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HomeSupply ChainKey Considerations for Transforming to Digital Supply Chains

Key Considerations for Transforming to Digital Supply Chains

Digital technologies are transforming more and more companies from their traditional supply chain structures. These technologies turned them into collaborative digital models, improving their agility, visibility, flexibility and coupled with the centralization of control. A connected supply chain enhances the security in the business organization process automation. At the same time, this will accelerate innovation and bring the costs down. In order to ensure that organizations can take advantage of the digitized supply chain models, it is important that they make it an integral part of the overall business model as well as the organizational structure. This article discusses the key issues to be considered when companies planto transform and digitize their supply chain operations from the traditional approach.

Greater Visibility

Visibility refers to how easily one can track the movement goods as they are purchased, manufactured, and transported to their final location. This is crucial as it provides the ability to all parties involved in the supply chain to see where potential issues are developing. Real-time monitoring can now be done to update on delivery status as well. With the updates, it allows the warehousing team to get ready well in advance and create storage space for the product. While at the same time it will also make it easier for the team to address impending issues. This also allows adjustments to be made as and when it is needed, before they become full-blown disasters. Besides removing stress for the team, decreasing interruptions at any level within a shipment’s journey through the supply chain will also result in an increase in customer loyalty. This practice improves the transparency in the supply chain while improving on the trust and collaboration of the team. All who are involved will have peace of mind, as there is no one that is deliberately trying to hide information. This is especially true during the pandemic. During the lockdown, everyone either wants or needed to know exactly where their goods or products are at all times. In the traditional approach, visibility in the supply chain relied on primitive means such as spreadsheets. But these tools are fast becoming obsolete as the world moves toward digital transformation. The greater visibility also helps in opening up numerous new streams of data that might have once been invisible. These data can be used for analysis and to plan future processes with optimization of strategies. Moving forward, all members of the supply chain can now effectively utilize this data, speed up transactions while at the same time fine-tune their processes.

Creating Centralized Control

For global corporations with a large supplier base, creating a centralized supply chain operations would be beneficial and make sense.  The reason being that even though the business units of these organizations might not only be separated geographically but they could also have different ERP systems or there are other priorities or metrics involved. This fragmentation obscures the visibility of what is actually going on. Thereby making reducing costs, achieving operational efficiencies and managing spending even more difficult. With the right supply chain management software, there is centralized control as they connected the organization’s current ERP systems. At the same time simultaneously act as a central repository of data so that all locations speak the same language, thereby improving efficiency and resilience. This combination of the built-in collaborative tools with the unified data model allows the team to work closely together and effectively mitigate any potential risks. Software companies can now offer supply chain management software which can unify systems to get complete automation of processes and transparency. At the same time, they also empower people to build supply chains that are stronger and with more agility.

Bringing Costs Down

The modern supply chains are actually more intricate and widespread as compared to the traditional supply chain structures. There are potential risks and the possibility of monetary losses. As part of a larger supply chain strategy, companies are focusing on their operations to reduce overall costs. They do this by optimizing warehousing storage space, reduce damages, and etc. One of the solution to space optimization is by having multi-client facilities. This is where costs will be shared across multiple companies. These companies will only pay for the area they use and it is not necessary to hire their own employees.Another potential area to bring the costs down is to invest in warehouse automation where processes can be streamlined while reducing labour costs and improve efficiency. Even though investing in technology, is a huge investment for most companies, it actually usually pays off in the long run. Many improvements can be made using technology i.e. savings energy costs in warehouses, as well as those on storage units which use movement sensor lights.

Connected Supply Chain

Smart logistics, such as the automation of warehousing, tracking of cargo and remote fleet management, can be transformative. With the advancements in supply chain technologies, companies now have real-time insights into the location and status of products. Technologies such as Bluetooth Low Energy (BLE) and cloud-based GPS assets tracking provide instant updates on cargo in transit. Nowadays real-time tracking are used to gauge performances of transportation and the inefficiencies of delivery routes. Digital technologies have been instrumental in improving adaptability while optimizing the supply chain. Internet-connected sensors can not only be used to detect supply chain disruptions or quality issues. But can also be used to address the issues raised or adapt production flows in real-time with minimal human intervention. When done right, visibility, responsiveness and resiliency across the entire supply chain eco-system will be increased.

Supply Chain Sustainability

This refers to efforts made by organizations to consider the environmental and human impact of their products’ journey throughout the supply chain. Starting from sourcing of raw materials to production, storage, delivery and every aspect in between. The purpose is to minimize environmental harm from factors such as energy usage, water consumption and waste production. This also addresses global issues such as water security, deforestation, climate change, human rights, and etc. Thus generating positive impacts on the communities and the people in and around their operations. While the traditional supply chain management focused on the costs, speed and reliability of operations, sustainable supply chain management adds the goals of upholding societal and environmental values.


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References

BDO Digital (2021). “Supply Chain 4.0: 6 Ways Digital Transformation Is Transforming The Supply Chain”. Retrieved from https://www.bdo.com/digital/insights/digital-transformation/6-ways-the-supply-chain-is-transforming, accessed on 22/03/2022.

David Toh Rongli, ADPSM (2019). “Six Crucial Factors On Cyber Security For Healthcare Procurement”. Retrieved from SIPMM publications: https://publication.sipmm.edu.sg/six-crucial-factors-cyber-security-healthcare-procurement/, accessed on 22/03/2022.

Gajendran Rozer Benny, GDLSCM (2021). “Strategic Considerations For Compliance To Incoterms. Retrieved from SIPMM publications: https://publication.sipmm.edu.sg/strategic-considerations-for-compliance-to-incoterms/, accessed on 22/03/2022.

GEP, Supply Chain Software Blogs (2021). “When To Centralize Or Decentralize Your Supply Chain And Why To Do Both”. Retrieved from https://www.gep.com/blog/technology/when-to-centralize-or-decentralize-your-supply-chain-and-why-to-do-both, accessed on 22/03/2022.

Ginna Koo, GDSCM (2017). “Digital Procurement For Effective Supply Chain Management”. Retrieved from SIPMM publications: https://publication.sipmm.edu.sg/digital-procurement-for-effective-supply-chain-management/, accessed on 22/03/2022.

Redwood Logistics (2022).“Why Visibility Is More Important Than Ever To The Digital Supply Chain”. Retrieved from https://www.redwoodlogistics.com/why-visibility-is-more-important-than-ever-to-the-digital-supply-chain/, accessed on 22/03/2022.

Saurabh Singh (2022). “Supply Chain Digital Transformation: How And Why It Matters To Your Organization?”. Retrieved from https://appinventiv.com/blog/digital-transformation-in-supply-chain management/#:~:text=Why%20does%20digital%20transformation%20matter,mitigate%20risk%2C%20and%20optimize%20costs, accessed on 22/03/2022.

Sunil Gunwani, GDLSCM (2021). “Best Practices For Building Sustainable Supply Chains”. Retrieved from SIPMM publications: https://publication.sipmm.edu.sg/best-practices-building-sustainable-supply-chains/, accessed on 22/03/2022.

Maggie Byrne, GDPSCM
Maggie Byrne, GDPSCM
Maggie Byrne has 20 years of substantive experience in the specialised field of procurement. She holds the Diploma in Procurement and Supply Management (DPSM), and she is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Maggie is an Accredited Procurement Professional, and holds several competency certificates in the area of procurement and supply chain. Maggie completed the Graduate Diploma in Procurement and Supply Chain Management (GDPSCM) in April 2022 at SIPMM Institute.
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