Discuss the benefits of supply chain digitalization
For product manufacturers, their supply chains are among the most critical link in their value chains. Companies invest in their supply chains to ensure a regular supply of quality raw materials for production. Managing the supply chain efficiently is critical to gain success and competitiveness in the short and the long term. The success of the entire business might depend on the efficiency of its supply chain across several sectors. In the digital era, companies are investing in the digitalization of their supply chains.
Supply chain digitization means the application of advanced digital technologies to grow the efficiency of the supply chain processes. Digitization of the supply chain offers several advantages including reduced manufacturing costs, higher efficiency, lower labor costs, and more. The traditional supply chains do not offer the same advantages as the modern and digitized supply chain.
Apart from improved workflow, digitization of the supply chain also allows for improved sharing of data and information among suppliers and buyers. Automating the supply chain processes reduces labor costs, eliminates a lot of manual work and minimizes wastage. The use of digital tools in the supply chain also allows the involved parties to share information and improve processes without seeking any external help. Automation also enables companies to improve worker productivity in their supply chains.
Managing digital supply chains is also a lot easier compared to managing the traditional supply chains. Supply chain managers can have real time data and information regarding the performance of their supply chains. Digital tools allow supply chain managers to gather real time data on supply chain performance and critical requirements. For example, monitoring material flows, logistics and inventory levels is easier with the use of digital tools.
Supply chain managers can use the data to make critical decisions and for forecasting and resource planning. So, while supply chain digitization can improve the efficiency of processes by identifying bottlenecks immediately, it can also help minimize costs and delays. If businesses can manage to minimize costs and expenses in their supply chains and production, they can pass the benefits to their customers in the form of lower prices.
Several firms are using advanced technologies like big data, data and analytics, IoT and blockchain technology to manage their supply chains. The use of data and analytics for managing supply chains has also increased in recent years. A lot of data is generated in the supply chains everyday which can be used for managing the efficiency of processes and improving product quality.
In the case of traditional supply chains that do not rely upon advanced technologies, identifying problems and resolving them can be even difficult. Digital technology is also making it easier for companies to implement quality control measures in their supply chains. There are several aspects of supply chain management that can be managed with higher ease using digital technology. For example, managing logistics, sourcing, inventory and various tiers of suppliers is easier using digital technology.
Overall, digital supply chains are a big leap from the traditional supply chains. Increased efficiency, reduced costs, higher worker productivity, better inventory management, improved product quality, superior problem identification are just some of the benefits derived from supply chain digitization. Over the longer term, firms can realize even bigger advantages from digital supply chains including rapid innovation. The rate of product innovation inside the firms managing their supply chains digitally is higher compared to the ones still relying on traditional supply chain setups.
Managing a supply chain becomes complex without digital technology. Traditional supply chains have remained riddled with problems, many of which can be easily eliminated using digital technology. Supply chain managers can manage a larger number of tasks simultaneously and coordinate efficiently with stakeholders using digital technology.
Higher supply chain efficiency means superior growth for firms. There are several leading firms like Walmart that manage their supply chains and other business processes digitally. In the retail industry, brands have moved fast towards digitally managing their supply chains. Fashion retailers like Nike and Adidas have outsourced their entire supply chains. They manage their suppliers and supply chains digitally and thus realize the benefit of having not to worry about the various aspects of supply chain management like procurement and inventory management. One additional benefit for these firms is that they can focus on product quality and innovation.
Digital supply chains have become mandatory across all sectors from food to fashion and retail. Managing supply chains digitally has also allowed firms to grow their effectiveness in more areas like customer experience, product quality, innovation and marketing.