Long gone are the days of clunky paper records: it’s a digital landscape in supply chain now, and digitization is king.
Supply chains include a wide variety of participants focused on the manufacture and distribution of products or services. That may seem simple enough but, in reality, the process is complex and, too often, fragmented. While some links in the chain take steps to enhance efficiencies, others still rely on dated technology to perform their tasks as part of the chain. Today, industry experts recognize the importance of supply chain digitization and encourage companies to explore ways digitization can enhance their performance.
Supply Chain Digitization
Everyone in a supply chain performs a particular step that must be completed before a company can move onto the next step. When any organization along the supply chain path fails to develop an effective strategy for completing their role in the supply chain, the overall performance of the chain can, and often will, suffer. Defining and implementing a supply chain strategy cannot be accomplished by one link in the chain; the process must be determined by everyone involved.
In the past, paper trails ruled the manufacturing and supply chain environment. Every step of a process relied extensively on paper documents that were forwarded to those at various points in the chain.
Today, that type of process is increasingly ineffective as everyone involved needs a constant flow of data to effectively function. That means digitization is, for all intents and purposes, the only logical way for each element of the chain to know with any certainty what is happening along the chain at any given time.
A digital supply chain, then, is a system allowing supply chain visibility to every stakeholder along the chain. To be effective, every link in the chain must adapt their practices to incorporate the technology necessary to make that happen.
Understanding the Relevance of Digitizing the Supply Chain
When information is physical in nature rather than digital, efficiency suffers.
“The use of paper in modern business and the supply chain is tantamount to inefficiencies,” said Adam Robinson, Marketing Manager at Cerasis. “What happens if you have the right documentation but your business partners in another city have no clue what is going on? The answer is simple: your information is living in a world of silo-based tracking.”
The implications are staggering in an age where complicated relationships are required to deliver products to an end user. Although a specific organization may know the status of a product, others in the chain are not able to access that information easily, making it impossible for those members of the chain to maximize their organizational efficiencies.
Meeting the Challenges
Overcoming the obstacles preventing effective supply chain management won’t necessarily be painless for every organization. There are several roadblocks organizations must tackle. SCDigest mentioned several factors that must be addressed in its 2016 Supply Chain Digitization Benchmark Survey.
Overcoming issues with integrating internal systems is a daunting task for supply chains. Without effectively dealing with internal systems, it would be virtually impossible to provide a level of transparency required for digitizing the supply chain. The required data simply wouldn’t be available to others in the chain.
The study also revealed that staff members simply don’t know what their role is in the process, which exacerbates other issues. Complete, accurate data is an absolute necessity for creating a transparent environment where everyone involved has immediate access to that information.
Companies Continue to Explore Options
“The majority of supply chains are increasingly focused on digitizing their supply chains—and know doing so will give them acompetitive advantage,” said Kaitlyn McAvoy, Editor at Large for Spend Matters, on the recent report from JDA Software Group.
Only about 10 percent of organizations have established a comprehensive digitization strategy. That statistic suggests there is a great deal more to be accomplished before digitization of supply chains is fully realized.
It appears that organizations are rapidly recognizing the importance of integrating supply chain digitization, but they still have a considerable way to go before the process is fully visible across the spectrum of supply chain members. Since organizations integrating digitization enjoy a competitive advantage, it’s likely there will be increasing pressure to speed up digitization and, as a result, enhance customer service to all shareholders in the chain.
