Digitisation of the supply chain is now more important than ever

The onset of the pandemic proved to be a catalyst and accelerator of digitisation for many businesses across the world. Manufacturers, suppliers, and wholesalers across the globe had to adopt new ways of working, with the implementation of norms like nationwide lockdowns, social distancing, and work-from-home models. At the same time, businesses faced the challenges of erratic customer behaviour and dramatically disrupted supply chains. Amidst the clouds of uncertainty in the business landscape, supply chain management (SCM) teams searched for ways to make their operations more resilient and agile so that they could respond to the changing social and economic landscape.

Traditionally, supply chains followed a linear model, focusing on five essential areas – Design, Plan, Source, Make, and Deliver. The key aspects to managing successful supply chain operations were four Vs, i.e. volatility, volume, visibility, and velocity. However, as changes in the business ecosystem demand a more interconnected supply chain, businesses need to focus on factors such as reduced time-to-market and real-time accurate decision making apart from the four Vs. There is a dire need to deliver on the “convenience is everything” attitude of today’s buyers.

According to a joint report by MRRSIndia.com and Assocham, the Indian retail industry is projected to reach USD 1.3 trillion by 2025, with the online retail industry expected to reach USD 60 billion in India.

To meet the rapidly growing and changing demand, supply chains need to be agile and resilient. As a result, digitisation of the supply chain is more important than ever.

What is Supply Chain Agility?

As the concept of global-local tightens its grip worldwide, agility in the supply chain becomes vital for businesses. The pandemic forced the world to move online and operate digitally. An overnight transformation in logistics brought the world to the consumer’s doorstep. Today, consumers are not limited to their geography and can access products from not only different cities but different countries. Supply chain agility has made the acquisition of products possible in a shorter time.

In the post-pandemic world, there’s prevailing volatility and uncertainty in the economy. Exponential digitisation makes consumer demands dynamic. As a result, digital transformation is no longer a first-mover advantage; it is an industry standard. Digitising the supply chain is essential for streamlining business processes and staying competitive. Supply chain agility helps in overcoming these variables and is vital for developing a response-based system. 

How does Digitization make Supply Chains more efficient?

Supply chain digitization is the process of converting analogue supply chain processes to digital processes by establishing dedicated master data that aggregates information from the entire supply chain, along with information from specific external sources. This interconnects supply chain partners, thus reducing information lag to near real-time levels and eliminating chances of miscommunication. Moreover, a digital supply chain is enriched by many data-driven technologies, such as IoT, machine learning, predictive analytics, and big data allows for identifying inefficiencies, boosting product quality, and enhancing customer experiences. 

By digitalizing the supply chain, companies can better address customer demands, supply-side challenges, and efficiency expectations. These are some of the benefits of a digital supply chain:

1. Faster Deliveries

The implementation of digital procedures in product distribution lowers the delivery time of high runners to a few hours. The services rely on advanced forecasting approaches. For instance, companies perform predictive analysis of internal and external data, assessing demand, weather, market trends, and other factors influencing delivery time. The forecasts are performed weekly, and daily in the case of very-fast moving products. As a result, delivery time reduces significantly, leading to a positive customer experience.

2. More Flexibility

Real-time and ad hoc planning enables a flexible reaction to dynamic demand and supply conditions. Planning is a continuous process, minimising frozen periods and making it easier for businesses to respond to dynamically changing requirements or constraints. The digitization of production allows machines to provide real-time feedback on their performance. After products are dispatched, digitisation allows for increased flexibility in the delivery processes so that customers can reroute shipments to the most convenient location.

An automotive business enterprise digitised its ordering and dispatch processes. Before the digitisation of the supply chain, there were millions of data points that one needed to manually analyse on excel sheets. It led to a waste of time, money, and effort. By digitising the process, there was an estimated 16% saving in costs, 27% improvement in order fulfilment and 67% improvement in process time.

3. Reduced Operational Costs

With dynamic routing and network optimisation, warehouse and transportation costs can reduce significantly. In traditional operations, supply chain processes like demand and supply planning, S&OP process, and production planning are performed manually. Enormous amounts of time and money are spent to achieve mediocre results. With automation, the speed of the processes increases drastically, resulting in accurate results that reduce costs for the organisation. According to the World Economic Forum’s study, reducing supply chain inefficiencies can increase global GDP by 5% and total trade volume by 15%.

Bottom Line

Traditional businesses must adopt digitization to have a sustainable competitive advantage. The lack of digital options to manoeuvre supply chains is a significant challenge. Moreover, traditional supply chains are replete with ad-hoc processes and system working in silos. Adopting technology and establishing a digital presence is of crucial importance for streamlining processes and driving efficiency. Digitising supply chains will ensure that the right product reaches the right place at right time, fulfilling customer expectations.

This article is authored by: Sunny Nandwani, Founder and Managing Director, Acuver Consulting.

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