’ and ‘digital SCM’ emerging the world over, how can we be sure of what sort of technologies fall under these broad terms and more importantly, how are they going to change the management capabilities that are at our disposal?
What is digitalization in SCM?
Digital Transformation in supply chain planning usually involves the development of new tools, skills, and processes that target a step change in speed and agility. In recent times, the focus of the supply-chain management function has shifted to advanced planning processes, independent SCM function such as analytical demand planning or integrated sales & operations planning (S&OP).
Here is how to plan digitalization in supply chain management:
The digitization of the supply chain essentially integrates supply chain management with today’s internet and mobile technologies to deliver cost and process efficiencies and dramatically improve the customer experience of dealing with the companies’ product or services.
Improve Efficiency –
New approaches to product distribution can reduce the delivery time of products in demand. Advanced forecasting approaches, such as predictive analytics of internal data (e.g., demand) and external data (e.g., market trends, weather, school vacation, and construction indices) help SCM systems to avoid risks and make the most of upcoming market trends. In the future, we will even see ‘Predictive Shipping’ for which Amazon holds a patent: Products are shipped before the customer places an order.
Make your Business more Flexible and Updated –
The digitalization of SCM and real-time planning allows companies to respond flexibly to changes in demand or supply which minimizes planning cycles and frozen periods. The Uber-fication of transport - crowd-sourced, flexible transport capacity - will significantly increase agility in distribution networks as well. Manufacturers may, therefore, see new direct-to-consumer opportunities in what once was a playing field only for the retailers!!
Increase Accuracy –
The integration of that data from suppliers, service providers, and others in a “supply chain cloud” ensures that all stakeholders in the supply chain steer actions and make decisions based on the same facts. This facilitates next-generation performance management systems with real-time, end-to-end transparency throughout the supply chain which helps businesses to make more accurate decisions.
Today, technologies such as Radio-frequency identification, GPS, sensors and mobile connectivity have enabled organizations to transform their existing supply chain execution capabilities to be more flexible, open, agile, and collaborative. Subsequently, transforming SCM planning capabilities to take advantage of the emerging areas of Big Data, Artificial Intelligence, Advanced Analytics, and Cloud Computing is very essential to compete in the evolving market.