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Digital Transformation In Logistics And Supply Chain
As recently as five years ago, digital transformation in logistics and supply chain was significantly lagging for many companies in the supply chain and logistics industry. According to a 2017 report, Digital Transformation Supply Chain McKinsey, the average supply chain had a digitization rate of 43 percent, based on the organizations surveyed. It was ranked among the lowest of the five business areas examined.
While many companies have increased their time and financial investments in digital transformation in logistics operations, the rate of digitization accelerated amid the disruptions caused by the global COVID-19 pandemic. Companies with digital supply chain management practices were more resilient and able to navigate challenges like shipping delays, staffing shortages, logistics provider capacity issues, and inadequate inventory levels. Increased agility and efficiency are just a few of the many advantages of digital supply chains.
The PwC Digital Trends in Supply Chain Survey 2022 found that companies focused on basic supply chain issues, including managing costs and increasing efficiency, but have been missing out on value-creation opportunities in digitization and transformation.
When digitizing their supply chains, company executives reported needing the most help with extending their budgets. They also cited challenges with securing the right talent and the right tech. About 58 percent said they have experienced high rates of turnover among supply chain employees. The survey respondents also cited moderate to major risks with supply attributes. Many of the respondents also said that they planned to make changes in their operational systems within a year.
What is digital transformation in supply chain?
Many enterprises are embracing digitization in various business areas. However, others are still seeking to gain a deeper understanding of how digital transformation in the supply chain adds value and profitability.
Digital transformation in the supply chain is the overall process of leveraging technology to solve business challenges and improve various business processes at a fundamental level. Since the supply chain can encompass numerous areas of the company, digitization of the supply can positively impact marketing, sales, operations, finance, and customer service. Many financial companies, for example, invest in digital transformation to enhance security.
Digitized supply chains make use of electronic technologies, connectivity, massive amounts of data, and advanced analytics to deliver concise and comprehensive insights to users in real-time. As a result, executives can make quicker and better-informed decisions that can drive overall profitability for their companies.
Supply Chain Transformation Examples
Some examples of digitized supply chains include when a freight forwarder offers a web portal to book freight, track containers, or pay invoices. Another example would be using visibility data to track shipments and send automated shipping notices to customers.
Supply Chain Digital Transformation 2021
Supply chain digital transformation 2021 developments are outlined in various reports, including a future of supply chain McKinsey report, which provided some insights into how the industry is evolving as well as set the foundation for supply chain technology trends 2022.
Some trends highlighted included:
Increasing supply chain agility. Many business executives struggled with engaging customers during the COVID-19 pandemic because of disruptions in their supply chain. Also, many freight forwarders were able to leverage supply chain visibility to meet their customers’ demand for better tracking capabilities.
Hyperautomation. Another leading supply chain digital transformation trend was the emergence of hyperautomation, which is a combination of technologies like artificial intelligence, machine learning, and robotic process automation to automate tasks. Many companies were immersed in the process of transferring responsibilities formerly held by employees to intelligent applications.
Supply chain security. Through supply chain security solutions, companies can implement a more comprehensive approach to minimizing security risks like cybercrime across their end-to-end supply chain.
Starting Supply Chain Digitization
Companies exploring where to start with digital transformation in supply chain must understand that digital transformation can be a lengthy process. It is important for key members involved in digital transformation to understand the complex supply chain processes, or work with a vendor like Chain.io to ensure a smooth integration between supply chain systems.
Some of the first steps to digitally transforming your supply chain can include a supply chain audit, which can include identifying several small goals — like adding visibility to one or two simple business processes. This may require seeking to understand supply chain processes and how they are currently falling short of efficiencies.
While you can research a supply chain digital transformation case study for best practices, the following are some common steps for many companies digitizing their supply chains for the first time.
Conduct a supply chain audit. As mentioned previously, a supply chain audit — whether internally or externally — can help a company assess gaps in its current performance and identify areas for improvement.
Collaborate on business objectives. Key stakeholders should define clear business goals, such as enhancing operational efficiency, improving productivity and demand planning, streamlining processes, and boosting profitability.
Prioritize projects. Choose a project that will be simplest to execute first yet will result in gains in efficiencies. This can range from minimizing mistakes with order processing and clearer logistics planning to warehouse automation or improved response to supply chain disruptions.
Set KPIs specific to projects. Executives may want to reconsider the key performance indicators (KPIs) that determine how their teams are performing. With digitization offering new opportunities for gains, they should capture new areas to measure.
Supply Chain Digitial Transformation 2022
According to the PwC supply chain survey 2022 results, the advantages of digital supply chain are evident in the way that they have transformed global supply chain operations. With real-time visibility into supplier performance, for example, companies can respond more quickly to potential disruptions and challenges that could cause costly delays in manufacturing.
Supply chain digital transformation 2022 developments also led to:
Improved customer experiences. Through real-time actionable insights about customer needs, companies can deliver a more personalized customer experience.
Process automation. As indicated in any supply chain digital transformation course, the importance of digital transformation in the supply chain also is demonstrated through the automation of processes. Companies can realize efficiencies, enhance productivity, and minimize costs by replacing traditional manual supply chain processes that can be time-consuming and costly. With automation, teams also can more readily collaborate with partners. improve their processes and collaborate with other entities.
Support innovation. With the benefits of streamlined processes, real-time data insights, and information about company performance, teams not only can dedicate more time to research and development, but they also have the information needed to identify opportunities based on customer behavior.
The impact of digitization on supply chain management for freight forwarders has been key to giving them a competitive advantage, especially in the wake of the COVID-19 pandemic when customer demand for products accelerated, freight rates increased, and port congestion caused delays.
The Future of Supply Chain 2022
The uncertainty caused by many of these challenges shaped the future of the freight forwarders industry. More freight professionals, including 3PLs and 4PLs, embraced the digitization of supply chain to become more resilient during times of significant uncertainty. The real-time aspects of the digital supply chain allowed for transparent communications. Freight forwarders who used this real-time tracking technology were able to keep customers up to date on delivery schedules and navigate the best routes and solutions to minimize risks.
As the digital transformation in supply chain continues to advance, the future of supply chain in 2022 and beyond promises more advanced solutions and technologies to enhance collaboration and coordination among suppliers, providers, vendors, and customers.
Digital Transformation in Supply Chain Management
Examples of digital transformation in supply chain management and logistics vary from industry to industry. Digital supply chain examples extend to retail, manufacturing, finance, agribusiness, freight forwarding, food, healthcare, education, and more.
Digital transformation in supply chain management can incorporate an extensive number of digitization tools and integrations, like those from Chain.io, including Visibility, ASN/Milestone Automation, CO2 Data Automation, and Data Routing, to give customers more accurate data, streamline logistics, and minimize the risk of errors caused by manual work.
Some common areas represented in digital supply chain management examples include:
Connected supply chain. Many digital supply chain companies specialize in smart logistics to transform areas of the supply chain. This can include cargo tracking, remote fleet management, and automated warehousing. Through digital TMS, Bluetooth Low Energy (BLE) asset tracking, and other advanced digital technology in supply chain management, companies can gain real-time insights into where shipments are along a route. Real-time tracking also gives them the tools to identify areas for improvement, such as route efficiencies and transportation performance.
Demand-driven supply chain management. Through the real-time processing of massive amounts of data, companies can gain more immediate insights for demand forecasting and replenishment. This type of predictive analytics can help companies better manage inventory and production and minimize costs.
Identify customer expectations. As customer expectations change, companies with digitized supply chains can make sure that they are providing transparency around delivery dates and ensuring a smooth logistics and distribution process that meets delivery expectations.
Minimize cyber risk. The impact of digitization on supply chain management also is realized in security measures. With many transactions occurring online, many companies have been vulnerable to cyber-attacks. Digital transformation in supply chain can help companies identify security gaps in their networks and supplier networks.
Supply Chain Digital Transformation Case Study
According to McKinsey, digital transformation is “an effort to enable business models by integrating advanced technologies.” And, as far back as April 2019, more than 90 percent of business executives, some of whom were highlighted in supply chain 4.0 case studies, reported that a digital approach was critical to reaching their strategic goals.
Supply Chain 4.0 McKinsey marked a significant transformation in the industry, with the application of IoT (the Internet of Things), the use of advanced robotics and the application of advanced analytics of big data to accelerate the use of automation and analysis.
These applications, many featured in supply chain digital transformation case study findings, significantly improved a company’s performance and enhanced customer satisfaction.