Supply chains are a critical part of keeping the world economy flowing – yet many supply chains still operate using old-fashioned and analog methods where suppliers focus too much on their step in the process instead of the big picture. This makes it more difficult to ensure end-customer excellence through the delivery of high-quality goods on time in a sustainable way.
Several factors can detract from customer excellence in supply chains: modifications made by end customers themselves, unexpected disruptions like the global Covid pandemic, and local disruptions like material quality issues upstream or any operational challenges. But issues like these can be dealt with more effectively by digitalization of the supply chain.
The process of going digital
The digitalization of supply chains should be a stepwise process that begins by bridging the nearest actors in your ecosystem. A common pitfall is that scope gets too big and the business impact of different supply-chain actors, and therefore motivation to go digital, gets vague. Also, the combined digital architecture gets too complex to handle in one, well-defined project.
The objective is to make the flow through the nearest links of the chain so smooth that the different actors will be able to understand their role in the whole chain and react to changing customer needs in real-time, without material losses or delays – helping to ensure an excellent end-customer experience. This is especially true for fragmented supply chains, where digitalization has greater potential than with already big centralized players.
The three benefits of digitalization
There are three key benefits to the digitalization of supply chains. The first is increased and easier access to data. However, just digitalizing and sharing all data isn’t possible or even desirable. In order to achieve efficiencies through shared data, the minimum level of data types and quantity needs to be scrutinized. This needs to be determined on a case-by-case basis, but could for example include operational data such as material availability dates, delivery dates, and any deviations from regular conditions.
Secondly, once there is an established way of sharing data between actors in the supply chain, this leads to increased transparency. This kind of data transparency enables all actors to see the big picture and understand their role in delivering high-quality goods in a timely fashion and in a sustainable way. Also, being able to draw insights from the data works as an excellent platform to further develop the chain operations and deepen the relationship between actors.
Thirdly, digitalization also helps vendors to become more resilient to disruptions. With easily shared data and the ability to automate processes like RFQ, and building and maintaining approved vendor list (AVL), vendors can more quickly search for replacement suppliers when needed due to external and unexpected shocks. When it comes to responding to customer requests for changes, quickly sharing data with suppliers ensures that these changes can be met. Again, the result is a supply chain that better meets end-customer expectations.
How to get started with digitalizing your supply chain
In order to ensure the best chance of success for moving towards digital supply chains, a competent partner who understands your business area and the needs of supply chains – while also having the relevant expertise to bring key tools into use – is essential.
Digital supply chains will help enabling key stakeholders to take responsibility for the end-customer experience in a sustainable way. There needs to be a shared business objective and a shared understanding of the meaning of customer value, as this is the only way to achieve any common goal. Isolating yourself from the rest of the supply chains and only thinking of your specific role won’t be enough once the competitors move on to truly digital, customer-value-based chains that deliver the best end-customer value.
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