How Digitization Improves Supply Chain Efficiency, Agility and Customer Focus

Industry 4.0, also known as the fourth industrial revolution, is currently underway. It is the term used to describe the rapid technological trend that is driving interconnectivity, automation, machine learning, and real-time data.

Today's supply chain is a series of largely discrete, siloed steps from marketing, product development, manufacturing, and distribution to the customer's hands. Digitization breaks down those barriers, transforming the supply chain into a fully integrated ecosystem that is fully transparent to all of the players involved — from the suppliers of raw materials, components, and parts to the transporters of those supplies and finished goods, and finally to the customers demanding fulfillment.

In this post, we will evaluate what a digital supply chain is and how it can improve efficiency, agility, and customer focus.

What is supply chain digitization?

The movement toward a fully integrated sequence of planning and production solutions that work in parallel to create a more visible supply stream across each touch point of the value chain is known as supply chain digitization. The end result is a more responsive, agile, and transparent supply network that can easily adapt to several unknown industry variables such as inventory shortages or oversupply, order modifications, and resource availability. Companies can benefit from lower production and operational costs, shorter lead times, and improved reporting and data analysis capabilities, which can fuel better planning and production programs, as a result of this integration and digital transformation.

The application of advanced digital technologies to the traditional supply chain management paradigm results in a digital supply chain. Among these technologies are:

  • Cloud Computing
  • Software as a Service (SaaS) 
  • Big data
  • Intelligent automation
  • Machine learning
  • Natural language processing (NLP)
  • Virtual reality and augmented reality
  • Blockchain
  • Internet of Things (IoT) 

Benefits of a digital supply chain

The digital revolution has radically altered modern human society. This era includes supply chain digitization, which is redefining how global supply chains operate and deliver value.

Digital supply chain management is centered on electronic technologies, connectivity, data, and advanced analytics. These elements, when combined, provide the following benefits, especially when adopted by all partners along the value chain:

Improved visibility into supply chain performance

Compared to traditional supply chains, a digital supply chain provides significantly more visibility into its elements and moving parts. Organizations can get real-time visibility into supplier performance, allowing them to identify gaps that may cause disruptions and then address them.

Digital supply chains are also more customer-centric, so companies can better understand customer needs and take actions to improve customer experiences.

Process automation

The traditional paper-based, manual supply chain operations are replaced with a digital supply chain. It eliminates manual data entry and the requirement for stakeholders to call or email for updates. Thus, all parties gain access to all of the necessary data and can improve their processes without the need of a collaboration with a partner company.

Business processes are also automated as a result of digitalization, which improves process efficiency as well as worker productivity, performance, and profitability. Sensors and other digital instruments enable real-time inventory tracking across the supply chain. Finally, technological connectivity allows businesses to improve their supply chains and develop new business ideas.

Reduce costs while increasing innovation

A digital supply chain offers real-time, comprehensive data on performance, status, and requirements. Raw material flows, operational logistics, inventory levels, forecasting, and resource planning are all processes that can benefit from this data. These are immediate advantages of increased cash flow and expense savings.

Improved information sharing and collaboration allow for the identification of process bottlenecks, the reduction of time-to-market, the acceleration of innovation, and the improvement of the return on invention.

Advanced analytic and data

Many data-driven technologies, such as big data, machine learning, IoT, and predictive analytics, enable the digital supply chain. Businesses can connect and associate data sources for better inventory management and preventive maintenance.They can use data to find inefficiencies, improve product quality, and improve customer service.

Advanced analytics that depict data can be provided via a digital supply chain, allowing users to learn from mistakes, make predictions, and improve decision-making.

Improve supply chain planning

Identifying potential problems and predicting their consequences in traditional supply chains can be time-consuming and unreliable. Shared and up-to-date quality and control data in a digital supply chain enables companies to foresee issues and respond quickly before the problem escalates.

Furthermore, digital supply chain management simplifies the planning and management of all supply chain workflows, including:

  • Sourcing 
  • Procurement
  • Conversion
  • Inventory management
  • Logistics management

Companies can improve the performance of the end-to-end value chain by better coordinating and collaborating with various stakeholders such as third-party service providers, vendors, intermediaries, and customers using digital tools and technologies.

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