Retail digital transformation is driving a remarkable evolution in an industry worth over $27 trillion.…
Supply chain digital transformation isn’t just the need of the hour; it’s a vital component for organizations to overcome current and future challenges.
Yet while organizations have made significant investments, PwC’s 2023 Digital Trends in Supply Chain Survey revealed that issues remain. Of over 300 executives, 83% report that their investments haven’t fully delivered the results they promised.
If you’re a member of the supply chain market, this guide may be just the thing to help you navigate any challenges ahead.
What is Digital Transformation?
Before delving into supply chain digital transformation, let’s have a quick recap of what digital transformation truly is.
Digital transformation refers to the process of integrating digital technologies and strategies into an organization’s operations, processes, products, and services.
It involves leveraging digital technologies to drive significant changes in how businesses operate and deliver value to their customers. Typically, these technologies include, but aren’t limited to, cloud computing, big data analytics, artificial intelligence (AI), Internet of Things (IoT), and machine learning (ML).
Using these technologies, organizations collect, analyze, and utilize vast amounts of data, automate tasks, improve operational efficiency, enhance customer experiences, and develop innovative products.
However, digital transformation isn’t just about adopting technology; it requires a comprehensive strategy that aligns people, processes, and technology. That’s why the process includes cultural and organizational changes, as well as rethinking business models and customer value propositions.
Moreover, it’s a continuous journey for organizations, as technology evolves and new opportunities arise. Therefore, they should be in it for the long haul.
What Supply Chain Digital Transformation Truly Means
Traditional supply chains already include data-intensive processes that leverage new tech and business models to constantly evolve. What supply chain digital transformation aims to do is –
- Enhance Customer Experiences – Digital transformation enables organizations to deliver personalized and seamless experiences to their customers across various digital channels. It involves optimizing customer touchpoints, improving self-service options, and providing real-time access to information and services.
- Improve Operational Efficiency – Digital technologies streamline and automate business processes, reducing manual effort, errors, and costs. Organizations can leverage data analytics to gain insights and optimize operations, supply chains, and resource allocation.
- Enable Data-Driven Decision-Making – Your organization can leverage data analytics to gather insights, make informed decisions, and identify trends and patterns. It can further use data to understand customer preferences, optimize processes, and drive innovation.
- Foster Innovation and Agility – The latest technologies enable organizations to experiment, iterate, and innovate faster. They can adapt to the volatile market, launch new products and services, and stay ahead of competitors.
State of the Digital Transformation Initiatives in Supply Chain
The digital transformation of supply chains began to gain significant traction in the early 2000s. However, the concept of digitizing certain aspects of supply chains predates this timeframe.
In the 1970s and 1980s, the introduction of computerized systems played a crucial role in automating certain supply chain processes, such as inventory management and order processing. These systems improved efficiency and accuracy by replacing manual paperwork and reducing human errors.
The widespread adoption of the internet and e-commerce in the 1990s laid the foundation for further digital transformation in supply chains. This period saw the integration of digital technologies like Electronic Data Interchange (EDI), which enabled electronic communication and data exchange between organizations.
In the early 2000s, supply chain digital transformation accelerated with due to advanced technologies and concepts such as:
- Enterprise Resource Planning (ERP) Systems – ERP systems integrated various functions within an organization, including supply chain management, into a centralized software platform. This allowed for better visibility, coordination, and decision-making across the supply chain.
- RFID and IoT – Radio Frequency Identification (RFID) technology and the Internet of Things (IoT) enabled the tracking and monitoring of goods and assets in real-time. This enhanced visibility and provided valuable data for optimizing supply chain processes.
- Cloud Computing – The advent of cloud computing provided scalable and cost-effective infrastructure for managing and sharing supply chain data across geographically dispersed locations. It facilitated collaboration, information sharing, and analytics on a broader scale.
- Big Data Analytics – Large volumes of data generated within the supply chain, combined with advances in analytics capabilities, allowed organizations to gain valuable insights and make data-driven decisions.
Post-pandemic, supply chain and procurement were the two areas organizations focused on. By digitalizing their processes and operations, organizations believed they can combat uncertainty and disruption.
Challenges Supply Chain Organizations Face While Digitally Transforming
Despite constant efforts, PwC uncovered supply chains struggles with several challenges. As a result, they haven’t been able to achieve ROI from their investments. Here are four major ones to look out for.
1) Transformation Goals Tend to Clash with Organizations’ Basic Priorities
In 2023, supply chain organizations intend to focus on improving efficiency while reducing costs. The latter is especially constraining digital transformation initiatives in the absence of a clear or properly articulated business case.
In addition to daily noise distracting decision makers, the workforce poses another challenge. Not only do supply chain companies struggle to retain ‘digital native’ talent, but they also face issues retraining employees whose current roles may no longer be necessary.
2) Tech Investments aren’t Delivering Promised Results
Many organizations haven’t been able to realize the benefits of their tech investments. According to PwC, only 17% reported getting expected results. The rest didn’t because –
- A lot of time was required for implementation (21%)
- Changes to processes lacked proper definition (10%)
- Lack of capabilities to maximize tech use (10%)
- Tech failed to deliver expected capabilities (9%)
- Lack of capabilities while deploying tech (8%)
- Low to no support from tech vendors (7%)
- Inability to track benefits (7%)
- Ineffective change management (6%)
- Poor planning and requirements definition (4%)
- Lack of ownership and vision (4%)
Further, digitizing supply chains is hampered as some organizations don’t have the infrastructure to support initiatives such as cloud-based technologies.
3) Resilience and Risk Management are Still not 100%
While supply chain digital transformation has helped significantly improve resilience and risk control, more can be done. After all, most executives believe what they currently accomplished is just ‘adequate’.
Decision makers believe they need to invest more into identifying, tracking, and measuring risks to the supply chain. They’re constantly looking into options that can help further predict risks beforehand.
4) Different Roles in Supply Chain Organizations Have Different Perceptions
Individuals with sole control over business decisions may not see eye to eye with individuals sharing influence for these decisions.
For instance, PwC’s survey uncovered less than 50% of sole responsibility decision makers prioritize cost reduction. Those who share influence, on the other hand, amount to 65%.
How to Avoid the Pitfalls of Supply Chain Digital Transformation
Before exploring what trends will further mold supply chains, you should learn how to reduce the impact of their challenges. Below are some recommendations you may want to implement for a smoother journey onward.
Begin Transforming While Keeping End Results in Mind
Once committed to digital transformation, your organization should have an idea of the tangible results its expects and how to measure them. So, you need to go beyond financial ROI and identify and track other outcomes.
Based on expected gains such as moneys saved or freed-up capacity, you should draft a plan to reinvest these. Preferably well in advance, not after the whole process.
Target Senior Digital Leaders
Never forget to address the concerns of those driving the transformation to win them over. Especially considering their role in adding to the workforce, establishing standards, and setting ways of work.
If you don’t have a chief digital officer (CDO) already, consider hiring one to contribute to your employee value proposition. They’re also essential for ensuring top-tier talent join your organization and help achieve its goals.
Have a Concrete Reskilling Plan in Hand
Yes, you may need to look into the local hiring market and talent pool to get candidates who can help your supply chain grow. However, make sure to looked into your own untapped pockets of talent.
Upskilling current employees won’t only cover your digital needs, but it’ll improve your brand’s positioning as an employer. Just remember to keep a realistic view of the number of employees you can upskill and the time they’ll need to train.
Go Beyond Traditional Risk Management and Reassess Regularly
With new technologies implemented, you should thoroughly review your current capabilities. That way, you can find out which aspects of managing risk will benefit from your new tech. Just remember to reassess which aspects need a refresh on a regular basis.
Choose the Right Digital Transformation Partner
You may want to look into reliable digital transformation agencies who can deliver the results you want. These are organizations that will go above and beyond to help you get the most value for your investments. Just make sure to check these tips to hire the right people.
Supply Chain Transformation Trends You Should Look Out For
After addressing current issues and how to resolve them, it’s time to think forward. It’s time to think of how you can futureproof your business to ensure it thrives in the years to come.
So, here are some of the trends that are likely to make a huge impact on supply chains.
Use of Apps with AI and Advanced Analytics Capabilities
By 2024, there will be a rise in apps that help supply chain organizations make better and more informed decisions quickly.
These apps will leverage AI and analytics to mine through data to better understand what’s happening in the business. The same tools will also help predict what may happen in the future.
If this piques your interest, remember to adopt a holistic approach when it comes to these technologies. That way, you can maximize their value to your organization.
New Technology Leadership Roles
CDOs are one of the roles that will become vital for supply chain digital transformation.
This will shift the trend from relying on enterprise IT to having a dedicated leader to advance transformative initiatives. That way, organizations won’t have to worry about slowing down the digitalization process.
Investment in Real-time Transportation Visibility
Gartner among others expect the market for real-time transportation visibility platforms to grow in the next couple of years.
That’s because customers and consumers demand more visibility into their orders and shipments. Therefore, this is one solution supply chain leaders should be looking into.
Shift Towards Sustainability
Your supply chain digital transformation initiatives need to rely on eco-friendly tech and practices.
With sustainability becoming a top priority across this market, you can’t afford to lag behind. So, be prepared to integrate sustainable solutions as well as metrics.
Integration of Blockchain in Supply Chain Solutions
Blockchain is expected to make an even bigger impact in supply chain management.
Despite the demise of TradeLens back in 2021, experts believe the technology will make waves way into 2025. Especially for tracking and tracing and supply chain finance purposes.
Need Help With Your Digital Transformation Journey?
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