Digital Transformation in Supply Chain Management

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By Andy Lappo, Tech Critic
Published on Jun 20, 2022

Digital Transformation
Best Practices
10 min read

It’s been a couple of chaotic years since we bumped into the Great Supply Chain disruption, but feels like we’ve been struggling since the beginning of time. Sorely in need of dramatic change, the industry gets on with the challenge slowly. So, what’s our play? How do companies reignite progress within the scene and get closer to a heyday of a tech-powered supply chain?

Long story short, it’s going to be a pretty wild ride, but we’ve been doing some thinking on potentially winning path trends. To avoid selling you blanket statements or red-pilled theories, our analysts crunched through towers of surveys and stats reports while coupling the insights with our internal business-specific expertise.

What does it all add up to? Well, so far as we aren’t a secretive bunch, we share our discoveries up front to get you a leg-up on the marathon. We’re all set, and you are on the need-to-know list. Sit back, strap in — we’re going to have a moment rocketing past the economical turbulence bright and breezy.

A take on global market risks landscape

First things first, a short yet incisive look into some distressing troubles corroding our long-established supply chain workflows day by day. What have we here? It’s a yummy five-course meal unwanted by our fed-up humanity:

  1. Chopped climate change factors for appetizer
  2. Global pandemic-spiced soup
  3. Lasting energy crisis as a main course
  4. Creamy socio-economic collapse-shaped dessert
  5. Planet’s existential dilemma served with a cheesy geopolitical blackmail

With a menu like that, we wish we’d be ten again. “Just five ice creams, ma’am, please, and off we go”. “No, you children stay put. Eat as I count!” So, emotions aside, we leave our critical thinking unclouded and search on: what kind of way out there might be exactly?

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source: consultancy.co.uk

Strategic digital tech investment (thx captain obvious)

Time that we forget the analog technology era. Seriously. This years’ surveys reveal that we should be prepping for another great digital transition. As calculations go, 35% of companies are planning to invest at least $1M in digital transformation of their supply chain over the next two years. Impressive, right? Hold on, there sure is a catch.

The thing is, only 20% of the surveyed executives noted that the investments have fully paid off through the delivered results. May sound much of a cliche, but still: most lacked a long-run strategy. Increasing spendings on technology is a world away from actually adopting it.

Some supply chain operations need gradual educated transformation approaches, as do spending plans. Regardless, instead of opting for a mature risk analysis, many treat innovation as an exercise in cutting costs. This way, their mindset makes them walk in circles.

With that said, we have a simple pointer that better be top of mind. While making a breakdown of your innovation resources, it’s critical to assess the potential rewards in terms of business continuity, longevity, and economical viability. To be specific, factors are more of a how than a what. Namely:

  • How can an individual tech investment become a blueprint to be scaled and implemented all across the company?
  • How to adjust digital transformation efforts to the growing economic volatility?
  • How can a short-term automation success help cut recurring costs and mitigate risks in the long term?

Triple check mark — and you’re good to go. But still, to make the means justify the end, we should also consider the newest issues undermining the conventional supply chains’ rationale. As we start rethinking legacy strategies, it would be dead wrong to skip sourcing bottlenecks.

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tech investments

Supplier risks & trade wars to avert

Today, we can’t see past the fact that newly implemented trade restrictions keep us on our toes, to say nothing of geopolitical tensions. The war in Ukraine resurfaced increasing cross-border dependencies within raw supply of gasses, metals, and agricultural produce.

Given a shift towards self-sufficiency across numerous countries, we may well anticipate exponential growth of industrial policies lurking under the “economic resilience” label.

The system that we’re used to is now reluctantly approaching a major tipping point, largely reinventing itself — from energy distribution to trust establishment. Speaking of which, supplier’s reliability is a top-of-the-list factor to be reexamined in the light of the pandemic-time chain tweaks.

This isn’t to say that the supplier Universe has lost equilibrium due to cargo shipment delay and semiconductor chip shortage pressure — far from it. It’s just that to get through shortages and inflations in one piece, we’d better stop focusing on prices exclusively.

Building a more flexible approach can put you out of the hot seat, so give a closer look to shared demand planning and try to ramp up local processing efforts. These aren’t a piece of cake, yep, but worth it. What IS a no-brainer is, in the name of common sense, watching for the market signals.

See the congestion and weakening capacities? Instincts are rarely wrong. Don’t idly wait for the heat to die down in time with skyrocketing container rates. Grab a head start on the issues, extract patterns, and get away with little smoke damage in the end.

Now that we’ve portrayed strategic directions where supply chain higher-ups are clamoring for transformation, without the right technologies we’re stuck.

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resilience economy, source: researchgate.net

Supply chain tech trends resolving unknowns

Think technology cannot take all the credit for fixing the current upheaval? You have no idea! The earth is full of risk-takers and dreamers able to build a little something to revolutionize the supply chain in full — from logistics and warehousing to procurement, inventory management, demand planning, and supplier risk governance.

Twenty-years-ago us would be going crazy, but as of today, we know our way around all of the tech domains we are to list. Most familiar heavy-lifters first — curtains up, lights on.

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source: consultancy.co.uk

Big data analytics

No prizes on guessing why it’s of special use. Capable of reducing production times while improving sourcing and supplier collaboration, Big Data solutions help prioritize and tackle critical problems in real time. Bring in batch-based analytics — and forget the headaches of keeping up with the fossil fuel emissions standards.

Undoubtedly, the greatest magic about Big Data centers around:

  • analytics as a service,
  • digital twins,
  • logistics control towers.

The last two initiatives enable top-quality insights for full-cycle investment decision-making. Yet, the major challenge is to manage to gently merge your control tower and digital supply chain twin efforts. If disintegrated, neither instrument shows peak results. If properly linked together, they help predict risks and build executable strategies.

Embedded AI, data science & advanced analytics

According to Gartner forecasts, in some 4 years, over 75% of major commercial app vendors catering to supply chain management will deliver embedded artificial intelligence, advanced analytics, and data science. Word travels fast, and the trend is the talk of the tech scene movers and shakers, while smaller companies are to catch up.

Aimed at ingesting massive operational data in the real time, intelligent supply chain platforms introduce utmost visibility into processes. The giant players like Amazon, Google, IBM, and Microsoft are today’s leaders handling the challenge, but the niche gets more and more populated by business-specific AI vendors, which fuels the competition.

AI-enabled equipment resolves mission-critical issues within ports as containers get unloaded. Right in the field, it can analyze data from different perspectives — from operator to cross-terminal. Smart IP cameras monitor RTG crane efficiency and capture data to measure operational tech metrics or the crane turn time. Managers overview inbound trucks, optimize routes into diesel cranes, maintain emissions declines over time, and prevent safety violations.

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maximizemarketresearch

Intelligent data capture & modeling, ML & OCR scanning

Joining the rightful place at the forefront of supply chain evolution are data modeling and optical character recognition. With probabilistic modeling under the hood, enterprise systems can accurately predict outcomes, as the technique allows factoring in the impact of random events while automating forecasting.

Think again of common off-the-shelf cameras underlying OCR technology. Put them in action — and you can detect and read a license plate, pull up the work order and the crank container ID, and thus make sure the truck is at the right place and time.

As congestion grows, the tech helps enhance port safety. The entire perimeter can be covered by video analytics-powered tripwire detection to notify the crane operator when it’s safe to proceed. An icing on the cake, add Machine Learning and build a top-efficient early warning system sending push notifications across the value chain.

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technologies to invest, source: PWC

IoT & edge ecosystems

Through 2025, we may have a quarter of supply chain decisions executed through smart IoT-enabled edge ecosystems. These are physical locations connecting operators, equipment, and sensor data all across supply chain networks. What’s so special about them? The trick is that they allow making mission-critical decisions while having first-hand data sources at the fingertips.

Imagine a complex connected infrastructure of autonomous vehicles and drones, robots and self-managed machines. Controlling it can be a nightmare without a well-orchestrated edge ecosystem of tools and apps. From Wi-Fi to 5G — data communication advances will turn traditional supply chains into sci-fi data hubs enabling huge cargo shifts on the fly.

Blockchain & smart contracts

Unlike typical supply chain management solutions, blockchain relies on decentralized ledger. What’s in it for us? First, it’s a complete logistics transparency. With tamper-proof self-executed smart contracts in its core, blockchain enables a perfect control of manufacturing and distribution processes.

Blockchain prides itself on being cyber-secure and threat-resistant, meaning the ironclad guarantee your transactions will go off without a hitch. Complex routines like certification, audit, and tariff are fully digitized, which allows automating consignment and goods authenticity validation.

Ultimately, you can trace each stage in the value chain, get proof-of-location, prevent counterfeit distribution, shipment fraud and delay, thus establishing crystal-clear trust across the parties. An absolute trouble-killer tech from all appearances, blockchain is potentially the future for the storm-sensitive supply chain industry.

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blockchain in supply chain

Microservices or modular software architectures

Composability: it’s badly needed by so many systems, yet is notoriously tough to adopt. As we happen to deal with the unprecedentedly volatile market, the only way to play in the big leagues is extreme agility. Yet, most firms nestle around their aging architectures, hoping to safely balance the risks for when the seasons change.

And that’s a shame, as treating the issue as a sideshow is a detrimental practice. To future-proof tech facilities within the supply chain, it’s critical to switch to modular, microservices-based architectures early on. First to jump into the bandwagon were insurance and finance industries, with others joining them primarily for ERPs and manufacturing execution systems.

Today, it’s now or never for the supply chain software sector. Many start accepting the challenge right off, restructuring their core enterprise-centric apps into combined collections of services. By 2026, market researchers predict a 25% share of supply chain execution vendors that have modernized their systems. Note: take care to adapt to the change in advance, otherwise you risk wrecking your workflows.

Sustainable & circular technologies

Green is the new black. While a shift to alternative energy sources and carbon footprint reduction seemed to become a long game, we’ve now found ourselves in the world where we are to re-establish supplier connections in a matter of some half a year. To avoid getting trapped by these manipulations, we are to accelerate to light speed reinventing the energy consumption.

Sure enough, supply chain is neither an environmentally friendly nor power-efficient area. Its average emissions are 11.4 times higher than operational ones, equating to around 92% of total greenhouse gas emissions. Time that more organizations supported the Paris Climate Accords.

Luckily, there are plenty of roads to hit on your way to a sustainable product lifecycle:

  1. Autonomous delivery: digital trucks and drones, route planning apps
  2. Smart intralogistics: resource-efficient attack resistant cyber-physical systems and robots for distribution and warehousing centers
  3. Shared transportation and logistics: cross-border platforms, last-mile or same-day delivery
  4. “Megacities” infrastructures relying on in-city logistics, aimint at carbon footprint reduction, pollution and waste prevention, 3D printing tech, and crowdsourcing
  5. Heat-powered workflows upon geothermal energy from the Earth’s core (kidding — or not?)
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Point-of-arrival message

Starting at tech-intensive stops, our journey with a view quite naturally ends within green and eco settings. Same as history, that's just cycles that come and go. Living in a time where it’s crucial to sustain ourselves through supply and energy crises, power shutdowns, and cyberattacks, we are still happy to be able to introduce antithesis to the planet fatigue.

As we jump to goodbyes, we are to come clean about what we know. After digging around, we can pull back the supply chain tech curtains even stronger. Whenever you make up your mind to bring the physical and digital infrastructures together, we’ll help you with this exhilarating mission. Take care, stay involved.

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