Three Keys To The Digital Supply Chain For A Volatile World

Hans Thalbauer

One of the prevailing characteristics of the global economy today is chronic volatility and the uncertainty that comes with it. Case in point: Brexit.

The inability of the United Kingdom to move forward with a clear plan for exiting the European Union has left most companies with UK operations in limbo. Business planning, such as it is, has focused on building up safety stock – which increases inventory carrying costs.

As a result, almost every square foot of available warehouse space in the UK today is occupied as companies stockpile goods. The objective is to avoid import duties for incoming goods in case of a hard Brexit. But will a hard Brexit transpire – or will a deal be made? Who knows? Which is exactly the point.

Brexit, of course, is only one example of uncertainty in the global economy. Trade wars between the US and China. Slowing growth and a potential recession on the horizon. Turbulence in the oil market. Climate change and weather events that can destroy communities and cripple supply chains. The list is extensive.

To help overcome the challenges associated with volatility and uncertainty, organizations need a digital supply chain built on visibility, sustainability, and better customer experiences. Let’s have a look at how each of these aspects can help drive better supply chain operations.

Visibility and connectedness

The notion of total supply chain visibility is nothing new. For more than a decade, it has been top of mind for supply chain managers everywhere. But how much actual progress has been made?

Consider the fact that when it comes to a digital supply chain, visibility means connectedness. Now ask yourself this: How many of your supply chain partners are you connected to – digitally? How many of your partners do you actually collaborate with at the strategic planning level?

This connectedness isn’t limited to suppliers of materials. Pan out a bit further to include logistics. Are you connected to your carriers so that you can overcome disruptions and still ensure on-time delivery? And what about your assets – such as plant machinery? Are you using Internet of Things technology to connect to the manufacturer – who can then analyze asset health in real time, predict machine failure, and take proactive measures to avoid it?

This is the level of connectedness needed to achieve total supply chain visibility. Many companies, however, are only a fraction of the way there. More work lies ahead to connect suppliers, logistics providers, assets, and other aspects of the end-to-end supply chain.

The good news is that the technology exists to get the job done – technology such as IoT, predictive analytics, machine learning, and cloud-based supply chain solutions that drive business agility.

Sustainability from multiple perspectives

Sustainability should be viewed in both its environmental and business senses. At a time of increasingly dramatic climate change, the environmental sense is all-important. But businesses are focused on growth; thus the sense of sustainable business growth is often more immediate.

In many ways, the two are intertwined. Running with less resource usage and waste means running efficiently – which ultimately saves money. Today’s technology, moreover, can drive new business models that speed growth while helping to minimize the carbon footprint.

Direct to consumer models, for example, can cut down on transport. No longer do you need to ship product to distribution points along the way to the customer. Now you can open an e-commerce storefront and ship direct.

3D printing, or additive manufacturing, can cut down on transport by locating production closer to the end customer. Predictive maintenance can extend the lifecycle of assets. And IoT and machine learning can optimize energy consumption for large deployments of capital equipment. A digital supply chain requires the flexibility to help organizations deploy and support such innovation.

Better customer experiences with the digital supply chain

Total supply chain visibility and a focus on environmental and business sustainability converge to help drive better customer experiences.

Though it is sometimes overlooked or deemphasized, supply chain visibility is central to delivering a positive customer experience. Problems receiving a product or service after making payment can spoil an otherwise great experience. And if your supply chain lacks the agility to respond to new trends with new products, your customers will look elsewhere.

As for the innovative business models that support sustainable growth, this is exactly what customers crave. Maybe it’s an app that delivers your services more efficiently – or a subscription program that cuts down on large capital outlays. Or maybe you can support an x-as-a-service model where the customer never owns the equipment but just pays for the service of always-on production or temperature-controlled facilities.

Whatever the business model, your digital supply chain needs to be up to the task of supporting it with pervasive connectedness, total visibility, and sustainable operations that drive down costs, increase efficiency, and help to deliver better customer experiences.

Stay tuned for a follow-up blog where we’ll dive deeper into the digital supply chain with a focus on connectedness, predictive analytics, and intelligent technologies.

Download the IDC report “Leveraging your intelligent digital supply chain” to find out how an end-to-end digital supply chain – from design and planning to manufacturing, logistics, and operations – addresses the operational pressures of shorter product cycles, design variability, fluctuating demand, and faster delivery expectations. 

Hans Thalbauer

About Hans Thalbauer

Hans Thalbauer is globally responsible for solution management and the go-to-market functions for SAP digital supply chain solutions and the SAP Leonardo portfolio of Internet of Things solutions. In this role, he is engaged in creative dialogues with businesses and operations worldwide, addressing customer needs and introducing innovative business processes, including the vision of creating a live business environment for everyone working in operations. Hans has more than 17 years with SAP and is based out of Palo Alto, CA, USA. He has held positions in development, product and solution management, and the go-to-market organization. Hans holds a degree in Business Information Systems from the University Vienna, Austria.