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Although traditional supply chain management is quite effective, it has certain limitations, including market risks, lack of cost control, data collaboration, rising logistics costs, tricky demand forecasting, route congestion, and unprecedented delays, to name a few. Therefore a digital supply chain management platform is essential.
A digital supply chain management is a set of processes that apply cutting-edge technology solutions for better functional insights within the supply chain to let each stakeholder make correct decisions regarding the sources of materials they require, the collaboration in between, and the demand for their products. The innovative technologies include IoT, blockchain, Machine Learning, Artificial Intelligence, and predictive analytics.
Visibility plays a vital role in the running of supply chains. However, the visibility in traditional supply chains is not real-time, leading to chaos in the functional processes. This is one of the core reasons why digital supply chains have become the need of the hour for most organizations. Thus, by promoting transparency and real-time visibility, raw material sources and manufacturers can easily connect to fulfill the demands of customers. This improved version of visibility nullifies all the limitations of traditional supply chains. Hence, this ensures that the supply chain always remains in sync by eliminating the disconnecting points between the parties.
Digital supply chain management revolves around streamlining all order purchase processes to achieve demand fulfillment and supply unity. It often involves seamless and fast information transfers that are scalable and translate to accurate, meaningful results. These go beyond the traditional realms of supply chain management, i.e., they are not only informative but also predictive and adaptive. This means that many aspects associated with supply, such as procurement, can be proactively controlled throughout the journey in lesser time.
The major drawback of traditional supply chains is that they generally depend on standalone systems operating in siloes with little or no data-sharing. Also, it does not emphasize customer needs; instead, it concentrates only on production and provision. As a result, they cannot swiftly identify problems along the value chain.
On the other hand, digital supply chains can adjust quickly to the shifting situations related to market disruptions and pandemics. They operate in real-time with integrated systems and processes. Digital supply chains integrate processes, approaches, and technologies involving Artificial Intelligence, Machine Learning, Natural Language Processing, Robotics Process Automation (RPA), the Internet of Things (IoT), and many more.
Digital supply chains are more resilient to demand and supply risks than traditional ones, as they react to problems and resolve them proactively, keeping all parties in the loop and informed during the process. Similarly, digital supply chains offer a more tailored experience, prompt service, and a wider variety of services. This reinforces the entire supply chain, thus enabling a seamless flow of products and services, which is not quite the case in traditional supply chains. Associating and sensing such kind of specific problems, Gartner predicts that 80% of brands that fail to unify their digital supply chain with control tower initiatives will suffer by 2026.
Due to their customer-centric and ergonomic approach, digital supply chains significantly improve customer fulfillment, retention, and loyalty. Thus, advanced technology and order fulfillment through data aggregation are other major captivating aspects of digital supply chains, as opposed to traditional ones that depend on manual inputs.
Conventional supply chains depend on planning and reaction, whereas digital supply chains are predictive solutions that make the latter more intuitively oriented. Additionally, data controls forgo the need for supply resilience assessments, making digital chains more resourceful, autonomous, and flexible when compared to traditional supply chains.
Increases visibility: Enterprises can provide more visibility across the value chain than traditional supply chains into supplier performance, thus allowing them to detect disruption-causing gaps.
Improves automation: A digital supply chain helps eliminate paper-based, manual processes such as data entry and the requirement for stakeholders to request updates through phone calls or emails. Therefore, all the information can be readily available to everybody so that they can improve their processes and collaborate with others. Besides this, digitization improves automation in business processes, which enhances process efficiency, performance, productivity, and profitability. This can be justified by a digital supply chain survey by PwC conducted in 2022 that revealed a 63% rise in efficiency.
Reduces expenses and speeds up innovation: A digital supply chain provides up-to-date requirements, performance, and status information. This data helps to optimize processes such as raw material flows, inventory levels, operational logistics, predicting, and resource planning. Thus, these are the direct benefits of increased cash flow and cost cuts.
Improves data: A digital supply chain is enabled by many data-driven technologies, including big data, IoT, Machine Learning, and predictive analytics. As a result, companies can easily connect and relate data sources to better inventory management and maintenance. They are leveraging data to recognize inadequacies, improve product quality, and boost customer experiences. It can also offer advanced analytics that visualizes data so that users can make predictions and better decisions more effortlessly.
Improves supply chain strategies: Identifying issues and predicting their likely effects can be laborious, time-consuming, and unreliable in traditional supply chains. In a digital supply chain, shared and latest quality and control data enables firms to foresee issues and respond quickly before the problem intensifies.
Besides these, digital supply chain management makes it simpler to organize and manage the supply chain workflows, which include procurement, sourcing, inventory management, conversion, and logistics management.
The first step to digitizing a supply chain is to review the basic requirements, already available resources, and layout to plan implementation. After this, the company needs to find remedies to the underlying issues to ensure the best possible performance before going live with a new system. The firm should then unify various separate departmental systems for better syncing. Finally, the gaps should be filled by surveying multiple stakeholders to assess what needs to be done, how, when, and why.
The next step is identifying and denoting commercial goals beyond operational efficiency. Thus, demand planning paves the way for more successful and strategic outcomes. Moreover, a company should ensure that all staff and the workforce are well-aware, oriented, and on board. Then, create a reliable data inventory of what needs to be digitized to run the supply chain. Lastly, companies should have an external assessment and outlook of what information can be automated.
With digital supply chains focusing on real-time insights to meet the ever-evolving demand expectations, they are faster, more efficient, and more accurate. Thus, companies can implement processes more easily and quickly with better data collation and management.
Thus, applying new technologies such as cloud computing, the Internet of Things, and big data can help firms overcome these challenges and help in the improvement of supply chain visibility.
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