A supply chain encompasses a huge ecosystem of processes, people, resources, technologies and data for companies to get their products to customers in a competitive way.
Furthermore, all companies involved need to consider compliance standards and think about strategies to become more resilient and sustainable. And this is the main reason for the adoption of digitalization in the sector.
This “new” supply chain is based on the use of data to optimize processes, increase visibility of its processes, reduce risks and make processes more transparent, in addition to ensuring greater flexibility and lower cost of ownership.
According to Grant Thornton’s report The Future of Growth and the Manufacturing Industry, companies that fail to invest in a digital supply chain can expect losses of up to 44% caused by inefficiencies across the chain.
Digital supply chain
Industry 4.0 has brought a new approach to the processes that take products to customers, which involves identifying customer demand and sharing this information with suppliers. If this flow is not carried out correctly, the possibility of forecasting problems increases, which can lead to shortages or even oversupply.
Although it is not possible to completely avoid risks and eliminate inefficiencies in the supply chain, the benefits of adopting digitalization are many:
- Process automation and the use of robots increase efficiency and productivity;
- Tools digital technologies allow greater visibility and transparency in processes;
- Better granularity allows products to be customized to meet specific customer demands;
- Using data improves forecast accuracy, identifies risks and makes decision-making smarter;
- Forecasting models are also improved and become more flexible.
The challenges relate to data capture and management. The digital supply chain uses a variety of data-driven technologies, such as Big Data, machine learning, artificial intelligence (AI), IoT, and predictive analytics, but for these technologies to be effective, the information needs to be reliable.
McKinsey found that supply chain digitization offers the greatest potential for revenue growth of any industry, and that speaks to what customers want: digital services.
For example, without digitalization, companies would have a hard time making deliveries quickly. Research conducted by Bornlogic and Opinion Box showed that 78% of Brazilian consumers have already given up on a purchase due to the long delivery time.
By adopting digitalization, companies can make their processes more agile and accurate, achieving greater visibility across the entire chain, which allows them to reduce operating costs by 30% and inventory costs by 75%, according to McKinsey.
How to digitize the supply chain
Digitalization is critical for companies that want to create a connected, intelligent and efficient ecosystem. Gartner predicts that by 2023, 50% of companies are expected to use AI, advanced analytics and IoT in their operations, with 30% of them implementing robots in their warehouses.
Some practices help companies looking to make their operations more digital:
Analyze the current supply chain
This analysis needs to identify the strengths and weaknesses, potential opportunities and risks that the supply chain is subject to. This way, it is possible to set goals and increase the chances of success.
Define a digital strategy
Companies and suppliers need to define the objectives of the digital supply chain, understand its benefits and ensure that the strategy meet everyone's needs.
Analyze the suppliers
Knowing the digital maturity of each supplier is essential for adopting a digital supply chain. If suppliers are not ready to embrace the strategy, it may not yield the desired results.
Invest in digital resources
With clear goals and expectations and knowing the risks and benefits of digitalization, the company needs to invest in digital resources for the success of the strategy – for example, tools for supply chain management, automation, etc.
Invest in people
Although digitalization reduces the use of manual processes, it depends on keeping staff well informed and sufficiently trained to deal with new technologies.
Analyze performance from csupply chain
As new systems and technologies are implemented, it is necessary to regularly analyze supply chain performance to ensure that solutions are delivering the best results.
Although it is not a simple task, implementing a digital supply chain brings benefits that cannot be ignored. Find out how COSTDRIVERS can help you on this journey.