7 Steps To Transform Your Supply Chain Into a Digital and Intelligent Supply Network
The global health crisis has dealt a massive blow to the economy. The unprecedented turn of events has wreaked havoc in several industries that are now staring at severe losses, employee layoffs, and even shutdowns.
Extended shutdowns and disruptions led to a prolonged slowdown. Plus, there are no immediate signs of recovery. The retail sector has perhaps seen its darkest phase. In April, retail sales in the U.S. dropped by a record 16.4 percent. Losses compounded in subsequent months as lockdowns were extended in several regions.
New challenges for supply chain leaders
As restrictions were imposed on transport and movement of people, enterprises had to deal with supply outages, production stoppages, and limited workforce. Amid this mayhem, the foremost challenge for supply chain leaders has been the lack of end-to-end visibility of supply chain operations. Organizations with global supply chains have realized the difficulty of tracking and collaborating with suppliers, especially at Tier 2 and Tier 3 levels. The lack of tools and processes to respond quickly to market changes, real-time data exchange, and effective collaboration with partners have also been key challenges.
Time to review and transform supply chain processes
The current crisis has accentuated the need to build agile and resilient supply chains. Most businesses envision a transition from conventional supply chain processes to a network that works with data and technology.
Here are seven steps to transform your supply chain into an intelligent digital network.
1. Define a vision: Start by defining a clear vision for your supply chain digital transformation. Ensure that the vision is closely aligned with your enterprise goals. These goals can be related to specific business objectives, such as improved supply chain visibility, better and faster decision-making, automated operations, and integrated customer engagement.
2. Assess existing systems and resources: Identify what capabilities you’ll need to achieve your transformation goals and determine the gaps. Look for:
- Data collection and analysis: Assess the capability of existing systems to generate, collect, and analyze data. Can the data be accessed easily and used to draw actionable insights?
- Legacy systems: Do existing systems use technology that can support your new goals? Is the technology aligned with business objectives? Identify digital solutions that are best suited to achieve the desired outcomes.
- Workforce skills: Determine if the workforce has the necessary skills to work with and adapt to the new business model.
3. Unify data and processes: Use a unified platform to gain complete, end-to-end visibility of the digital supply chain. Utilize the enhanced transparency to streamline core functions, including demand forecasting and planning, inventory management, warehouse management and logistics. The key objective here is to enhance visibility for every role and process across the extended supply chain.
4. Leverage cloud-based solutions: The cloud helps build shared solutions that can be accessed by multiple stakeholders in real time. However, you must first assess and identify aspects of the business that can benefit most from the cloud. These can include supply planning, procurement, inventory management, warehousing, transportation and logistics, product lifecycle management, and customer service. Replacing on-premise supply chain management systems with cloud-based solutions can boost operational efficiency and significantly improve the ability to collaborate with suppliers and partners.
5. Automate the planning process: With automated planning, you can simplify tasks and derive meaning from large volumes of data. Differentiate planning tasks that can be automated from others that are more strategic and need human intervention to arrive at a final decision. Look at less critical planning processes that can be optimized automatically. These are routine or recurring tasks where best practice solutions can be applied automatically. Do not automate processes that involve complex situations or require collaboration between planners.
6. Use data and analytics: In a digital network, supply chain professionals rely on real-time data to make informed decisions. It also helps them collaborate effectively with suppliers, partners, and other functions. Access to real-time data enhances visibility across the supply chain and helps identify potential disruptions. Plus, you can use AI-powered analytical tools to draw actionable insights and improve planning processes. For example, analytics can help prevent an anticipated out-of-stock situation and adjust inventory accordingly. Or you may receive an alert to expedite product manufacturing to match a potential increase in consumer demand.
7. Align people with processes: Despite the introduction of advanced technologies, the shift to a digital supply chain would be futile if the workforce is not aligned with the new processes. This shift should integrate digital technologies with people, processes, and management infrastructure. Without such integration, teams may not be able to work efficiently in the new business model and fail to achieve the desired results.
Successful supply chain transformation requires a holistic, enterprise-wide approach that involves careful planning and close collaboration with internal teams and partners. You must also create a long-term roadmap for digital transformation. What you really don’t want is a hasty change with disintegrated functions and people short of skill.