Four Supply Chain Strategies To Drive Digital Transformation

Richard Howells

Part 2 of the “The Digital Supply Chain of One” series

Clearly, industry boundaries are blurring due to new business models enabled by the digital economy. But are you equipped with the strategies you need to drive digital transformation and succeed in this fast-paced, ever-evolving landscape?

To meet the challenges of today’s digital economy, where customers want both products and services quickly and tailored to their unique specifications, your organization needs to fundamentally reimagine its business processes across the digital supply chain with the following four foundational principles:

1. Customer-centricity: Plan and deliver for the segment of one

In a digital economy, customer-centricity is more than just an aspiration. It needs to be integrated with digital supply chain capabilities to serve segments of one consistently.

The experience starts with a touchless supply chain, where you automate wherever possible and manage by exception. This approach enables supply chain practitioners on the ground to focus on the value-added activities and processes that focus on customers first.

Automation at this level requires an accurate picture of actual demand. Improving forecasting accuracy remains essential, but it’s not enough. You need to capture demand signals in real time from multiple data sources. These sources include structured data – such as orders, point of sale, and Internet of Things (IoT) sensor data – as well as unstructured data – including texts, e-mails, social media, sentiment analyses, and predictive algorithms. All of this information must be brought together to deliver a true picture of actual demand to yield insights that facilitate improved business performance and superior customer service.

This demand drives integrated business planning processes that must be responsive and flexible to changes in supply, demand, and other signals across the supply chain. These improved processes enable companies to better manage collaboration across partner networks and more efficiently handle everything from a shipment of one item to multiple truckloads headed across borders. The result is the ability to deliver the outcomes customers want – even as preferences, requirements, and the digital economy continue to evolve.

2. Predictive business: Design, make, and maintain the product of one

In the face of growing complexity and rapid change, how do you keep pace? One way is to see what’s coming before it happens:

  • Addressing issues before they become major concerns
  • Fixing machines before they break down
  • Adjusting shipments to avoid traffic or weather problems
  • Realigning manufacturing to adjust to sentiment analysis

Thanks to the emerging technologies available in the digital economy, all of this is possible. The leading-edge practice for a predictive business is to build and manage networks of digital twins. A digital twin uses IoT sensor data to maintain a direct connection between a physical product or asset and its designed, manufactured, and deployed digital representation.

Through the use of digital twins, you can gain a 360-degree view of your entire network’s equipment, products, and assets – from products running in customers’ homes and full deployments of commercial-grade assets out in the field to machines and equipment operating within your business.

Visibility has little value in and of itself, however. You need to use the data available to create true product and asset intelligence and then act on it. The more you know about how products perform and how they’re used, the more accurately you can predict service disruptions and detect what customers want most.

By capturing and incorporating customer demand and usage data across a network of products and assets represented by a digital twin, you can create valuable insights about what’s on the horizon. This advantage can lead to more relevant product design, higher availability in the field, and improved customer service with the outcomes that consumers crave.

3. Smart automation: Manufacture the lot size of one

Automation is everywhere across the supply chain, from robotics and autonomous forklifts in the warehouse to the potential of drones delivering goods. But when it comes to smart automation, manufacturing is leading the way – motivated in large part by the move from mass production to mass customization of individualized and personalized products.

To seize this opportunity, leading companies are rethinking their design, manufacturing, and logistics processes. A key trend is the transformation from continuous production lines to flexible production cells that can be moved and used in a nearly plug-and-play manner. Smart sensors that provide critical status data can assist in the automatic routing of products to the next cell in the production process.

As a result, companies can better manufacture the lot sizes of one that personalized products demand. In conjunction with more agile manufacturing processes, businesses are also retooling their distribution and delivery processes. Traditionally seen as cost centers, distribution centers are now viewed as strategic assets that can present a competitive advantage for savvy companies.

A range of powerful emerging technologies is enabling organizations to realize this advantage. To maximize flexibility without carrying the cost of large amounts of inventory, for instance, many companies are turning to 3D printing to generate products on demand. Other enterprises are turning to technologies such as machine learning, IoT, and robotics.

4. Total visibility: Analyze and manage the supply chain of one

In addition to the individualization, automation, and responsiveness required to succeed in the digital economy, it’s vital to provide real-time visibility to every role across the extended supply chain. But how, exactly, do you achieve that?

Total supply chain visibility requires nothing less than a digital mirror of your business. The goal is to see everything – from the movement of goods in production or transit to demand signals and relevant data from sentiment analysis, point-of-sale systems, and other critical sources. Total visibility also means the ability to see traffic jams, accidents, and weather patterns that can affect sales and deliveries or cause supply chain disruptions.

Since modern supply chains always extend beyond the four walls of your organization, you need to flexibly coordinate and collaborate across complex business networks of partners, manufacturing facilities, warehouses, and distribution centers.

With a digital mirror of your extended supply chain, you can connect the real world to the planned world, enabling you to:

  • Improve sustainability and compliance across your global supply
  • Help ensure ethical product sourcing
  • Streamline cross-border transactions
  • Minimize exposure when performing product recalls

The objective is to identify potential disruptions and sense surges in demand. Gaining this ability will help you improve business responsiveness, minimize risk across the supply chain, and provide the kinds of experiences and outcomes that customers crave.

To learn more about how to enable a smart, connected digital supply chain of one for today’s digital economy, register to read the IDC Infobrief.

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About Richard Howells

Richard Howells is a Vice President at SAP responsible for the positioning, messaging, AR , PR and go-to market activities for the SAP Supply Chain solutions.