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EMBRACE DIGITAL TECHNOLOGIES AND DATA-DRIVEN CULTURE TO DRIVE SUPPLY CHAIN TRANSFORMATION
In 2012, Amazon filed for a patent named "Method and system for anticipatory package shipping" that explained the shipment of one or more items to a geographical area "without completely specifying the delivery address at the time of shipment, and while the package is in transit, completely specifying the delivery address for the package." The patent paved the way for the technology-enabled, next-generation delivery system often called the digital supply chain. Several factors have increased the complexity of the supply chain, including too many stakeholders, widening geographic coverage, and mass personalization. With the advent of emerging technologies, enterprises such as manufacturers and logistics companies can improve the cost, speed, and responsiveness of their supply chain with better planning, visibility, and control. This PoV explains the characteristics and enabling technologies of the digital supply chain and guides an enterprise’s journey into this space.
What is a digital supply chain? Hyper-connected, automated, cognitive, and autonomous
HFS has identified the characteristics that define a digital supply chain, described in Exhibit 1.
Exhibit 1: Characteristics and respective parameters of a digital supply chain
· Extends to external ecosystem partners, including stakeholders like financial organizations, suppliers, transporters, and regulatory authorities
· Ensures the transparency and visibility of the transportation of goods among the stakeholders
· Increases efficiency across the supply chain
· Reduces in-transit losses and delays in delivery and payments
· Automates back-end processes including purchase order creation, warehouse, and transportation management, document handling, and data entry
· Eliminates manual errors and facilitates the access of real-time information
· Decreases processing and turnaround time
· Improves working capital management
Cognitive and autonomous
· Processes the real-time data generating from different areas of the supply chain
· Integrates data with macroeconomic factors, financial management, and customer preferences
· Has decision making capability to analyze trade-offs
· Enables better personalization and customer services with lower inventory and transportation costs
Emerging technologies are expediting the digital supply chain development
Several emerging technologies are accelerating the digital supply chain journey:
- Internet of Things (IoT): IoT enables a real-time track-and-trace model for the movements of goods across the value chain. Low-cost hardware, an increase in processing power, and high-end connectivity will further increase the use of IoT in the manufacturing and logistics sector.
- Artificial intelligence: Advanced analytics, machine learning, and other AI methods provide actionable insights through data analysis, enabling better supply chain planning (demand forecasting, capacity planning, and production alignment) and execution (transportation scheduling and real-time monitoring).
- Intelligent automation: Intelligent system that can take autonomous actions for numerous business challenges including inventory management, manufacturing, quality, and transportation.
- Blockchain: Blockchain acts as the “single source of truth” among the supply chain stakeholders, providing an immutable record for each transaction across the supply chain; this data is a reference for all future activities.
- 3D printing: 3D printing enables custom design and local production, enabling unit cost economics and mass personalization and shortening the length of the supply chain.
- Robotics: The application of industrial robotics is increasing rapidly in manufacturing shop-floor and warehouse management. The concept of cobot (collaborative robot) is becoming popular as it interacts with humans on a diverse range of applications, resulting in better coordinating and increased productivity.
- Autonomous logistics and transportation: Though we are quite far from the mass adoption of autonomous mobility, it is the future of transportation. There is a lot of ongoing research about driverless trucks, self-driving ships, and autonomous aircraft. Warehouses are also using drones for transportation within warehouses and exploring the possibility of future delivery to customer premises.
The digital supply chain ecosystem is catching up quickly
Since 2018, we have observed several initiatives, acquisitions, and partnership announcements in this space among the software vendors, management consulting firms, and service providers. Here are some of the key announcements:
- TCS announced a global partnership with JDA Software to build next-generation cognitive solutions in the supply chain domain. (Link)
- Gravity Supply Chain partnered with Microsoft to accelerate the digital transformation of the supply chain for retailers and manufacturers through its SaaS solutions. (Link)
- Accenture acquired US-based Intrigo Systems to strengthen its capabilities in delivering end-to-end supply chain transformations that can result in better visibility and buying decisions. (Link)
- Genpact acquired Barkawi Management Consultants to expand its capabilities for supply chain management and aftermarket services. (Link)
- Deloitte acquired Dutch SAP supply chain consultancy AEPEX, which it will integrate into Deloitte Consulting’s SAP and supply chain practices. (Link)
Four actions are imperative for building a digital supply chain
- Assimilate relevant technology innovations to reimagine your new supply chain: Technology changes are happening more quickly than enterprises can adopt them. Enterprises need to build an internal emerging-technology-focused team for analyzing technology feasibility, defining the future roadmap, and re-engineering processes.
- Build an integrated data management platform: Data is the secret sauce of the digital supply chain because it drives business insights. Enterprises need to break the silos of different business functions and collaborate to build a common data management platform for the real-time, end-to-end supply chain management.
- Develop an adaptive workforce: Change management is always tough for employees because they fear job security, skill obsolesce, etc. Staff members need regular training, upskilling, and motivation to drive the changes to prepare them for the future’s operating model.
- Build an ecosystem: Too many manual processes and interventions within the supply chain value chain are weak links that can jeopardize the digital supply chain implementation. So enterprises need to encourage ecosystems to adopt emerging technologies that are essential for digital transactions. Also, enterprises need to connect with service providers, software vendors, and industry consortia for awareness and recent developments.
The Bottom Line: Focus on emerging technologies and organizational culture for the adoption of the digital supply chain.
Adopting a digital supply chain demands a paradigm shift in organizational culture for embracing technologies, process re-engineering, and decision making. Enterprises must analyze the scope of change and organizational readiness to embark on the digital supply chain journey. Elements of the journey, such as technology adoption, the number of PoC experiments, and approach types differ across organizations, industries, and geographies.
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