How Will Digitization Improve The Supply Chain?

The chaos of the COVID-19 pandemic and regional conflicts across the world have been enormous stressors on the global supply chain, bringing many of its inadequacies to light.  More advanced technical solutions will be needed to alleviate problems plaguing the supply chain, including the following issues that reduce supply chain resiliency:

 

  1. The supply chain operates on a manual, spreadsheet-based system.

    This type of system is insufficient for exchanging information at the pace and scale of modern commerce because it is outdated, time-consuming, and prone to human error.

  2. There are extreme shortages and delays within the supply chain.

    These situations increase consumer frustration and anxiety, which can hurt businesses by decreasing sales and damaging customer loyalty.

  3. The supply chain lacks efficient tracking systems.

    When a problem arises at one point of the supply chain, there is no accurate, centralized tracking system to locate the point of origin and alert other nodes of the supply chain network. For example, if there is an outbreak of E. coli linked to romaine lettuce, it can take up to 6-8 weeks for the source of contamination to be identified and 10-14 weeks before the product is recalled. This exacerbates the spread of illness, upsets customers, and hurts the producer’s brand image.


Advantages of Supply Chain Digitization


Digitization is a necessity for businesses because it replaces costly, labor-intensive work with automation. To build supply chain resilience, a main priority should be moving towards automation and greater trust in machine-driven computation to augment human intelligence and decision making. Automation also removes friction within the supply chain, leading to a better systematic flow, increased productivity, streamlined communication, more cost-efficient use of materials, and shorter workweeks. Moreover, digitalization of the supply chain can increase operational productivity with less money, time, and effort. 
There is much to gain from supply chain digitization:

 

  1. Digitization builds visibility in the supply chain.

    Due to the interconnected nature of the supply chain, problems at one link of the chain will inevitably affect other links. Supply chain visibility enables operations at each point of the supply chain to identify and alleviate problems at the source. Digitization provides an accurate tracking system to locate each shipment of individual products, so when a contamination occurs, the point of origin can immediately be located with lightning speed. This yields better customer service and increased regulation of products within the organization.

  2. Digitization enables rapid access to information about an organization’s supply chain, which also empowers businesses to utilize data to improve performance.

    Online and remote tracking of information eliminates the need to shuffle through endless spreadsheets because all the data you need is digitized and instantly accessible at your fingertips. Furthermore, digitization produces data that will be organized, tracked, and analyzed to identify deficiencies within a company’s systems. This enables businesses to assess productivity levels  at each stage of the supply chain and find ways to optimize their operations.

  3. Digitization allows better communication between producers and consumers, which leads to increased brand loyalty and trust.

    The future of the supply chain is digital, and this will play out in various innovative ways in global retail. For example, advanced supply chain digitization could enable real time recalls, so instead of hearing about a recall through the news media, you could get an alert sent directly to you based on what you purchased. In addition, businesses will now have the ability to notify their customers that their product is contaminated or give specific updates on the location of their product; as a result, this establishes a stronger, more direct relationship with the consumer.

 

The pandemic has exposed the weaknesses of manual processes governing supply chains. This triggered growing urgency among organizations to build more intelligent supply chains to remain resilient and competitive. Businesses must adapt and convert to a digital, automated system in order to reap the advantages of digital transformation.


References

Ahluwalia, H. (2021, June 11). Why supply chain spreadsheets can cause major supply chain issues. The Owl. Retrieved February 28, 2022, from https://www.theowlsolutions.com/post/why-supply-chain-spreadsheets-can-cause-major-supply-chain-issues.


Breteau, S. (2021, September 1). Council post: Digitizing for end-to-end supply chain visibility. Forbes. Retrieved February 28, 2022, from https://www.forbes.com/sites/forbesbusinesscouncil/2021/09/01/digitizing-for-end-to-end-supply-chain-visibility/?sh=6ecc6eb57c30.


Goodman, P. S. (2021, October 22). How the supply chain broke, and why it won't be fixed anytime soon. The New York Times. Retrieved February 28, 2022, from https://www.nytimes.com/2021/10/22/business/shortages-supply-chain.html.


What are the benefits of supply chain digitization? Altivate. (2019, May 14). Retrieved February 28, 2022, from https://www.altivate.com/blog/what-are-the-benefits-of-supply-chain-digitization.

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