Digital Transformation of the Supply Chain

In almost every supply chain publication, you will find an article discussing digital transformation. Industry analysts, consultants, solution providers, executives and practitioners are all focused on how to transition from a traditional, analog supply chain to a more digital supply chain. This has never been truer than it is today. Digital supply chain capabilities enable more agility and resilience; two supply chain characteristics that are especially important in dealing with unforeseen disruptions. As a supply chain practitioner, it is critical to understand what a digital supply chain looks like and how to ensure your supply chain is on the right transformational path.

 

What is Digital Transformation?

Digital Transformation involves a focused effort of activity across multiple processes that accelerate performance and deliver new value-added capabilities. Digital Transformation in supply chain operations usually involves the development of new tools, skills, and/or processes that target a step change in speed and/or agility.

Why is Digital Transformation Important?

Digital Transformation is one of the top concerns and areas of focus for C-Level executives. There is a growing awareness within senior executives that transforming supply chain capabilities to take advantage of the emerging areas of “Big Data,” “Artificial Intelligence,” “Advanced Analytics” and “Cloud Computing” provides a competitive advantage and reduces risk due to disruptions.

Supply chain leaders know there is a “War for Talent” to find and retain qualified personnel. It has been reported that there is only one qualified supply chain candidate for every seven openings, and this ratio is projected to increase before it gets better. The best candidates want to work with advanced technology platforms that allow them to spend more time analyzing problems and developing value-added recommendations. Digital Transformation of supply chain capabilities is critical to hire and retain the best talent.

Supply chain practitioners are asked to accomplish more with less, to be involved in more business processes and deliver more value-added capabilities while lowering costs and ensuring high customer service. Materials and components are sourced from even more remote locations and finished products are being sold into expanding regions and channels. The amount of external data continues to grow at exponential rates. Planning cycles continue to shrink, and customers expect shorter and shorter delivery times. All these pressures demand a step change in performance creating the need for Digital Transformation.

As a Supply Chain Practitioner, How Can I Facilitate a Digital Transformation?

The first step is to obtain C-Level sponsorship. Unlike most supply chain improvement efforts focused on managing and maintaining the current state and making incremental improvements, transformation involves multi-year, multi-functional efforts that can only be accomplished when embraced by top company executives. To gain executive buy-in develop a business case showing substantial hard and soft benefits.

Start with documenting the “As-Is” process capabilities and corresponding key performance metrics. This will lay the foundation for any future performance comparison and provide the starting point to develop benefits for transformation. Envision the “To-Be” process capabilities and desired performance metrics through benchmarking, group brain storming sessions, and alignment to business strategy and direction. Include envisioned capability cases to provide a vision of what the “To-Be” environment might look like. Develop a roadmap with critical milestones required to transition from the “As-Is” state to the “To-Be” vision. The trick is to have enough detail in this transition plan to execute against while still maintaining flexibility to adjust to new priorities and emerging technologies.

The skills people need to operate in the envisioned “To-Be” environment will be different requiring training and education. A focus on change management and employee development is necessary for successful transformation.

Conclusion:

The move to digital business capabilities is affecting all areas of a company including the supply chain. Today, technologies such as RFID, GPS and sensors have enabled organizations to transform their existing supply chain execution capabilities to be more flexible, open, agile and collaborative. Digital Transformation of supply chain operations is well underway in most industries today.

To be truly competitive in an increasingly volatile world, forward-thinking companies will need to transform their supply chain operations by investing in digital supply chain capabilities. The ability to improve customer service, reduce costs, minimize risk and enable company strategies through digital supply chain capabilities has caught the attention of executive management and supply chain practitioners must step up to meet this challenge.

Digital Transformation is an exciting opportunity for supply chain teams and requires the right combination of people, process, technology and data. At Logility, we have helped companies around the world transform and build resilient supply chains.