Written by Tom Fitz-Walter, Executive Director Supply Chain TMX
Over the last year there has been an onslaught of disruptions to supply chains across the globe. When COVID-19 first hit, supply chains around the world halted and organisations had no idea where their inventory was. Today, with global freight issues and massively blown out lead times, visibility and flexibility in supply chains remains a significant challenge.
These disruptions have seen the “just in time” supply chain philosophy thrown out the window for “just in case”.
Safety stock metrics for many companies have shifted and they are holding more inventory, which supply chain management would have penalised in the past. Having inventory and knowing where it is located is becoming more important than leaning out operations, which is bringing about a shift in focus from the physical to the digital supply chain.
Traditionally supply chains have been viewed to follow a linear path from designing a product, sourcing the materials, producing the product to fulfilling it and so on. Now with a digital supply chain, all these stages are integrated through internal and external systems to provide visibility in the whole value chain. The result is real-time analytics for smarter decision-making, data-backed predictions and more dynamic processes.
While some supply chains are only just starting their physical transformation, ongoing disruptions are now also pushing supply chains to digitalise quickly, with those that haven’t started either journey are about to be left behind.
Old legacy systems not keeping up
While systems such as Warehouse Management Systems, Transport Management Systems and Enterprise Resource Planning models are all well-established, they are all separate components that do different tasks.
Most organisations can relate to all these systems, therefore are already engaged in digitalising elements of their supply chain. However, companies can no longer only have visibility in parts of their supply chains. Organisations need to be able to track in real time the entire process from the point of origin, transit on shipping, to the distribution centre and in the case of online all the way to the consumer’s door.
Integrating the physical and digital supply chain
The advancement of an organisation’s physical supply chain needs to synchronise with their digital supply chain. Supply chains now require interconnected systems that all interact with one another to provide full end to end operational visibility.
This will enable real time analytics for rapid data-backed decision-making enabling organisations to be flexible and responsive, especially in the midst of ongoing disruption in global supply chains.
When data is shared between the production and operations team, it enhances the research and development of a product. By integrating these functions through shared live data, a product’s design can be refined to create more efficient and seamless production processes.
While advancements in materials handling equipment have automated tasks, digital supply chains enable the automation of complex decision making.
The centralisation of a company’s data onto one platform that is backed by cloud-based planning systems, big data and artificial intelligence can significantly improve a company’s planning capabilities.
An interconnected digital supply chain can enable real time analytics for rapid, more granular and informed decisions.
The sourcing and procurement stages can become automated and predictive through digitalisation.
Greater visibility in a company’s supply and costs and external data in prices can make sourcing more predictive, which could enable automatic replenishment orders, payments and exchange of goods.
With transactions becoming more automated, they can also be easier to track through technologies such as blockchain.
The manufacturing process can be improved beyond just physical advancements through smarter decision making.
Visibility in a company’s supply chain through technologies such as asset tracking and data on external factors such as the environment or consumer behaviours can enable quick decision-making on fast moving or lagging stock and whether to ramp up or stop production.
Digitalised systems synced with warehouse and fulfilment operations create the continuous real-time insights and data needed to enable dynamic fulfilment.
Visibility of inventory and how it’s being impacted by seasons, weather or buying trends would inform fulfilment strategies and enable companies to pivot quickly on where inventory should be stored on any given day.
For an omni-channel company, this would inform whether inventory is stored in the distribution centre, dark store, micro fulfilment centre or stores to be picked up or delivered directly to the customer.
In the age of immediacy consumers expect fast and reliable deliveries, with digitalisation key to achieving this in an efficient manner.
This starts from having control towers tracking assets from the ship to the last mile delivery van. Information throughout this journey needs to be digitised, with processes triggering automatic information sharing ensuring the product is always visible and accessible to the company but also the end customers.
Digitalisation harnesses the ability for an organisation to have data at their fingertips. This visibility in operations enables real-time analytics for smarter decision-making, predictive analytics and more dynamic processes, ultimately driving a more competitive supply chain critical to a company’s profitability and success.
The key is to start by reviewing the holistic supply chain and performing a digital diagnostic. This identifies where the opportunities are for an organisation and supports the roadmap to implementation. An organisation’s digital strategy may take years to implement, therefore it’s important to initially focus on change that will provide the biggest wins.