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Supply chain digitization is the improvement of traditional supply chain management systems with new technologies. Traditionally, businesses have very little visibility of the whole supply chain system.
Key Points:
- Supply chain management is quickly changing due to new technologies.
- Businesses need to digitize their supply chain to stay competitive.
- Supply chain digitization provides businesses with accurate and real-time data on the state of their products.
With a digital supply chain system, companies can collect and analyze high-quality, real-time data about their business. This allows businesses to make better decisions when navigating market changes and improving the overall efficiency of their supply chain.
The widespread use of new technologies is providing new opportunities in the field. Businesses can communicate faster and with much larger quantities of data. In today’s fast-paced and interconnected world, supply chain digitization is essential for companies to stay competitive in the market.
Why Do Businesses Need to Improve Their Supply Chain?
The business world is becoming more complex and unpredictable. For example, in 2020, the COVID-19 pandemic disrupted things in a way that many organizations weren’t prepared for. In an uncertain environment, businesses need to respond to problems and changes promptly.
The only way to do this is if the entire supply chain is visible with real-time data updates. Businesses need a smooth-running digital platform that captures data about their supply chain in real-time. That way, they have a better chance of understanding and solving problems.
Another reason businesses need to improve their supply chain is that the market is becoming more competitive. If companies don’t make efforts to keep up with today’s fast-paced environment, they won’t be able to compete in the market.
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What Is Supply Chain Management?
Before understanding supply chain digitization, you must understand what supply chain management is. Supply chain management has to do with the flow of goods and services between businesses and locations. Essentially, it’s about delivering a product in a cost-effective and timely manner.
Every product completes a journey from inception to delivery into the hands of the end-user or consumer. Even before the product is created, several companies and organizations might intervene in the design and manufacturing process. Supply chain management aims to understand the whole process and improve its efficiency.
What Is Supply Chain Digitization?
Essentially, supply chain digitization involves using new technologies to improve the supply chains of a company. Traditionally, businesses have visibility of a tiny portion of the supply chain. With new technologies, companies can have a much more comprehensive view of the entire supply chain.
According to an IBM study, 84% of chief supply officers stated that lack of visibility across the supply chain was one of their biggest problems. Now that organizations can store and share data much more effectively, they can work together to make the whole supply chain visible.
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How Is the Supply Chain Going to Change in the Future?
Businesses will have more information about what happens to their products along the supply chain route, thanks to digitization. This supply chain improvement allows companies a lot more freedom of experimentation. For example, they can test new eco-friendly packaging and track the temperature or humidity during transportation.
Cloud Computing
Cloud computing has made it possible for businesses to store large quantities of data quickly and effectively. Without it, supply chain digitization wouldn’t be possible. The data doesn’t have to be physically held by the company. Instead, they just upload it to the cloud.
Data Collection and Sharing
Supply chain digitization mainly has to do with data collecting and sharing, so businesses have real-time information about their supply chain. Data collection and analysis have become some of the most critical tools in the business world. Companies need to harness the power of data to improve their supply chains and optimize their logistics.
Four Types of Data
Businesses can track four types of data, thanks to new technologies. These are time, location, condition — temperature, shock, humidity and vibration — and contextual data points. This data helps businesses answer questions about the state of their product along the supply chain.
Thanks to these data types, businesses can know the precise state of their packages and shipping materials. For example, pharmaceutical companies need to track slight variations in temperature. Also, monitoring vibration or shock is essential for electronics or tool companies with sensitive equipment.
Automatization of the Supply Chain
Supply chains are also becoming more automated across the world. Right now, managers access real-time data to make business decisions. However, in 5 to 10 years, an automated system using robotics and artificial intelligence might replace traditional supply chain management.
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