In today’s business world, supply chain management is more important than ever. With the rise of online shopping and the globalization of businesses, managing a supply chain can be a complex task. Luckily, there are plenty of resources and software available to help you get started. Here’s everything you need to know about digital supply chain management.
What Is The Digital Supply Chain
Traditional supply chain strategy is becoming increasingly outdated and inefficient. Many businesses are turning to digital supply chain solutions to modernise their supply chains and improve their overall strategy. Digital supply chain reforms can give various advantages, including enhanced visibility, increased efficiency, and cost savings.
The global digital supply chain market was valued at $3,918.00 million in 2020 and is expected to grow at a CAGR of 13.2% to $13,679.00 million by 2030.
Simply put, a digital supply chain is a distribution and logistics management strategy based on digital technologies. Whether you’re using software to manage inventory, integrating mobile technology with the distribution warehouse, or using smart devices to generate automatic alerts and reports on the status of your inventory—all of your current business processes can benefit from digital supply chain management.
The digital supply chain is a term used to describe how businesses manage the delivery of products and services to customers. The components of the digital supply chain include:
• Sales—This is where a consumer orders a product online or gives his/her contact information for follow up business.
• Materials—This is the manufacturing or sourcing process that creates the goods that are sold to consumers. For example, it may be the creation of an iPhone or an order of donuts for a bakery.
• Manufacturing and Distribution—This is the actual process of making or shipping goods and services to customers.
• Customer Engagement—This is the stage where a business interacts with its customers. For example, this may be through an online sales platform or a call center.
• After Sales Service—After a product has been purchased and delivered to a customer, the business must still provide help if something isn’t functioning properly or the customer is dissatisfied in some way. An Apple Genius Bar may be considered an example of after sales service for their products.
Each element of the supply chain can be managed by different groups within a company, or even outsourced to third parties.
How To Implement A Digital Supply Chain
The global digital supply chain market share was led by large organisations in 2020, and this dominance is projected to continue in the future years.
For many businesses, these benefits are enough to garner them to the digital supply chain, but the real question is how you will know when it is time for your business to make the switch. There are several things that you need in order to make a successful transition:
1. A Shift In Thought
Like most things in business, a shift in thought is required before a company can successfully implement and maintain a digital supply chain. The change from thinking about inventory as products that you simply buy and sell to thinking about it as assets that you track and retain will require quite some rethinking on your part.
2. A Collaborative Approach
Digital supply chains are new to many businesses, so it is important to start with a collaborative approach. This means that everyone involved in the process needs to work together instead of at odds with each other. This will help your business run smoothly (and you will save money) because you’ll be able to bring more efficiency into your operations as a result.
3. Get Started
The sooner you get started, the better off you’ll be because it will take a while before you build up an adequate database of product data and customer information. This will ensure that from the beginning, your company operates within standards and best practices for supply chain management techniques like lean manufacturing and Six Sigma quality control techniques.
Benefits Of A Digital Supply Chain
The benefits of a digital supply chain include increased efficiency, better customer service, improved employee morale and countless other factors. The following are just a few key advantages of using digital tools for your supply chain:
1. Improved Efficiency
A variety of new techniques and programs have made it easier to manage an entire supply chain from start to finish. For example, an automated order management software system can track the entire manufacturing process (from suppliers to manufacturing to shipping) by tracking inventory and updating accurate orders as they are received. This allows businesses to smooth out the peaks and valleys in production schedules by keeping on track with its inventory levels.
2. Tracking And Reporting
Tracking information with software allows businesses to know exactly where their products are at any time. For example, if a smartphone or tablet gets lost or stolen, businesses can be notified immediately because the device is registered through the company’s network system.
3. Customer Satisfaction
Customers today have many different options for obtaining customer services. Providing the most efficient customer service possible will improve your reputation and help you to attract new customers.
4. Employee Morale
With all of that paper-based paperwork and waiting on customer response times, employees can become lackadaisical about their jobs at times (and low morale is never good for business). With the myriad of customer service options available today, employees can contact customers through their mobile devices while they are on their way to work.
In addition, companies can use cloud computing to store employee and customer information and documents on secure servers. Consistency and accuracy of data will help to improve employee morale by reducing mistakes and time spent waiting for customer service representatives.
5. Reduced Costs
Cutting costs (25%), SCM automation (25%), and market expansion (23.7%) were the causes that raised supply chain spending in 2018. Data and analytics (6.6%) were followed by customer service (4%), adding fresh talent (4%), eCommerce (2.6%), direct-to-consumer sales (2.6%), and mobile-enabled customers (1.3%).
It’s common for companies to purchase multiple products from one supplier or vendor at once. This is inefficient because you’re paying for multiple items when you really only need small amounts of them (and it’s not like the vendor cannot scale up production).
6. Better Coordination
The digital supply chain is more efficient because it allows all of the businesses involved to work together, instead of in silos. For example, Amazon offers warehousing services to third party sellers on its website. This kind of coordination makes it easier for businesses to work with each other by providing a single point of contact for vendors and customers alike.
When a business uses a single vendor, they give up some transparency into the supply chain process. However, when all three parties (vendor, manufacturer and customer) are connected through the same software or mobile device system, there is increased transparency so that everyone involved can see what’s going on at any time.
8. Improved Customer Service
A digital supply chain can make customer service easier for businesses. For example, when a customer orders a product online, the business can alert that customer as soon as the item has shipped.
Conversely, a company can provide more personal service because they are aware of every aspect of the shipment’s journey from production to delivery. In addition, a company can use mobile software to track the status of their products better and give more personalized help if needed.
9. Reduced Risk
There are several types of risk that a business can face in today’s digital supply chain. For example, a product could be tampered with, or it could be stolen outright. Giving up too much data about customers and products online makes a business vulnerable to cyber attacks.
With each additional tickbox on the purchase order, when you increase exposure by a hundred percent, there is more of an opportunity for a malicious actor to gain access to sensitive information.
How To Optimize Your Digital Supply Chain
Following COVID-19, the worldwide digital supply chain market was assessed at $3,918.00 million in 2020, with a CAGR of 13.2% predicted to reach $13,679.00 million by 2030.
It is important to remember that when you implement a digital supply chain, there are certain elements you will be missing out on if you do not have a plan for the transition. While it may seem simple to implement an efficient digital supply chain from the get-go, it can actually be quite difficult and tedious. The following are some things that you need to keep in mind if you want your company to make an effective transition:
1. Building A Data Warehouse
A data warehouse is a repository that businesses create so they can store all of their various information regarding internal and external customer orders, shipments and operational data. They are extremely useful for businesses looking to increase efficiency and reduce costs in their supply chains.
2. Developing Smart Contracts
Smart contracts are digital contracts that help block parties exchange value or assets over the internet by running on blockchain technology. They help connect physical supply chains, which reduces the amount of movement needed to perform transactions and can also minimize fraud risks through encrypted data transfers.
3. Building A Payments Platform
The payments industry is vast and complex, so it is a good idea to leave it to experts when implementing a digital supply chain into your business’ system. When you are tasked with the responsibility of managing payments from customers to suppliers, that means you will be providing a seamless experience for your customers.
The process of moving manufacturing processes out of a country to save costs on labor and shipping is common in the digital supply chain because it does away with the human element and allows for movement without human intervention. This process can create jobs overseas that can help cripple an economy if unchecked, so it is important that management always keep their eye on this aspect of their business.
5. Standardizing Data
When companies introduce new technology into their supply chain, they must make sure that all parties are on the same page regarding the use of that technology. For example, if you want to implement a digital supply chain in your company, then you will want to make sure that everyone in your company knows how to use it effectively and efficiently when the time comes.
Top Tools For Digital Supply Chain Management
In order to improve supply chain visibility and supply chain performance, businesses need to develop innovative business models and digitize their supply chains. Resilient supply chains are those that can rapidly adapt to changes in the marketplace and continue to function effectively.
57% of businesses believe that supply chain management gives them a competitive advantage that allows them to grow their business.
Some of the best tools available for creating a digital supply chain include:
1. International Smart Logistics
One of the most important parts of creating a digital supply chain is logistics. International Smart Logistics can help you optimize the movement of goods and services by providing you with intelligent shipping route optimization software, which will save time and money for your company and its customers.
WorkHound is a great tool that gives small business owners an easy way to hire an intern or contractor. It’s a digital platform that offers a variety of search filters, which makes it convenient and easy to find the perfect candidate, which helps your business run more smoothly.
Tradegecko is a great option for international business owners as it allows you to find the right trading partner in over 100 countries and connect with them through an online platform. It also has helpful information on trade regulations, duty rates and duty calculators.
Intelligent Digital Supply Chain Trends
In recent years, logistics processes have undergone a digital transformation, with new technologies such as machine learning and demand planning playing a major role. This has made the process more efficient and accurate, and has helped to improve customer satisfaction.
The majority of industry professionals (70%) believe that the supply chain will be a key driver of greater customer service by the end of 2020.
Technologies are changing rapidly and continuing to evolve at an unprecedented rate, which is a huge advantage for companies today. For example:
1. Artificial Intelligence (AI) Technology
AI technology, more commonly known as deep learning algorithms and artificial neural networks, is littered across the internet today and will be present in every facet of our lives soon, even in the workplace.
Using complex algorithms to learn about your behavior on a daily basis will allow for new Virtual Assistants (like Alexa) to self-learn without a human ever having to tell it what to do next.
2. Predictive Analytics
Predictive analytics is a technology that can make your supply chain more efficient and safer by providing valuable information about your customers. For example, it can detect trends like excessive demand for certain products, produce reports on how much stock you’re holding and predict when you’ll need to restock your shelves in the future.
3. Voice Interaction
The use of voice interaction is becoming more and more popular in modern business today because of the ways it brings convenience to mobile customers, especially when buying online or over the phone. For example, a business like Amazon or Zappos will use voice interaction for their customer service purposes.
4. 3D Printing
3D printing is a technology that is becoming more and more revolutionary every day, especially in the manufacturing of new products. We can now start to print parts of a product, which creates less waste than if they were to be manufactured solely by traditional methods. This includes recycling; it’s one of many sustainable technologies that businesses can use to help reduce their carbon footprint.
IoT stands for Internet of Things and is a technology that can do everything from tracking your inventory to optimizing delivery routes as items move through your supply chain on their way to the customer. The increased connectivity with digital technology can help manufacturers and businesses improve their supply chains by utilizing this technology in the right way.
6. Robotic Process Automation (RPA)
RPA has revolutionized many industries, but especially in the business world. RPA is a tool that allows engineers to utilize automation software to create solutions on their own without having to rely on costly human labor. It is core to cutting costs and improving efficiency within your company’s supply chain, which will make you better off in the long run.
Digital supply chains are becoming the norm for many businesses because of their increasingly positive impact on the bottom line. Savvy executives want to improve (and secure) their business’ bottom line; as a result, it is no surprise that more and more companies will be incorporating a digital supply chain into their operations in the coming years.