Digital Supply Chain Management – Application in Logistics

Business and technology have become more inseparable over the years and smart entrepreneurs are keying into the trend and gaining a competitive advantage. An example of such a trend is digital supply chain management. 3PL logistic companies in particular can expand their business operations by leveraging technological innovations.

Luis Lopez

The huge influence of advancement in digital technology on our world cannot be overemphasized. This influence also results in changes in the behavior of customers. Today’s customers behave and interact digitally across many social media and digital channels. However, many supply chains are unable to keep up with this spontaneous and unpredictable demand and customer behavior.

Smart businesses and companies are leveraging the use of artificial intelligence to enhance and automate their supply chain processes. In this post, we’ll take a look at what supply chains and digital supply chains are.

What is a digital supply chain?

Before we go into what a digital supply chain is, it’s important to understand what a supply chain means. A supply chain simply refers to the entire cycle of production and sales of products, from the sourcing of raw materials to production, all the way to the final steps of customer purchase, distribution, and after-sales support services.

In simpler terms, one may also refer to a supply chain as a well-coordinated network that encompasses a company’s entire business activity and processes, which includes sourcing, manufacturing, and product delivery.

Traditional supply chains are often faced with various challenges, including sudden changes in demand, unanticipated barriers to supply, profitability, and productivity-related issues. Adopting the use of a digital supply chain, however, can help reduce most of these challenges to the barest minimum, as well as improve process efficiency.

A digital supply chain refers to a collection of processes driven by technologies such as predictive analytics, artificial intelligence, machine learning, and advanced analytics to facilitate control and visibility along a supply chain network. That way, businesses can get real-time data and feedback that enable them to make crucial decisions about the source of raw materials they require, the current demand for their goods, and all the processes and steps in between.

Digital supply chain management

Digital supply chain management may be described as the systematic application and monitoring of digital supply chain processes to gain a competitive advantage in business. It is all about coordinating and interpreting all the elements of a supply chain process while making critical business decisions.

Managing a digital supply chain effectively in logistics involves the adoption of predictive analytics to determine inventory allocation and carry out accurate demand forecasts through the use of digital technologies.

Companies and businesses are required to evaluate their supply chain setup from time to time. Over the last decade, several technologies have been developed to transform the traditional methods and processes of sourcing, production, and distribution to the end user.

That being said, digitalizing supply processes means there is the potential to attain unprecedented heights in supply chain coordination and automation.

Essentially, the infusion of digital technology into supply chain management adds some degree of efficiency and effectiveness to the entire process. Therefore, managing a digital supply chain network involves the use of digital innovations to have a bird’s eye view of operational logistics, supply chain planning, and other performance metrics while identifying critical pain points along each step.

Digital supply chain strategy

Switching from a conventional supply chain setup and fully digitizing supply can pose a huge challenge for most companies. However, businesses can make the switch hassle-free by sticking to a proven and viable digital supply chain strategy. Companies can follow these simple laid-down steps to ensure a transition to a functional digital framework.

Risk identification

First, you need to analyze every process of your current supply chain and take a critical look at all possible risks that come with the implementation of a digital supply chain. Identify the pain points and ensure you set aside resources to maneuver and get through them.

Access whether other parties are ready for the imminent supply digital transformation; these include your suppliers and other parties that will be part of the whole setup. What risk does each supplier contribute to the system? Conducting a comprehensive risk assessment is critical to preventing unnecessary pitfalls along the way.

Goal setting

When making the switch to a digital framework, the importance of setting actionable goals cannot be overemphasized. You will need to be sure that the digital technology you are adopting will improve your business operations and productivity.

There should be systems in place to measure progress and identify situations that need improvement. You should know the exact actions to take if you fall short of specific goals and expectations at any point.

Communication

Ensure all stakeholders are carried along and updated regularly about all the digital technologies and processes in use in the supply chain. They need to be aware of the projected benefits of digitization and every hand needs to be on deck to achieve the end goal. Effective communication can help strengthen existing trust among all stakeholders involved in the supply chain process.

There will always be certain fears about new technology and you should take proactive steps to alleviate them. Your company may struggle to make a smooth transition if your digital transformation agenda is not fully accepted and adopted by all partners and employees.

Assessment

Supply digitization is never a set-it-and-forget-it initiative. Your setup will always require constant tweaking, adjustments, and optimization. You should periodically review the performance of every step of the entire process to see what needs improvement.

Risk management and cyber security are also critical components of periodic assessment and monitoring. Set up ongoing cyber security and risk management to further improve and strengthen your digital supply chain management initiative.

Benefits of digital supply chain management

Digital supply chains aren’t without their risks, however, the benefits and advantages dwarf the disadvantages.  A well-structured and well-implemented digital supply framework helps companies cut costs, save time, manage risks, and reduce disruptions to the barest minimum. Some obvious benefits of digital supply chain management include:

• It can help improve performance and productivity
• Companies can run smooth and fast procurement processes
• It can help facilitate innovation, improve camaraderie at work, and connect more systems
• Companies can optimize their production and minimize waste