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In the traditional scenario, the marketing team analyses customer demand. It predicts sales for the coming period and the manufacturing orders raw materials, components, and parts for the anticipated capacity with the available information.
Too often, manufacturing operates independently from marketing. The lack of transparency will disrupt the orderly flow from marketing to the customer. Digitalizing the supply chain will dissolve the silos where supply and demand signals originate at any point and travel immediately throughout the network.
A shutdown of manufacturing, increase in demand, and low levels of raw material supply are visible throughout the system, letting all players, including the customers, plan accordingly. As supply chain is focal point of an enterprise, visibility in the supply chain is key to a visible and connected enterprise.
Elements of Digital Supply Chain Efficiency and Resilience
The digital supply chain consists of these seven key elements:
1. Integrated planning and execution
The goal of a digital supply chain is to deliver the right product quickly, responsively and reliably, while increasing efficiency and cutting costs. It can be achieved with a fully integrated supply chain driven through a central cloud-based command center that connects suppliers, manufacturing, logistics, warehousing, and customers.
In a world where customized manufacturing is becoming the norm and customers are becoming ever more demanding. The fully responsive supply chain is a huge competitive advantage and fast becoming a must-have, resulting from full awareness and collaboration along different time horizons on strategic, tactical, and operational levels.
The rapid information exchange boosts the agility of the entire chain while enabling much closer integration with customers when you want to ‘lock in’ those customers through an efficient supply chain, excellent service, and a compelling customer experience.
2. Smart Logistics
Opening the supply chain for all to see is the overarching goal in a digital supply chain. While B2C markets inspire companies to provide this visibility level, demanding more information about shipment arrivals with real-time updates, in B2B networks, producers expect timely status information on their supply shipments linked to production plans.
Machine learning algorithms will automate this, offer mitigation advice and proven available solutions from the past. It will reduce workload and increase supply chain efficiency. A practical ‘track and trace’ system will enable companies to track shipment location while field sensors monitor temperature and humidity.
3. Digital Procurement
Many companies are digitalizing procurement as they use various big data tools and techniques. It connects suppliers, aids the planning process, improves sourcing, manages supplier risk, and boosts collaboration, resulting in lower costs and faster delivery throughout the supply chain.
Digitalizing procurement will transform the value proposition of the procurement function. The software will become an essential feature of every company’s product. The software embedded in these products is more valuable than the physical materials it goes into – and is already providing the competitive advantage that companies need to win.
4. Smart Warehousing
The transformation of the warehousing will begin with inbound logistics. Inbound trucks will communicate their position and arrival time to the intelligent warehouse management system, choosing and preparing a docking slot, optimizing just-in-time and just-in-sequence delivery.
The management system will allot storage space for delivery and assign the appropriate autonomous equipment to move the goods to the correct location. The system will deploy drones to track inventory, assess goods’ whereabouts through sensor data, and map the entire facility.
Digitalization is already revolutionizing the warehousing and distribution of spare parts. Case in point, DHL tested an augmented reality system in their Ricoh-owned warehouse in the Netherlands equipped with smart glasses containing software from Ubimax.
Employees navigated through the warehouse along optimized routes via the glasses’ graphics display, enabling them to find the correct quantity of the right item much more efficiently, with reduced time. The productivity improvements and reduction in errors increased the overall picking efficiency by 25%.
5. Efficient Spare Parts Management
Warehouses typically maintain vast inventories of parts for 30 years or more if customers are to operate older machines. Digitalization is revolutionizing the warehousing and distribution of spare parts.
Sophisticated analytics software allows demand for spare parts to be forecast precisely through predictive maintenance of vehicles and machines, which will enable companies to optimize spare parts storage and distribution. With 3D printing, facilities equipped with printers, software, and blueprint, can manufacture spare parts.
The warehouse can reduce its inventory and associated costs. The capacity to add predictive maintenance services and deliver parts quickly is instrumental to the shift to Industry 4.0.
6. Autonomous Logistics
The virtues of autonomous vehicles with internal sensors that could help fleet operators assess cargo health and determine maintenance requirements remotely can result in faster and reliable delivery times, lower labor costs, eliminate human errors, reduce emissions, and make routing, operations, and convoying of trucks efficient.
Recently, Nevada licensed two Daimler Freightliner Inspiration trucks equipped with radar, advanced cruise control, and mapping software for use on highways. They added value to logistical tasks and route logging, freeing drivers and making their job attractive and safer.
7. Prescriptive Supply Chain Analytics
Big data analytics is a critical element of Industry 4.0. Companies are already learning where goods are, the demand for specific items, and when items are likely to be delivered. The next stage is the ability to prescribe how the supply chain must operate.
Prescriptive analytics systems provide decision support to managers and act autonomously on simple decisions. Companies can include external information such as economic indicators and employ self-learning algorithms to automate decision-making.
The analytics engine would produce a minimum-cost scenario showing how much money could potentially be saved and how to achieve this goal with enough data. This scenario could be adjusted to account for other factors. It could help minimize costs during natural disasters that could potentially disrupt the supply chain.
Ultimately, prescriptive analytics could offer scenarios at every level.
Addressing the Digital Supply Chain Priorities
The digital supply chain integrates innovative technologies to reduce costs and create value. Combining tools for visibility, data & analytics, and cloud provides a strong foundation for digital transformation.
A complete definition of end-to-end supply chain automation must include the use of intelligent Business Process Management (BPM), Robotic Process Automation (RPA), Machine Learning (ML), Artificial Intelligence (AI), Deep Learning (DL), Blockchain, and Optical Character Recognition (OCR).
The digital supply chain is at the core of a completely digital enterprise, as seen in the below infographic.
Digitalization helps companies manage new customer demand, supply-side difficulties, and residual expectations for efficiency improvement. The global demand for the digital supply chain is expected to rise in the coming years, owing to time and cost-effectiveness, increased use of digital media devices, and enhanced service quality over time.
Some of the key players implementing digital supply chain are FedEx, UPS, Maersk, Japan Post, Adani, among others with Capgemini, Infosys, HCL, Accenture, TCS, Tech Mahindra being some of the key service providers tasked to work on application development & maintenance, software testing, server, and network management, data warehouse, business intelligence, among others.
Draup’s analysis of the supply chain industry helped us identify the key use cases, the key players, and the key service providers and startups in the space. The report includes the market trends, key locations, R&D centers, emerging technologies, and initiatives.
Draup’s sales intelligence platform assists clients in adapting to the new normal. Our data has helped them integrate into their Digital Supply Chain practices. Decision-makers can get their hands on a large pool of data, well-researched analytics, industry trends, and best practices to make the right decisions and pivot to smart and intelligent manufacturing.
