How digitalisation can optimise your supply chain
Supply Chain Team - New Zealand Trade and Enterprise
18 Oct 2021 - 5-minute read
What you’ll learn:
How digitalisation is affecting supply chains and customers’ expectations.
Ways technology can optimise your supply chain and delight customers.
How to decide which technology to adopt.
Digitalisation is a megatrend
Customers have a base expectation of ‘there’s an app for that’. They expect faster, better and more personalised service. This drives businesses to try and meet their customers’ expectations through technology.
Workers also expect to use technology. They know it helps them perform better and provide great service. The rise of the digital worker has accelerated during the Covid-19 pandemic. Business owners realise that technology keeps them relevant in the marketplace, improves service and increases efficiency.
Meanwhile, technology providers are forging ahead with new hardware, software and integration capabilities. Market demand is driving them to provide competitive solutions to supply chain problems.
Supply chain challenges mount
Along with intensifying customer service expectations and keeping pace with cost efficiencies, businesses face 4 main types of supply chain challenges.
Complexity and scale – can you plan a supply chain that is cross-functional and integrated across your business? Can you also run contingencies at the complexity and scale required today?
Visibility and transparency – can you manage operations or predict actions in an agile way, so you and your customers can see where your products or assets are?
Trust and standards – can you prove your goods have been produced, stored and transported to today’s quality, ethics or compliance standards?
Partnerships and data – can you stitch together the many players along the supply chain? Can you share the data required to compete as a supply network and achieve your common goals?
Technology is required to overcome these 4 challenges, so its portion of the ‘people/process/technology’ equation has risen exponentially.
New technology provides solutions
Industry 4.0 supply chain technology has ushered in a new era. Businesses can track, visualise, simulate, and automate decisions and processes in real time. They can also highlight their customer service and gain a competitive advantage.
Information and digital technology are vital to supply chains
Supply chain management involves moving goods, services and information across a network of suppliers to customers. The information needs to connect demand and supply in a way that gives your business an advantage against competing networks. Without information flows there is no supply chain.
Supply chains are also data heavy. If your business is not vertically integrated, you’ll find it difficult, time consuming and costly to pass data between partners.
Technology and digitalisation have changed how work gets done. Low-cost tracking devices, scanners and connectivity can improve your business’s quality assurance, real-time visibility and accountability. Internet technology enables businesses to pool resources and synchronise value chains. For example:
Uber Eats 'connects customers with local restaurants and enables partner-drivers to use their cars to deliver it’.
Kotahi Logistics 'simplify the export/import supply chain by providing seamless end-to-end integrated digital solutions'.
Software gives a digital view across operations
To manage your supply chain well, your business needs accurate and timely information, which makes digitalisation important for:
increasing revenue
lowering inventory
reducing supply chain costs
managing risks.
Many head offices are now distant or dislocated from customers, warehouses and assets, so they rely on the virtual world to give them current data, simulate possible futures and make decisions.
The concept of the ‘virtual control tower’ is now fulfilled through software, giving a digital view across the whole operation. Decision makers can see where risks are and be alerted to deviations so they can act, with some corrections made through AI and machine learning.
Digitalisation can reduce risks and save time
Digitalisation is accelerating in every aspect of the ‘source/make/deliver/return’ process. Planning is essential to ensure the process is coordinated.
In warehouses, automation has got to the point of heads-up display, augmented reality, hands-free operations, or even completely removing people from tasks now deemed dangerous. So technology can reduce health and safety risks.
Another example is the dreaded stocktake. This work can now be completed in real time by systems as the operation progresses. It’s no longer necessary to stop value-add work to do accounting work.
Snapshot of data points in a product’s journey
This diagram gives a snapshot of key data points across an extended supply chain — points that impact flow and value in a product’s journey from supplier to customer.
Digitalisation helps you compete
A digitally driven supply chain allows you to compete at the next level and highlight service. Getting timely, accurate information means you can compete in different ways depending on your strategy. Here are some ways that digital technologies can give you an edge.
Assuring provenance
When customers have information about the authenticity, integrity or custodianship of your product, it can make connecting with your brand seem less risky.
For example, when Icebreaker tells customers about their supply chain, they say ‘We know exactly where our garments are being made. We take responsibility for the whole ecosystem’. They also provide information to back up their statement.
Using exclusive data
Do you have a critical piece of data that others don’t know about? This data might come from an Internet of Things (IoT) sensor that measures temperature, physical attributes, behaviour, flow or ratings.
When data about how your customers experience your products and services is immediately available, you can use it to improve design and service throughout your supply chain.
Ensuring data is trustworthy
You need verified data to make good decisions. You also need ongoing data governance that ensures your data is usable, trustworthy and protected. Data curation (organising and integrating the data you collect) is crucial to maintaining the quality of supply chain data, so you can trust and re-use it.
You can use technology to improve data integrity and security. For example, blockchain technology promises a higher standard of trust in some supply chain data. And application programming interfaces (APIs) can improve the security of data used across supply chains. (APIs use information from other organisations, such as Google’s location services.)
Using data to gain insights
Data insights can improve your decision making and technology increases the scope of data points you can draw from. Data lakes (centralised data repositories) can be used to capture raw streams of data from:
remote (IoT) devices
social media
mobile phone apps.
You can ask different questions and view data in different ways to gain insights. Technology has also lowered the cost of owning massive amounts of data.
Running simulations and scenario planning
If you have enough data and have planned for many scenarios, you can use a ‘digital twin’ to predict a situation happening and work out the best options for that situation. Those options are then available for a human to make a sensible final decision on.
Managing an omnichannel supply chain
A digitally enhanced supply chain is agile and capable enough to delight customers wherever they are, and however they engage and transact with your business. You can please customers whether they’re window shopping, ordering and paying, tracking their delivery, or signing on glass when their parcel arrives.
However, managing an omnichannel supply chain requires significant technology and business maturity. You must understand a customer’s status no matter which channel they’re using and what stage of the transaction or delivery process they’re in.
Working out what tech you need
Before you adopt new technology for managing your supply chain, it’s essential to set your strategy, know how you want to compete, and segment your customers to understand the right supply chain for the right group.
Analyse your supply chain processes
A process analysis can reveal where to invest in technology. Look at the bottlenecks and weaknesses in your supply chain. Always get the process right before investing in technology to then automate and accelerate it.
Evaluate technology solutions and business maturity
Scan the market for technology that could improve your supply chain. Before you decide on cutting edge or tried and tested solutions, it’s important to:
know your industry benchmark for supply chain technology
assess your business maturity level.
Next, look at whether a stepped approach to adopting technology could take you to your desired maturity level over time.
Be aware of the risks and create a roadmap
The biggest risk with adopting new technology is going far beyond your workers’ capability and losing them in the process. Good workers who are tech savvy can be hard to find again. Fear of missing out needs to be tempered by:
good calculation of what you need
where are you on your maturity journey
what capital you have available.
A roadmap is important to ensure your investments build coherently within your enterprise’s technology architecture. Technology is great once it’s working, but implementing it and generating the expected benefits can be a tough journey – so choose well.