The intricate web of the global economy calls for innovative solutions to meet increasing customer demands and rising cost pressures. But for many manufacturers, the idea of taking their supply chains digital causes tremendous stress. Even something with as much clear upside as implementing a digital twin of the customer — with the potential of vastly improving demand forecasting accuracy and delivering a better customer experience — is being considered by fewer than 30% of chief supply chain officers, according to Gartner.
The data is there for the taking. Once hyped technologies like big data and IoT sensors are now common and provide a wealth of information that allows companies to understand their supply chain operation on both a macro and micro level. Suppliers don’t have to rely on intuition that has always pointed, for example, to it being more cost-effective to build products in China and ship them globally. That traditional approach doesn’t take into account the true cost of having production so far from the products’ final stop in stores and the ability to react quickly to market changes. Digital supply chain data points to a better solution.
Moving into the digital realm doesn’t have to be overwhelming. Understanding three elements — awareness and visibility, responsiveness and resilience — lays the foundation for digital transformation and could unveil new business opportunities.
Awareness and Visibility
Awareness and visibility mean taking advantage of the ability to obtain the required data, regardless of origin. Timing also plays a critical role here — the power of connecting to everything in real-time is the only way to manage exceptions and capitalize on opportunities.
As an example, consider the humble desk lamp. For those of us not in the supply chain business, it’s a simple household item that just works. But that lamp represents a triumph of manufacturing. Any hiccup in the process from design to delivery has an adverse effect on the company’s bottom line. Did a monsoon delay the shipping of the lampshade fabric? Did the wire vendor have a production issue? Worrying about every little complexity keeps retailers up at night.
But with a platform that enables awareness and visibility, the lampshade fabric supplier can provide data in standard message file formats, manually upload the same data via a mobile portal or provide streaming sensor data from real-time production sensors. This brings right-time awareness and visibility at the process execution level—the lampshade vendor is experiencing a monsoon that delays his process and disrupts production. Businesses can now make accurate, quick business decisions with confidence.
Real-time digital dashboards enable real-time decisions. So, as the lampshade fabric vendor—and possibly his suppliers—bail themselves out after the monsoon, backup vendors will be identified and ready to go with no time lost.
Having real-time awareness and visibility opens up a new set of questions for manufacturers. With that valuable information in hand, what do you do with it? What’s the best way to respond to a supply chain issue, and when is the ideal time to respond? Counterintuitively, an immediate response isn’t always the right decision.
In an attempt to solve a supply chain problem as quickly as possible, companies might over-respond, throwing as many resources as possible into the mix as soon as something goes awry. But when everyone has access to up-to-the-minute data, responsiveness becomes the ability of an enterprise and its partners to react to exceptions and opportunities in a unified, consistent and collaborative manner that delights customers and reduces supply chain costs.
Real-time sensor data—providing information like location data, temperature and production yield—creates a level of granularity that identifies exactly what’s going on, where and how to mitigate the impact. The beauty of the digital supply chain is that it all but eliminates the need for multiple phone calls, emails or contacts to ensure “everyone is on the same page.”
Resilience ensures enterprises can effectively manage any exception or requested change while improving net margin without sacrificing customer satisfaction or revenue growth. It means being agile and savvy and that they’re not paralyzed by disruptions. And believe it or not, resilience doesn’t have to be hard to implement or achieve.
Let’s look again at our lamp example, with the lampshade fabric supplier affected by the monsoon. We talked about how awareness and visibility can help mitigate the effects of the storm, but increased resilience enhances the supplier’s ability to bounce back with minimal detrimental impact.
Resilience for your digital supply chain means manufacturers can identify internal changes (changes in order completion times, for example) and adjust to them without incurring a negative cost or impacting customer satisfaction. The same applies to external changes (new customer requests or a change in supplier performance). And finally, there’s the education aspect, bringing enterprise associates on supply-chain resiliency and functionality processes as well as business impacts to maintain consistency and continuity.
Digital Supply Chains Solve More Than Digital Issues
Today’s businesses face increasing cost pressures, customers who want customized parts in smaller batches on tighter deadlines, and new skill sets needed to bring manufactured items to market. Digitally transforming their supply chains gives manufacturers visibility and the ability to understand and comprehensively manage their entire supply process, from sourcing through product receipt. With a few basic building blocks, however, companies can bring their operations into the digital age and unlock more agility while increasing customer satisfaction.