But how exactly should we define the digital supply chain? It's a complex question. From forecasting to operations and planning, from marketing to sales: the supply chain is very comprehensive. You'll need to pick the technologies that can add value to your organization and implement them correctly, so you'll set up a digital supply chain that works for you. This definition, however, remains vague. Therefore, we'd like to adopt a more practical approach. In this blog, we will describe the digital supply chain using 5 trends which indicate the direction you'll likely need to take.
1. Connecting all data in the supply chain
Traditional supply chains are organized from silos, each of which works with its own systems and information. If you want to make the digital supply chain work, you'll need to collect and interlink the data from all those different silos. Moreover, your new platform should be accessible to all users, so they can easily add information to the supply chain data platform. This means you'll have to clean up your data systems, ensure that definitions are consistent, and create a single system where everything comes together. It will be the foundation of your digital supply chain.
2. Effective utilization of assets
A digital supply chain should provide visibility of all available assets that can be shared. Providing visibility of effective run rates, current utilization, and unutilized spare capacity throughout the supply chain enables you to optimize the utilization of assets. The transportation industry provides a clear example of how insight results in optimization: knowing the extent to which planes or trucks are loaded with cargo, an organization can determine whether it needs more vehicles or if it can make smart use of any unfilled space.
Briefly put, the term 'disintermediation' entails the uncovering and removing of as many intermediate steps as possible. A digital supply chain should plan for demand, supply, inventory, and finances simultaneously and in real time, eliminating intermediate third parties that add little to no value to the process. The goal is end-to-end linking by skipping the intervention of third parties. The latter become superfluous through online platforms and applications, which enable transparency in all actions.
4. End-to-end transparency and instant collaboration
A digital supply chain should provide end-to-end visibility and make the impact of disruptions transparent. A provision of such transparency throughout the supply chain allows the business to understand how disruption affects capacity, utilization, planning, and supplier schedules. As a result, users can collaborate, run their scenarios, and resolve problems instantly.
5. Matching supply and demand
In the digital supply chain, it's crucial to know the demand. Yet the context of this demand is equally important. When do you need what? How high are priorities? You have to customize based on customer needs to match supply in the most profitable manner. Not only does this call for visibility of the inventory of finished goods – it also requires insights all the way into raw materials, available capacities, and even suppliers (if it makes sense in terms of business).
At M3, we believe that the essence of a digital supply chain lies in a powerful platform capability that connects both data and people to optimize processes throughout the supply chain.