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.
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.
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.
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.
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.
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.