Supply chains are critical for the digital economy and they play a pivotal role in creating great opportunities for all the players in the supply chain ecosystem. Wikipedia (2018) define supply chain as a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier to customer. Supply chain activities involve the transformation of natural resources, raw materials, and components into a finished product that is delivered to the end customer. These activities include warehousing, manufacturing, movement of products, sales and marketing.
The developments in information and communication technologies have had a fundamental impact in the evolution and integration of supply chains. This trajectory is exacerbated by digital transformation and rapid pace of change. For example, business models change rapidly, requiring flexible and responsive supply chains. An integrated supply chain provides the basis for good competitive advantage to all key players participating in the supply chain ecosystem.
The characteristics of supply chain include, strategic planning capabilities, business intelligence, customization, flexibility, agility and innovation, to name a few. Digitalization fully connect all aspect of the supply chain ecosystem to deliver a demand-driven and end-to-end business operating model, enabling automation in the process. This is critical to meet the evolving customer demand and responding to changing market conditions. Customers wants prompt product or service delivery, hence supply chain management should adapt quickly to meet their needs. Integrated business planning in the supply and demand processes is essential to enable digitization.
The biggest challenge that supply chains face is how to reduce cost while satisfying customer preferences. In some instances, information is too fractured and disconnected and this may lead to the disruption of many supply chain companies. To avert this challenge, supply chains are increasingly shifting to a demand-driven supply chain model. This model provide real-time information on demand and inventory levels to respective participants in the supply chain ecosystem, to enable them to react with agility when unforeseen circumstances arise.
Supply chains can be disrupted by natural disasters, traffic delays, labour issues, unplanned IT outages, cyber attacks, data breaches and loss of talent or skills. Technology and business model innovations are also challenging the supply chain status quo.
Six Technology Trends disrupting Supply Chain Management
Blockchain is a shared database technology that underlies bitcoin and ethereum. It is a persistent, distributed, tamper resistant, cryptographically secure database. Blockchain can be used to perform the following tasks:
Reduce bureaucracy and fraud.
Make organizations more transparent and democratic.
Help track the origins and movement of products.
Track products from the producer to the store shelf.
Help prevent waste inefficiency fraud and unethical practices by making supply chains more transparent.
Help consumers to be better informed about how each product was made and shipped so that they can make more environmentally-friendly choices.
Monitor cost, time, labour, wastage and emissions at every point in the supply chain management.
Verify the authenticity of fair trade status of products by tracking them from their origin. For example, blockchain can help verify that a bag of coffee actually came from a fair trade producer.
According to Gartner research, End-to-end supply chain visibility helps organizations reduce disruptions in the extended supply chain, becoming more predictive while reducing risk.
2. Internet of Things (IoT)
We are increasingly leaving in the world where more and more smart devices are connected through the internet. IoT combined with asset tracking solutions enable companies to revive their supply chain and logistics operations, save cost and improve decision making. Sensors can be used to collect data and to track the product from origin to the time of delivery. IoT can help companies collect and analyze data in real-time, optimize the supply chain responsiveness and improve customer experience. It can also help eliminate human error, improve forecasting demand and inventory management.
3. Driverless Vehicles
Self-driving trucks are set to disrupt the movement of products. This technology is expected to improve safety and making shipping and logistics more efficient. Autonomous forklifts, and robots arms are commonly used in modern warehouses. The autonomous trend is expected to extend in the transportation of goods, where driverless trucks will deliver products to customers. This emerging technology though is still in its infancy stage. Watch the space.
4. 3D Printing
3D printing is re-inventing the manufacturing sector. It is fostering a shift from mass production to on-demand production (build-to-order) and personalized products. On-demand manufacturing offers economies of scale, for example, raw material can be supplied as needed, reducing excess inventory. However there is a trade-off between customer preferences and response time. For example, some customers might not be willing to wait longer.
5. Cloud Computing
Cloud computing provides a wide range of capabilities and has now moved to mainstream adoption. There is no doubt that it offers vast opportunities for many industries, including supply chain management. Start-ups could adopt cloud based solutions for their supply chain infrastructure, in order to capitalize on economies of scale. Established organizations might find it difficult to migrate their supply chain to cloud computing due to legacy issues and regulatory requirements. However they can adopt hybrid cloud solution. The benefits of moving workloads to cloud computing are huge for supply chains. These may include, reduction in capital investment, scalability of services dynamically, big data storage and analytics, flexibility, accessibility, convenience and optimization. In conjunction with IoT, cloud computing makes it possible to track a product throughout its lifecycle.
6. Robotics and Automation
Robotics and automation enables companies participating in supply chain ecosystem to be more efficient, effective, and to eliminate manual and repetitive tasks. This could be achieved through digitization and leveraging a combination of digital technologies, such as Big data, cloud computing, Artificial intelligence (AI), Machine learning (ML), Deep learning (DL) and Robotics. Process robotics can also play a significant role in end-to-end supply chain automation. SDC Executive (2016) suggest that, functionally, process robotics removes the siloes between various processes and allows an entire process, such as managing procurement, shipping, warehousing and inventory management, to be handled in one centralized process. Automation and intelligent business processes, created as a result of robotizing your supply chain, deliver responsiveness and agility. Through robotization, you can seamlessly connect and automate sales, forecasting, replenishment, supply, planning, procurement, manufacturing and distribution activities.
Digital transformation strategy
Digital transformation is driven by the rapid adoption of technology. It is a journey of planned strategic change, empowering teams with new tools, ways of working to create agility, highly responsive strategy and a fearless innovative culture. We are in the midst of the forth industrial revolution. The term 'fourth industrial revolution' was coined by Professor Klaus Schwab. This creative destruction blends the physical and digital worlds. We are already witnessing profound shifts across all industries, marked by the emergence of new business models, the disruption of incumbents and re-invention of production, consumption, transportation and delivery systems.
It is inevitable that the emergence of new business models and technology innovation in supply chain management will re-invent how value is captured, created and delivered. As a result this will lead to superior customer experience and customer satisfaction. Companies in the supply chain ecosystem must embark on the digital transformation journey to avoid being disrupted by new digital start-ups and to stay relevant. They should make sure digital culture and skills development is part of the company's DNA.