With the emergence of modern technologies such as the Internet of Things, big data, artificial intelligence, etc., driving the development of the digital economy, the digital supply chain is the future development trend, which promotes the gradual transformation and development of the traditional supply chain to a modern supply chain system. So, what is digital supply chain management, let us explore in this article.
What is Digital Supply Chain Management?
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The term digital supply chain is used to describe a digital transformation that meets the criteria of digitization and is enhanced in another respect such as supply chain scope, depth and breadth of analysis. Incorporating IoT data is another core element of digital supply chain initiatives. The technology that generates useful data will expand exponentially. Supply chain digitization allows companies to address new customer requirements, supply-side challenges and residual expectations in terms of efficiency improvement.
What is a Digital Supply chain?
The traditional supply chain can be simply summarized as the network chain structure between all the individuals, organizations and activities involved in the business process from the manufacturer to the end user.
According to the definition of the Digital Supply Chain Research Institute, the digital supply chain refers to a customer-centric platform model, which is obtained in real-time through multiple channels and maximizes the use of data to achieve demand stimulation, matching, perception and management, to improve corporate performance and maximize the use of data. reduce risk.
What we call a digital supply chain is the use of traditional supply chain processes with digital technologies (Internet of Things, blockchain,
machine learning, artificial intelligence, predictive analytics, etc.), including demand planning, asset management, warehouse management, transportation and logistics management, procurement, order fulfilment, and more.
What is Digital Supply Chain Management?
Digital supply chain management refers to the use of various AI algorithms to guide supply chain forecasting, planning, execution, decision-making and other activities based on collected big data. The digital supply chain consists of two parts, one of which is basic supply chain management. According to the SCOR supply chain model of APICS, supply chain activities are divided into research and planning, source procurement, manufacturing, logistics delivery (warehousing and transportation), after-sales and Support, in which the supply chain that is narrowly mentioned by the majority of companies is the logistics delivery section.
The other part refers to digitization. Based on each operation link of the supply chain, all operational data are quantified and digitized, fully verified, collected and optimized. Combined with big data technology and AI artificial intelligence technology, the supply chain data is sliced, visualized, analyzed, and optimized. KPI, forecasting, and even model formatting based on the platform, and intelligent scheduling using RPA robotics technology instead of manual work.
Digitization makes Supply Chain :
Faster
New approaches to product delivery can reduce delivery times to several hours. Advanced forecasting approaches, such as predictive analytics of internal and external data, when combined with machine state data help provide more accurate forecasts of the demand of customers. Forecasts are made daily rather than weekly or monthly. Accordingly, in the future, we will see the appearance of “predictive shipping”.
More detail
With customers seeking more and more personalization in the products they buy, companies must manage demand at a more granular level, through techniques such as micro-segmentation, and customization and make planning more complex.
Innovations such as delivery by drones or self-driving cars enable more efficient management of customized customer needs quickly.
Flexible
Real-time, customized planning allows companies to flexibly respond to changes in demand or supply, minimizing planning cycles and freeze times. New business models increase the flexibility of the supply chain organization. Supply chain functions can be outsourced individually instead of maintaining in-house resources.
More Accurate
Performance management systems that provide end-to-end and real-time transparency throughout the supply chain improve accuracy. The range of information derived from key performance indicators is aggregated at the highest level. Integrating data from vendors, service providers and others in the “supply chain cloud” ensures that all stakeholders in the supply chain control and decisions based on the same factual facts.
More effective
This is the issue that most companies care about. Automating manual tasks and planning will improve supply chain efficiency. To optimize truck utilization and increase transportation flexibility, companies share capacity through transportation optimization. The network setup itself is continuously optimized to ensure the best fit for business requirements.
Digital Supply chain management process
Over the past three decades, supply chains have undergone tremendous transformations.
Today, many supply chains are transitioning from this rigid linear structure to dynamically interconnected systems that are easier to integrate with partners in the ecosystem and can be optimized over time.
The supply chain function ensures that operations are well integrated from suppliers to customers with cost, inventory, and customer service decisions made with a bottom-up view. to the endpoint rather than by each function independently.
Each process in the supply chain is listed below.
Customer Order
Customers are the first to order the products offered by the company. During this phase, the company receives information from the customer. The number of products the customer needs and the date of delivery of the product.
Planning
After receiving an order from a customer, the company plans the production process to produce the goods that the customer needs. At this stage, the company looks at its suppliers, considers them, and makes decisions to meet the company’s critical needs.
Procurement
After planning and determining the appropriate amount of goods, the next step the company must take is the procurement of goods. Sourcing is a procedure carried out by a company to obtain goods of the best quality at the lowest price according to company standards.
Shipping
Ordered goods are stored in the warehouse for production purposes to be carried out at a later stage. The quality of these stored raw materials must be maintained so that the goods produced using these raw materials have the same quality.
Manufacturing
The production process is a critical stage for the success of a company. Product quality is closely related to the results of this stage because all raw materials are processed into finished products that can be sold. It can be said that the better the quality of the production process, the better the quality of the final product and the more likely it is that consumers will be satisfied. After successful production, finished products are stored in warehouses before being distributed to consumers.
Delivery and logistics
Generally, this phase is the final stage of supply chain management. Finished products previously stored in warehouses will be distributed to customers according to the delivery date mentioned above.
Product returns
This step is to be taken if the goods are damaged when received by the consumer. In addition to the damaged condition, this procedure must be followed if there is a problem that takes a long time to deliver or if there is an error in the delivery. To avoid this situation, it is necessary to ship products directly to consumers and secure inventory so that refunds can be processed quickly.
Benefits of Digital Supply chain management for companies
A well-implemented supply chain mechanism can ensure that all delivered goods meet customer or end-user expectations.
By implementing supply chain management, companies can perform marketing functions. Find out what products consumers are interested in. This allows you to identify all the product attributes that consumers expect and pass them on to your manufacturing/product designer.
Businesses can sell their goods/services optimally, maintain customer satisfaction, optimize production processes, and even distribute profitably.
Customer satisfaction
By implementing supply chain management, businesses can keep their customers happy. As a business partner, the company can guarantee customer satisfaction by producing goods/services according to customer needs.
The customer is the main target group of a company in its manufacturing activities because it is the party that buys or uses the goods/services it produces. To have a long-term loyal relationship, you need to keep your customers satisfied for the long term. Supply chain management plays a key role in helping companies ensure customer satisfaction. Through this mechanism, companies can find out what they need and when is the best time to deliver goods.
Increase in revenue
The more loyal consumers who use the company’s goods/services from time to time, the greater the company’s opportunity to increase revenue.
The products produced by the company are in demand and used by consumers. Therefore, the company’s turnover increases.
Cost reduction
In the past, companies had to spend a lot of money to procure, produce, and distribute goods and services, but now things are different. Supply chain management can reduce the costs that companies have to incur for all these processes. By consolidating product flow from the business to the consumer, you can reduce costs on production and distribution lines.
Maximum use of company assets
Technology plays a key role in implementing supply chain management. The technology involved in supply chain management requires companies to improve employee performance. For this reason, companies usually work with software vendors to help their employees operate supply chain mechanisms.
Employees naturally seek to improve their skills and knowledge to maximize supply chain management, the company’s greatest asset. Practice the use of advanced technology required to implement supply chain management. This maximizes the use of company assets.
Company growth
The company can achieve the desired main goal. Putting it into practice will bring you huge profits, so the company will grow stronger and bigger little by little.
The maturity of the Digital Supply chain
The main goal of a digital supply chain is to provide insights to increase efficiency and create higher profits for the organization, the benefits are nothing more than cost reduction, business agility, supply chain visualization, risk management, addressing user needs, etc.
Knowing the level of digitization of their supply chain and the direction of improvement have become major concerns for companies.
The maturity of digital supply chain transformation can be divided into four stages: visibility within the enterprise, networked supply chain, customer integration and predictability.
Intra-company visibility
Once a clear digital vision is defined, automate workflows and collaboration to improve coordination and workflow visualization across corporate departments.
Networked Supply Chain
The supply chain exists in the network layer, enabling end-to-end digital data visualization, where all participants in the network can see and collaborate.
Customer Integration
Digital capabilities extend to customer touchpoints, and customer needs can be fully integrated into the supply chain in real time. Customer demand signals can be sensed in the entire supply chain, and management can timely formulate better countermeasures based on demand data.
Predictability
Companies leverage powerful data processing capabilities including business intelligence, predictive analytics, machine learning and network intelligence, to sense and predict the demand or interruption of the supply chain in advance, and reduce the risk of supply chain operation to a minimum.
Conclusion
The supply chain has a fairly complex process, so companies need to switch to digital systems. Change is often difficult, but the digitization of information and the application of advanced innovative technologies can bring opportunities for companies to drive business value across the supply chain. A digital supply chain will help companies to grow their business because they remove several barriers from conventional systems. Good supply chain management will make businesses achieve more.