The Road to a Digital Supply Chain

May 10, 2021
Supply Chain
Over the last thirty years, logistics has undergone a tremendous change: from a purely operational function that reported to sales or manufacturing and focused on ensuring the supply of production lines and the delivery to customers, to an independent supply chain management function that in some companies is already being led by a CSO - the Chief Supply Chain Officer. - McKinsey

The topic of supply chain digitalization is a broad one. It refers to a general trend of converting manual and analogue supply chain processes into electronic or digital ones. At an industry level, it represents an ongoing evolution. Like any industry, the supply chain sector has found ways to capitalize on new technological innovations to help it carry out its main goal of turning raw materials into products and getting them into the hands of customers, as quickly, efficiently and of as high a quality as possible.

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Before digital supply chains

Managing supply chains used to rely much more heavily on physical, manual processes. The only way planners could receive orders from customers was by phone, physical mail or fax. These orders were manually turned into bills of material and component requirements. Product information and specifications were manually entered into reports and systems. Purchase orders were hand written and mailed or faxed to suppliers. Buyers would call suppliers by phone to tell them about their needs and any changes in market demand.

Carriers were called over the phone to organize trucks to pick up and deliver goods. The visibility of where goods were at any time was limited to phone call updates and physical bills of lading were used to check the accuracy of deliveries. When it came to inventory, movements in and out of warehouses were recorded manually. Inventory levels were audited through physical counts manually entered into systems. And invoicing was sent or received by post, with subsequent payments made using physical cheques or via bank transfers only with written authorization.

The transition to digital supply chains

The reminders of how supply chains were run before the availability of new digital capabilities make two things clear. Firstly, the supply chain landscape has changed dramatically in a mere few decades. This has in part been driven by an increased focus on the supply chain function within organizations. It warrants its own department, ensuring integrated operations from customers to suppliers. Secondly, despite the existence of new supply chain management tools and technologies, many organizations still rely heavily on physical and manual processes today. This largely reflects two of the main barriers slowing down the pace of digital transformation, which are cost and complexity. Significant capital investment is often required and, due to the increasing complexity of supply chains in general, architecting and implementing solutions to work across supply chain ecosystems, let alone companies, can be a daunting task.

However, despite these challenges, operating a digital supply chain is more important than ever. The demands placed on supply chains are changing rapidly, influenced by a number of factors including globalization, evolving carbon emissions regulation, scarcer resources, global disruptive events and competitive pressures. To cope with these, supply chains need to become much faster, and all related data must become more granular, and much more precise.

Key enablers of digital supply chains

It’s evident that the path to digitalization is very much an evolutionary process. It cannot happen all at once. As supply chains become digital, electronic technologies are slowly applied to every aspect of the end to end supply chain, made possible thanks to a variety of new disruptive technologies enabled by digital connectivity. Advanced digital technologies like IoT, blockchain, machine learning, artificial intelligence, big data, virtual and augmented reality, predictive analytics, control towers, drones, 3D printing and much more can all play roles in driving improvements across traditional supply chains.

Benefits of digital supply chains

With a full implementation of digital supply chain technologies, all paper and manual data entry processes and manual requests (such as phone calls) are no longer necessary as data is shared and available to any supply chain actors. New systems and platforms use powerful algorithms, machine learning and AI to automate processes and decisions, by capturing and analyzing data in real-time from hundreds, thousands or even millions of sources. This allows for real-time tracking of the movement of goods throughout each phase of manufacturing a product, including transportation and logistics processes and lowers the level of human intervention needed. Even the most complex supply chains can become easier to manage, with more data available on performance to make optimization possible. In this way, all processes and aspects of the end-to-end supply chain become transparent, from customers all the way up to tier-n suppliers. Every aspect of supply chain, from process management, to flow of materials, supply and demand planning, inventory management, cash flow and strategy can all be managed dynamically, thanks to the availability of real-time information covering each part of the supply chain.

Real-time transportation visibility enabling digital supply chains

A more digitalized supply chain helps organizations achieve their age-old objectives of ‘better efficiency’ and ‘increased margins’. Predictive analytics helps optimize inventory allocation and forecast demand. Replenishment solutions can be fully automated. Assembly or picking lines can leverage robotics. And IOT sensors can be used to gather real-time data from manufacturing equipment and vehicles.

Supply chain visibility has become a reality thanks to three recent trends. Firstly, API integrations have made it far easier to connect disparate IT systems. By breaking down system silos and enabling fluid data exchange, the real-time information required to achieve operational transparency can be shared with ease. Secondly, carriers have gradually increased IT maturity, having digitalized their own operations with management systems and by installing telematics devices in trucks. Lastly, highly compatible and cost-effective cloud-based solutions are making real-time transportation visibility more accessible and affordable than ever. This makes RTTV platforms an easy way for organizations to start digitalizing their supply chains with low capital investment and quick ROI.

Shippeo’s multimodal visibility network is the largest in Europe, connecting with more than 140,000 carriers and 2.5 million assets, leveraging more than 700 data sources, including TMS, ERP, WMS, telematics, AIS, shipping lines, ports and parcel API integrations. It’s also the most granular tracking platform, providing more than just shipment ETAs. It enables tracking down to handling unit and SKU levels, enhancing tracking capabilities throughout your entire network.

Get in touch with our team of experts to discover more about real-time transportation visibility's role in achieving a truly digital end-to-end supply chain.

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