Digitization is another of those words that, for a few years, seem to be in fashion in the business world. Like Big Data, Blockchain and other glittering terms that sound very good to the ear. But what are we to do if we want to get serious about digital supply chain beyond the flashy headlines?
Companies often lack a clear definition of what this digitization is and limit themselves to a vague concept in which they understand that there will be greater use of computers and technology. Recently, Supply Chain Insights has published a report in which it investigates how 25 large manufacturers approach this process.
The digital supply chain and the shift in mindset
According to the article’s author, Lora Cecere, there are important differences between traditional supply chain thinking and that emerging with the advent of the digital supply chain. For example, while in the conventional supply chain processes are built from the inside out, in the digital supply chain processes are built in reverse, from what happens outside and in.
In a similar way, where before the focus was on responding to events, now it is placed on using sensors that are the ones that lead to an intelligent -and even automated- response. Finally, the study underlines the transformation from the standardization of processes towards processes that are autonomous.
Difficulties on the road to the digital supply chain
Many companies have started the path towards digitization, but they often encounter obstacles that they do not know how to overcome. The report reveals that although 88% of companies have an ERP system, only 29% of them are able to easily obtain their costs. In other words, companies are aware of the importance of taking the path but often have difficulties in turning these actions into tangible results (such as detailed knowledge of the costs of our logistics).
Another difficulty at this point is that companies tend to confuse knowing their operating costs with the total costs of the company. The latter is much more complex, needing to know and allocate the costs that cross various sections and departments of the company.
Finally, the report also denounces the lack of planning in continuous improvement programs. “Without an orchestration of the program as a whole, the funds that may be saved in one task may be wasted in another,” the document warns. Despite this lack of planning, the numbers show that companies’ clear interest in improvement. Asked about the number of continuous improvement processes that these 25 large manufacturers currently had in place, the resulting average was 105 processes on average.
Barriers to the digital supply chain
The report also tells us about the barriers that companies are running into, further dividing them into those that are increasing, those that are decreasing, and those that remain with roughly the same strength.
Among the barriers that are beginning to be overcome are the integration of new technologies and changes in the direction of companies to adapt to market changes and new technologies. Among those that remain we find some such as the support from the board of directors and the alignment with the key lines of the business.
Among the barriers that seem to be beginning to recede are the failures to collaborate between manufacturers and retailers and the use of analytics to be able to assess the impact of promotions.