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How Digitalisation Improves the Supply Chain

by Ethan
July 31, 2022
in Business
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How Digitalisation Improves the Supply Chain
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With the world marching towards digitalisation, many innovative tools are making their way into the marketplace. Therefore, digital transformation is no longer a luxury; it’s an industry standard.

Supply chain digitalisation is critical for streamlining your business processes, improving cash flow, and staying competitive. Luckily, it’s not as tricky as you believe.

But before you dive into the intricacies of digitalising your supply chain, let’s discuss how it helps you:

Table of Contents

  • A Quick Glance at Digital Supply Chain
    • Understanding what Drives the Digitalisation of Supply Chains
  • What are the Benefits of Supply Chain Digitalisation?
    • Opportunities for Automation
    • Improved Visibility into Supply Chain Performance
    • Better Efficiency
    • Reduced Costs and Improved Innovation
    • Improved Competitiveness
    • Ability to Handle Big Data at a Granular Level
    • Analyzing Data for Decision-Making
  • The Bottom Line

A Quick Glance at Digital Supply Chain

A supply chain entails a broad ecosystem of activities, including people, resources, business processes, and information that facilitates completing a company’s product/service.

Compliance, resilience, and sustainable supply chains are a rising priority today. These encourage organizations to transform traditional supply chains into digital ones.

A digital supply chain comprises advanced electronic and digital technology, such as:

  • Artificial Intelligence
  • Big Data
  • Blockchain
  • Cloud Computing
  • Internet of Things (IoT)
  • Machine Learning
  • Natural Language Processing
  • Software as a Service
  • Virtual Reality and Augmented Reality

Digitalising supply chains with new technologies and innovative initiatives can help optimize supply chain management, improve control, enhance resilience, and boost cash flow.

Understanding what Drives the Digitalisation of Supply Chains

For most businesses, Covid-19 acted as a catalyst for the digitalisation of supply chains.

Since 2020, many manufacturers, wholesalers, and suppliers have had to adopt new ways of working with lockdowns, reduced operational capacity, and social distancing policies. In addition, businesses had to experience disrupted supply chains and erratic customer behaviour.

For navigating disrupted supply chains, businesses started using technology to make their operations more agile, resilient, and sustainable.

What are the Benefits of Supply Chain Digitalisation?

Supply chain digitalisation is redefining how global supply chains operate and deliver value. While its benefits are endless, here we discuss the top six:

Opportunities for Automation

The digitalisation of logistics helps reduce manual tasks by minimizing the burden of administrative work on your team.

That way, your employees can invest time in other tasks requiring more attention that allow everyone to work in their areas of expertise.

In addition, automating your supply chain helps reduce human error, improving revenue lost due to those errors. It also speeds up processes.

Improved Visibility into Supply Chain Performance

Unlike traditional supply chains, digitalised ones offer better visibility into their elements and moving parts.

In fact, a study by IBM revealed that 84% of chief supply chain officers said poor visibility across the supply chain was the leading cause of inefficiencies and waste.

By digitalising supply chains, companies can access real-time visibility into supplier performance to effectively identify areas that need improvement.

In addition, digitalised supply chains are customer-centric, so organizations can understand customer needs better and enhance customer experiences effectively.

Better Efficiency

Digital supply chains provide opportunities to integrate and speed up processes. As a result, organizations can improve overall operational productivity.

For instance, if your business installs picking software or conveyor automation, you can improve the efficiency of warehouse processing.

Reduced Costs and Improved Innovation

Digital supply chains provide organizations with a holistic view of the supply chain’s performance, status, and requirements.

With this information, businesses can manage and optimize processes like operational logistics, raw material flows, resource planning, forecasting, and inventory levels.

As a result, organizations can improve cash flow, cut costs, improve information sharing, create opportunities to identify gaps in processes, and enhance innovation.

Improved Competitiveness

Multiple studies prove that digitalisation can help businesses flourish during economic uncertainty like slowdowns and recessions.

Although only a handful of companies flourished before, during, and after the recessions between 1980 and 2000, they had a similar business strategy and contingency plan based on:

  • Cutting costs by improving operational efficiency
  • Investing in assets like technology, plant, and machinery
  • Investing in R&D and MARKETING

As a result, the organizations outperformed their competitors by a whopping 10% in sales and profit growth.

In the same way, supply chain digital transformation today provides businesses with a competitive edge and improves resilience.

Ability to Handle Big Data at a Granular Level

Digital supply chains utilize advanced technology that provides the data insights businesses need to make informed decisions and identify areas of improvement.

In addition, it allows teams to handle big data at a granular level, whether it entails tracking individual SKUs or forecasting stock levels item by item.

Analyzing Data for Decision-Making

Businesses must make the right decisions quickly in the manufacturing, transportation, and logistics industries. Thus, agility is a must.

Fortunately, a digitalised supply chain allows organizations to collate and analyze significant amounts of data with less effort, less time, and better efficiency.

So, you can use the acquired knowledge to build strategies, plan scenarios, and make smart business decisions.

More importantly, you can incorporate the real-time information you’ve gathered to improve customer experience, reduce waste, and boost sales.

The Bottom Line

Supply chain digitalisation is the way to the future and will continue to deliver value.

Organizations focusing on the digital supply chain will enjoy customer satisfaction, resilience, efficiency, and cost savings. However, those that continue using traditional supply chains will struggle to succeed.

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