The Digital Supply Chain Initiative (DSCi), a research Institute launched by The Center for Global Enterprises, published its first report designed to guide companies in preparing for the Digital Supply Chain (DSC) of the future.
The Center for Global Enterprises focuses on the evolution of enterprise supply chains in the digital economy and the creation and practical applications of supply chain management (SCM) best practices.
The DSCi report provides a series of practical steps, a new approach in SCM conceived to increase revenue and decrease supply chain costs. According to the paper, flipping the focus to the customer-facing side of the business supply chain management can maximize demand and see a 20% reduction of procurement costs, a 50% reduction in supply chain costs, an increase in revenue of 10%. The researchers found this to be true across all industries.
By the year 2020, entirely new companies will be operating a Digital Supply Chain globally, according to the DSCi research. Some current powerful companies will also take the necessary steps to transform into a digital supply chain platform.
Following a strategy that aims at 20% lower costs and 10% higher revenue will allow companies to collaborate with their suppliers in a new way. At the same time, their collaboration with customers will drive innovative products and services.
Supply chain leaders will focus their energy to optimize results. This will be done by managing suppliers, moving manufacturing facilities to low-cost locations, and increasing the efficiency of logistics.
Big data and analytics, new technologies, new people skills, and as increasing risky operating environment will all be part of the frontside flip. Reaching a complete balance will ensure company success and Digital Supply Chain effectiveness.
The DSCi paper offers CEOs and senior supply chain leaders recommendations on how to move forward following four execution roadmaps to position their organization on the right pathway toward the digital supply chain journey.
Demand: Real-time continuous engagement with customers
One of the requirements for successful implemantion of a digital supply chain is useful, clean data obtained in real-time.
To achieve demand stimulation and management CEOs must ensure that real-time data is collected from a wide range of sources such as social media, Internet of Things (IoT) and sensors, and supplier and customer data.
The analysis of this data will determine customer demand. Bringing to the company new analytical tools and new data scientists ensures the good use of the data and the capacity to make better decisions.
Demand stimulation is an interesting add to traditional supply chain processes. CEOs and supply chain managers must promote and stimulate new market demand.
The execution of the digital supply shain can be signaled by developing a new, demand-focused scorecard. Perhaps adding metrics for revenue and market share growth could serve as encouragement for the supply chain team.
Data from machine learning and traditional management will provide enough information to make decisions better aligned with this new operating environment.
People: Cultural & organizational shift
During the organization's evolution to the digital supply chain, corporate leadership should identify and empower a new senior executive with the experience, knowledge, and leadership skills to lead the transformation. The new executive should possess experience and knowledge of the new technologies involved in the digital supply chain transformation. Big data and analytics should top his list of skills.
Empowered with technology budget and decision-making authority, the new executive should be able to drive the supply chain change through new people, new skills, and new individual and group performance metrics.
Technology: Enterprise/platform agility
The understanding of the importance to support investment in Digital Supply Chain technology must be at the core of the CEO. Real-time supply chain visibility depends on that.
There are a few steps that the Digital Supply Chain must take, such as integrating and linking internal organization data silos –legacy systems, acquisition, or other– and capturing data from external sources to be analyzed either internally or via outsourced contract.
The predictive and demand-sensing information will draw insights about current and potential customers. An efficient and reliable data management system will enable key digital supply chain executives or digital supply chain officers (DSCO) and supply chain managers to make necessary and informed real-time decisions.
Investing in data integration, capture, cleaning, and use of data will enhance the organization's visibility and response to customers. Cloud technology has the capacity to enable smaller businesses to gain secure, more affordable, and flexible data platform capability. In turn, this contribute to an easier and more effective supply chain visibility extension and collaboration with customers, partners, and suppliers without the investment in one, or several proprietary systems.
Production technologies such as artificial intelligence (AI), robotics, and 3D printing will speed up, adjust and win new business, and respond to new market demands. Cognitive computing may, or may not address the particular needs of a company
Driverless distribution and delivery vehicles potentially create opportunities to cut costs and grow revenue. Blockchain technology potentially will protect and sustain the integrity, performance, and agility of the company.
Risk: Enhance risk management capability
Leading companies are in constant search finding ways to integrate compliance measurements into the core of their business performance measurements.
It's the job of senior management to strategically allocate resources. This will be done with the help of evolving technologies and data sources. The ultimate goal of supply chain management is to identify the compliance areas and set the company to excel and develop a competitive advantage. At the same time, supply chain management must identify the compliance areas that will be the focus of risk mitigation.
Cybersecurity and intellectual property protection must be watched carefully. It's the duty of senior management to set the right balance between tight cyber controls and the ability for people to efficiently do their assigned jobs and collaborate.
Collaboration takes a front seat in the digital supply chain as internal cross-functional collaboration, collaboration with suppliers and customers, and collaboration with other companies facing similar, or the same risks.
To take advantage of the digital supply chain, supply chain management must determine which risks to mitigate and which to leverage into a competitive advantage.