How Digitization can Change the Supply Chain Scenario

by Procurement Freelancers Team

It will not be an exaggeration to say that the modern-day supply chain is digitally driven. Every organization is relying on the internet to reach a large number of customers within a short period. With the advent of digital technologies, companies are modifying their supply chain operations. Yes, there are challenges on the supply side in spite of the digitization. In today’s world, the preferences of consumers are continuously changing. Organizations can address new customer requirements if the supply chain is digitized.

Changes Expected in the Supply Chain Owing to Digitization

Experts are of the view that the new-generation supply chain will be faster and more flexible than the traditional one. With the emergence of performance management systems, organizations can expect transparency throughout the supply chain. Nowadays, organizations feel the urgency to adopt micro-segmentation and mass customization because of changing consumer preferences. The changes expected in the supply chain because of the implementation of digital technologies are listed as follows:

I. Faster

If the supply chains are digitized, companies can adopt new and innovative approaches to product distribution. This will reduce the delivery time to a great extent. The finished products will reach the marketers within a few hours. The digital supply chain facilitates advanced forecasting approaches, namely, predictive analytics of internal factors like demand and external factors like weather, market trends, school vacation, construction indices, etc. The digital supply chain assesses customer demand and spare parts demand precisely. In this case, forecasts are conducted every week for FMCG products. Instances are there when forecasts are carried out every day. The concept of “predictive shipping” arises from this approach.

II. Flexible

The digital supply chain instills a flexible reaction to the ad-hoc and real-time planning of organizations. This makes companies cater to the changing demand or supply situations effectively. As the frozen periods of companies are shortened, planning becomes a continuous process for organizations. The delivery processes become increasingly flexible as it allows end-users to reroute shipments to a convenient destination. In recent times, new business models have evolved such as transport management and supply chain as a service for supply chain planning functions. Nowadays, many organizations buy supply chain processes as a service to reduce costs. This will further help organizations to generate economies of scale. It is not only about economies of scale but also about economies of scope that is created due to the specialization of supply providers. Intriguing outsourcing opportunities are also created in this manner.

III. Granular

The digital supply chain reacts to changes in customer preferences effectively. New-age companies consider customers as granular clusters. Thereafter, companies determine a customer’s most suited products, which he/she is very likely to buy. No customer would be willing to buy a product that doesn’t fit their needs.

IV. Accurate

In previous times, the supply chain processes lacked transparency. Most of the time, organizations have to pay for it. Nowadays, the scenario is different. Performance management systems deliver accurate data ranging from synthesized top-level KPIs to granular process data. Organizations are hugely benefited from this integration of data as the stakeholders can take decisions based on the same information. Business firms keep clean-sheet models, transport or inventory as they use it to set up targets automatically.

V. Efficient

No doubt, machines perform tasks more efficiently than human beings. With the automation of physical tasks and planning, the supply chain processes of companies are attaining increased efficiency levels. Nowadays, robots are placed instead of human beings as the former can carry out the warehouse process automatically. When it comes to packing and shipping, autonomous trucks are used.

Digital technologies are modifying the supply chain in every aspect. As technology is continuously evolving, more changes are expected in the forthcoming days. Business firms need to change their marketing strategies while deviating from the traditional notions of supply chain processes.

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1 comment

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