Digital Transformation, Cross-Company Collaboration, and Supply Chain GrowthDigital transformation has facilitated many changes within the modern supply chain but none more so than cross-company collaboration.

The modern supply chain looks very different to the tradition. In the past, supply chains worked in a linear, step-by-step manner, which was highly segmented. Conversely, modern supply chains are aiming for much the opposite. Therefore, modern supply chains have to be fast, agile, highly responsive, transparent, have visibility throughout their operations, and perhaps most of all, be integrated and collaborative.

There are many ways through which supply chains enacted these changes. Critically, digital transformation provided companies with the infrastructure to reach for these new standards. However, it’s crucial not to forget one of the key approaches to supply chain that allowed companies to make the most of digital transformation. That key approach being cross-company collaboration.

This ebook highlights how and why supply chain has changed over the years and why cross-company collaboration driven by digital transformation has been central the much of that change.

How has the Supply Chain Changed and why are Cross-Company Collaboration and Digital Transformation Essential to That Change?

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4 Key Steps to Supply Chain Digital TransformationMore than ever, companies are moving towards digitizing their supply chains—here are 4 steps they have to consider for their supply chain digital transformation.  

The necessity for supply chain digitization has never been more evident. Given the transparency, agility, and efficiency needed in modern day supply chains, it’s hard to get around the fact their operations have to be digital. Moreover, many of the technologies becoming increasingly important to supply chains either require or are bolstered by digitization. Thus, the future supply must be digital.

An article by GlobalTranz explains,

If the vision of Industry 4.0 is to be realized, most enterprise processes must become more digitized … A critical element will be the evolution of traditional supply chains toward a connected, smart, and highly efficient supply chain ecosystem. 

With that said, digital transformation is a considerable endeavour. On top of money and resources, it also requires an entirely new way of operating. As such, digitization, as counterintuitive as it sounds, is every bit as much about non digital factors as it is about digital ones.

This article by Morai Logistics highlights several of the most important factors companies have to contend with if they want their supply chains to have a successful digital transformation.

Remembering the Fundamentals

As important as the innovation that comes with going digital is, it can’t be the only thing supporting a supply chain. Its foundation must remain. Meaning, whatever made the supply chain successful in the first place must remain. In turn, with those fundamentals in place, they can then be further improved by digital assistance. For example, quality control can be further refined by smart sensors. Reliability can be enhanced by forecasting. A healthy digital supply chain should then be a marriage between the old and the new.

A post by McKinsey covers this in further detail,

To be successful in a digital transformation, though, it’s important that your supply chains retain traditional strengths (reliability, predictability, quality) while also allowing for innovation (greater use of automation, quicker responses to changing needs, more transparency across supply chain).

Maintaining Workforce Balance

Just as companies will require a blend of the old and the new in how they operate, the same will apply to their workforce. Not everyone will be technologically proficient and be able to use digital tools. It’s important having people who can make the most of the incredible benefits of digitization. But they aren’t the end all be all. The older supply chain professionals are still required. They have insights and expertise that are going to be timeless. It’s critical for companies not to turn their backs on them once they are digitized.

Promoting Education & Culture

With all that in mind, some aspects of the workforce will require training so that they can adapt to their new work environment. Moreover, the overall mindset of all those across the supply chain will have to transform too. Culture remains arguably the biggest impediment to a successful digital transformation. If companies don’t foster an attitude of innovation, transparency, data-driven processes, and more, their transformation simply won’t sustain itself.

Managing Risks

Finally, it’s crucial that companies remain cognizant of the risks that emerge from going digital. For instance, a transformation can take place without the technological infrastructure to fully support what it’s intended for. Which, in turn, leads to the transformation essentially be caught in stasis until further innovation takes place.

The earlier mentioned McKinsey post emphasizes some other risks that come from transformation,

But probably the most important risks to mitigate are those that can arise from the transformation itself, especially when a transformation loses sync with the technology needed to support it. At one extreme is “pilot purgatory,” in which perfectionism and inflexible processes keep promising ideas from ever reaching scale. At the other, the transformation can end up promising much more than existing technology and practices can deliver.

Digital Transformation - Top 5 Supply Chain Benefits

Digital transformation has become a big buzzword lately, but it is nonetheless key to companies having well functioning supply chains going forward. 

There has been an almost overnight paradigm shift regarding attitudes towards digital transformation. It has gone from being a goal to achieve at some nebulous future date to something that is a matter of survival. Companies of all kinds have come to see the numerous potential benefits of digitizing their practices and are embracing it as a result. The same is true of supply chains. Perhaps even more so.

An article by McKinsey explains as much,

McKinsey research suggests that, on average, companies that aggressively digitize their supply chains can expect to boost annual growth of earnings before interest and taxes by 3.2 percent—the largest increase from digitizing any business area—and annual revenue growth by 2.3 percent.

This article by Morai Logistics covers the top 5 advantages supply chains that digitize their operations are set to experience.

Decision-Making

A critical component of a healthy supply chain is the framework in place that drives its decision-making. Through the technological advancement digital transformation brings with it, that framework evolves as well. Getting access to machine learning in particular means supply chain managers can have very accurate predictions at their disposal. Which in turn can help them be much more precise with their decision-making.

As the earlier mentioned McKinsey article outlines,

Machine-learning systems can provide supply-chain managers with recommendations for how to deal with particular situations, such as changing material planning and scheduling in response to new customer orders.

Automation

In turn, digital transformation also unlocks automation. Which is set to play an enormous role in boosting supply chain productivity and efficiency. It does this in several ways. This includes reducing manual errors, completing laborious tasks faster, and making data collection more reliable and accurate. Automation is central in making tedious, repetitive supply chain work faster and more accurate, while involving less waste.

Customer Experience

Moreover, digitization brings with it a significant improvement to the customer experience companies can give their clients. This is because it enables clients to have end-to-end engagement. They can track their orders throughout the shipment and delivery process. This gives customers the transparency that they’re after and the peace of mind that comes with it.

Integrated Processes

Additionally, supply chains have gotten larger and more complex over the years. This is in large part due to the opportunities and costs globalization has brought with it. As such, it’s more important than ever for the many parts that make up a supply chain not to be silo’d but rather be integrated into one system where they can all be followed. Digital transformation means being able to have a single data management platform where all the disparate parts of a supply chain can be kept track of. This also means less resources and time spent on keeping up that tracking.

Future Growth

Finally, it’s important to keep in mind that digitization isn’t just some checkmark or objective to reach and move on from. It’s a mindset, culture, and infrastructure that allows for continued innovation and access to future technological advancements. It’s a foundation from which all future development can be built upon.

Slack addressed this in a post last year,

 New technologies will continue to shake up customer expectations and processes. A digital business builds resilience by replacing rigid structures and inflexible processes with a workplace culture and infrastructure that can respond and adapt to new demands.