Technology is changing the landscape of most consumer-oriented businesses in a fundamental way. Consumer buying behaviors and demand patterns are being significantly affected by the big information availability, growing social networks, and high Internet penetration. As the world moves into a digital-first environment, it is critical that chief supply chain officers find a place at the leadership table. They must learn to manage “sideways”, focusing on a different approach depending on where the digital transformation is centered.
The supply chain market usually has lots of doubts about how this will apply into their market: will this technology adoption by consumers have any major impact on the supply chains in traditional industries which continue to produce physical goods? Will the application of emerging technologies in supply chains, across industries, help organizations better fulfill the needs of their customers? The answer is a big YES. As there is a fundamental performance difference between traditional and digital supply chains. Traditional supply chains rely on a mix of electronic and paper-based processes and documentation. The organizational structure is often characterized by geographic structures which do not share information openly, thereby leading to sub-optimal performance. On the other hand, digital supply chains, have the extensive information availability and enable superior collaboration and communication across digital platforms resulting in improved reliability, agility, and effectiveness.
Digital technology is reshaping the supply chain. Now, supply design and supply chain analytics are in the top five priorities for leading enterprises. They want to learn how to consume and leverage data, integrate sensors and other elements of the Internet of Things (IoT) and software for customer segmentation and marketing automation. In particular, e-commerce software, supply chain optimization and traceability and product cost analytics warrant focus.
Information availability is at the core of digital supply chains. With the right organizational design and governance, they can enable superior collaboration and communication across digital platforms resulting in improved reliability, agility, and effectiveness. This performance difference will force organizations with traditional supply chains to adapt to the new digital realities or run the risk of falling behind the competition. A digital operating model is all about implementing digital capabilities along the organizational layers of governance, processes, data & performance management, and IT. It allows for required levels of integration and standardization of processes.
Technologies are not just for incremental improvement. They can be disruptive too. Take, for example, a drone. The drone will not only do last-mile package delivery but will monitor disruptions upstream in the supply chain. There are enormous applications for these devices – from agricultural and geographical survey to oil and gas pipeline inspections to disaster response and recovery. Five years from now they will be a standard part of supply chain operations in many industries. These and other technologies, such as smart machines which will automate decision making, are the new technology building blocks of the future digital business. Falling behind in these developing technologies could have serious implications for enterprises.
Supply chain leaders must take advantage of the opportunities that come with digital operations. They should embrace digitization, reconfigure the supply chain, and overcome traditional geographic or functional silos. We don’t believe that specific technologies are required for achieving higher performance. However, we do strongly believe that the potential for value creation lies in digitizing the operating model to a complete Digital Operating Model. Highly automated end-to-end processes, flexible bundling of activities and improved visibility are the hallmarks of a fully digital supply chain. This kind of changes will realize the untapped potential of existing resources and capabilities resulting in a higher level of performance.
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