Digital Transformation in Supply Chain
Digital transformation in a supply chain is about having foresight into the improvement of cost, agility, service level, and inventory. Consumers’ purchase behaviors are changing due to ubiquitous information available and growing social networks.
The traditional supply chain is based on the amalgamation of paper-based and electronic processes and documentation. Organizations are marred by geographic silos, in which, employees refrain from sharing information, resulting in below par performance. The urge to implement a digital initiative in silos has paved way for inter-departmental conflict. There will be a risk that the initiative will be taken as a standalone project rather than as a transformation program.
Suggested Read: Disruptive Technologies in Supply Chain
By Professor Nick Vyas, Executive Director and Co-Founder, USC Marshall’s Center for Global Supply Chain Management
Digital transformation in supply chain involve a digital operating model; it helps to adopt a “digital first” mindset. The digital operating model means implementing digital capabilities along the organizational layer of data, performance management, IT, and business processes. A few benefits of a digital operating model are business process automation, organizational flexibility, digital management of corporate assets, greater agility, and improved sales.
Complete execution of an end-to-end process eradicates as many middle layers or steps as possible to enhance performance in any process, without manual intervention. It has improved the efficiency of many organizations. Through digital management of corporate assets, companies can improve the margin of Earning before Interest and Taxes (EBIT).
Digital transformation in the supply chain also revolves around big data, as it possesses the ability to innovate, automate, and use data for a better decision. Big data helps to run reports and alerts executives of disruptions. It gives information about market trends, customer buying patterns, maintenance cycle, and minimizing cost.
Though supply chain involves numerous interactions such as raising a query about a defective product or returning unusable goods to the seller, not every interaction is always collected in a significant way. Highly automated end-to-end processes and flexible bundling of activities are the hallmarks of a fully digital supply chain. Aligning digital initiatives with supply chain and adopting a digital operating model will lead to higher level of performance.
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By Richard Sherman, Senior Fellow, Supply Chain Centre of Excellence, TCS [NSE:TCS.NS]