While finishing a meeting at work, an individual receives an alert on his or her mobile phone that the oven started to cook the casserole that was been placed there to thaw that morning. However, when traffic stops unexpectedly on his or her way home, he or she lowers the oven temperature using their watch so the food isn’t overcooked. A short while later, another alert is received telling him or her that his or her children are home from school. That is just one typical scenario that aligns with what people read and hear about new digital technologies or digital disruption. What’s perhaps less understood is the impact and opportunity digital disruption has on supply chain management as traditional supply chains become obsolete.
Too often, it is assumed that, if a company just sprinkles some analytics into its supply chain—like pixie dust—it will join the digital age. While some benefit may be realized as a result of doing so, its supply chain will still not fully deliver what’s possible with today’s new technologies.
Merely bolting on analytics and adding a little social media won’t do. In fact, such piecemeal digitization that results in a hybrid supply chain is arguably counter-productive—particularly if it keeps a company from mining the mother load of value that can be extracted from new technologies.
You need to shift your thinking from a traditional linear view and re-imagine your supply chain as a digital supply network that is based on an understanding of what digital technologies can enable—the art of the possible in terms of how analytics, social media, cloud, 3D printing, sensors and more can change the supply chain function, and deliver value to stakeholders. Increasingly, it also leads to the creation of new services and business opportunities.
Where to Begin?
Create a clean slate and ask yourself some questions. What business outcomes do you desire from your supply chain? What processes in your value chain are critical to its ability to deliver the business outcomes you want? How can digital technologies fundamentally transform the value these critical processes create?
When thinking about those technologies, you need to get granular. For instance: Could 3D printing allow you to deliver revenue-enhancing services by making patterns available to enable parts fabrication on a one-off basis for otherwise retired equipment?
You most likely read about Amazon.com, Inc. and the robots in its fulfillment centers. The story’s implications are time savings for employees, new ways of working and operational efficiencies for the company. But that’s the tip of the iceberg as it pertains to the types of change that new digital supply networks can create. They also can aid management decisions, from sourcing and shipping to productivity improvement and the creation of new customer services.
Digital supply networks also enable seamless shopping experiences that are markedly different as they consistently deliver personalized experiences for customers at every touch point regardless of the sales channel—the store, online or mobile. That’s important as customers increasingly want to be able to check on product availability before visiting a store, and use that information to make purchase decisions or reserve an item at the store.
You may even say those are just baseline retail customer requirements. For instance, going forward, online shoppers may increasingly want to use subscriptions for recurring purchases, consolidate orders so fewer individual deliveries need to be accepted and schedule fast shipping for more immediate gratification. At the same time, they expect to take advantage of online catalogs and promotions, but they may not want everything delivered to the same address or even on the same day. They may segment their delivery preferences based on the nature of the product. Perishables on a grocery order may be shipped to a location near the customer’s workplace so they can be placed in a nearby cooler, while more durable items may be shipped to the customer’s home. And, the customer’s subscription may call for some things to be replenished twice a week, while others are monthly or even quarterly.
Today, a growing number of customers expect these personalized services, but most businesses are not that adaptable. But it is possible as digital supply networks supplant legacy supply chain management systems.
What Are Digital Supply Networks?
Metaphorically speaking, a digital supply network enables materials, products and supplies that travel across an enterprise, the related data, and the people who manage and interact with them at any point along the way travel together irrespective of their physical location.
Digital supply networks make this possible by integrating four elements of supply chains—talent, physical, information and financial—with the use of social media, mobile communications, advanced analytics, cloud computing and others, such as 3D printing. They provide connective tissue while creating the flexibility and transparency businesses need. Done correctly, the result is digital supply networks that are connected, intelligent, scalable and rapid.
Being connected across the supply chain’s foundation is important. A supply chain control tower can serve as a central organizational hub, monitoring and directing activities across the supply chain, using real-time data from the company’s existing, integrated data management and transactional systems to intertwine supply chain processes and tools from end to end to drive business outcomes. With digital dashboards, it serves as information central, giving management the ability to monitor sourcing, production, shipments, inventory, talent and infrastructure, and put alternate plans in place when necessary. That window into supply chain operations in real time empowers decision-making about alternate supply models, plant production and hedging on commodity purchases, and aids other analysis and decisions at various points along the supply chain.
Such information can fuel an increasingly intelligent, automated environment. Analytics, cognitive equipment and smart apps that convert data into valuable information play a key role in the creation of an intelligent network. That can lead to more well-informed decision-making, more automation and even accelerate innovation. For instance, a food manufacturer can identify a set of taste attributes and tie those to specific weather, crop growing and cost considerations to complete its production planning.
For that matter, Taleris America LLC, a joint venture company serving the airline industry, helps its clients turn unscheduled maintenance into scheduled maintenance, predict potential cancellations and recover rapidly from delays.
When supply chains are imbued with a great degree of connectivity as a result of being digitally enabled, they become scalable. Processes become easier to optimize and duplicate, making it easier to identify errors. That contributes to organizational flexibility and enables niche market targeting.
Responding to the need for speed, digital supply networks enable rapid responses. Through decision support enabled by advanced analytics, these networks can make the difference between being able or unable to take advantage of new opportunities in the face of change. Access to better information and sophisticated analytics can accelerate responses to competitor activity, technology shifts, changing demand and supply signals, while decision support built into the networks increases their reliability and adaptability.
For example, Dell, Inc.’s global command center helps companies monitor supply chain activities and make real-time adjustments. Linked to a geographical data system, the command center’s monitoring platform rapidly notes service-dispatch activity and matches the dispatch with the best parts location. It also helps customers develop contingency plans when storms, flight delays and traffic congestion impact delivery.
Businesses that leverage digital supply networks can change the way they interact, and exchange ideas and information—virtually uniting designers, suppliers, manufacturers, distributors, logistics service providers, retailers and even customers wherever they are located. Connected, intelligent, scalable and rapid, these digital supply networks render traditional supply chain models obsolete. They create business value that can lead to dramatic improvements in flexibility, adaptability, stability, predictability and, ultimately, profitability.