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Digital Supply Chain, Features, Advantages and Failures

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The digital supply chain encompasses a set of interconnected processes that revolve around the customer, who is connected to the internet and is not loyal to any particular purchase channel.

The supply chain is no longer a linear process, focused on making and fulfilling orders requested by a customer who was located at the end of their operational process. Today, it is a circular process with the consumer at the center of its operations.

The processes of the digital supply chain are based on four main pillars: industry 4.0, the digitization of processes, real-time visibility and digital planning systems.

Digitization consists of a change in the transversal model of the organization. Technology alone is not the solution.

The company must have an adequate digital strategy, proven implementation methodologies, an effective performance measurement system, and people with the necessary skills and adequate management to change the culture of the organization. For an effective digital supply chain strategy, Logivice could be of great value.

What are the main advantages of the digital supply chain?

Digitization removes barriers between processes and allows the supply chain to become an integrated and transparent ecosystem for all stakeholders; from suppliers of raw materials to manufacturers of finished products or customers.

The core benefit of digitization is a leap from the 3Vs of logistics: visibility, speed, and variability. All three together generate competitive advantages.

Digitization has generated a variation in the traditional operations of supply chains. For this reason, companies seek to become more and more involved with services that are based on the immediacy of information.

There are 6 advantages generated by the digital transformation of the supply chain, compared to the traditional model.

  • Transparency, because it allows complete visibility of the supply chain.
  • Communication, since it generates information for all the participants in the process.
  • Collaboration, because it improves relations between the members of the chain, reducing friction.
  • Flexibility, because flaws in the process are detected and the necessary changes can be applied.
  • Greater response capacity at the level of planning and execution in the purchasing process.
  • End-to-end cost control.

These and many other advantages that will depend on the benefits provided by the technology platform, with which the supply chain is managed in your company.

Digital acceleration is thought as a key to the transformation of the supply chain. Inform and encourage companies of the benefits that the adoption of new technologies can bring them, not only in factors such as the profitability and effectiveness of the service, but also customer treatment and satisfaction.

Together with the incorporation of profiles and roles within companies with talent and digital skills, they form the pillars to achieve the digital transformation of the sector.

Why do technology-driven supply chain model fail?

Additionally, if we consider that 70% of all technology-driven transformation initiatives fail, the challenge is even greater.
These initiatives often fail in the first place, due to a lack of preparation and understanding of the life cycle of a transformation initiative. Second, due to the lack of a well-defined strategy for supply chain optimization. And, thirdly, due to poor or non-existent people management in the transformation process.

Therefore, many improvement initiatives have been short-lived or incomplete and the expected benefits to the business have not materialized. Faced with this challenge, companies that are going to implement the digital supply chain ecosystem cannot simply bring together technologies and develop technical capabilities. Technology alone is not the solution.

The company must have an adequate digital strategy, proven implementation methodologies, an effective performance measurement system, people with the necessary skills and adequate management to change the culture of the organization. In other words, they must transform their entire business.

Key features of digital supply chain strategy

  • Flexible strategy that allows adapting to changes as they occur in the market, with prioritized and actionable actions.
  • 3-5 year roadmap to guide supply chain transformation, and take the planning process to the next level.
  • Clear alignment with one or more corporate objectives, such as growth or customer service levels.
  • Combination of long-term objectives with a significant ROI over time and “quick wins” in operational improvements with a quick return.

Elimination of outdated roles and responsibilities, unnecessary activities, and performance metrics that no longer reflect current realities. Once the digital strategy is defined, companies must drive changes and develop new capabilities in several areas like structure and culture of the organization. They could bring value to the digital transformation of the supply chain system in an organization.

Final Words

Digital supply chain comes with a lot of benefits, threats and reasons of failures when it comes to implementing it in a fast paced industrial setup. Having fixed the norms and values of an organization in a constructive way, the success associated with the digital mechanism can be enjoyed.

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  • Source: Plato Data Intelligence: Platodata.ai

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