Supply chain digitization: the next logical step
July 23, 2020 | 2 min read
Each step in the supply chain generates data that can help your organization to make better predictions and stay “on the ball”. Since roughly 80% of any given supply chain is constant, automation based on this data can significantly reduce costs. For this reason, digitization is the next logical step in supply chain management.
Customer data and the Internet of Things
One organization that makes effective use of digitization is the Dutch railway company Nederlandse Spoorwegen (NS), which uses the Internet of Things for preventive maintenance. NS trains are equipped with a range of sensors that generate data that can be used to predict parts failures. These predictions are then used to schedule maintenance before the parts actually fail. Supermarkets have also discovered the power of digitization, using consumer data to predict their customers’ purchasing behavior much more accurately and reliably than ever before.
In search of new applications
The ongoing digital transformation trend is causing organizations to realize just how much they stand to gain from data, much of which they already have at their disposal. As a result, many businesses are eagerly searching for new applications. Data scientists and visualization experts are in high demand and the system landscape is changing rapidly. Until recently, Enterprise Resource Planning (ERP) was considered the last word in supply chain management, but ERP now is facing competition from artificial intelligence and machine learning.
Digitization starts now
The fact that 80% of the supply chain can be automated is exactly why it’s important to get started with digitization now, before it’s too late. Digitization doesn’t happen overnight – as a supply chain manager, you need time to consider your options and experiment to find the most effective ways of applying the information generated from digital data to improving your supply chain.
Clear vision and strategy
Getting started on digitizing your supply chain means investing in resources, systems, processes, and – perhaps most importantly – a clear vision and strategy. To do so, you’ll need people with the right skills and expertise who have a deep understanding of the subject matter and can distinguish between fact and fiction. Too often, however, businesses are motivated not by a drive to do better but by a fear of missing out.
Digitization as a tool for change
While digitization is all the rage at the moment, it’s important to remember that it is simply a tool for making strategic decisions to improve supply chains. We must ask ourselves: “What kind of digital transformation is needed for us to be more ‘on the ball’ and make better predictions?” And: “Just how much more on the ball do we need to be, exactly?” Investing in resources such as big data, data analytics, machine learning and artificial intelligence are not ends in themselves; instead, they must be part of a cohesive vision. Developing this vision and implementing it step by step are probably the biggest challenges when it comes to digitizing the supply chain.
Ready to learn more about the digital transformation of supply chains?
Our Executive Master of Operations and Supply Chain Management recognizes the importance of digitization in logistics with modules on Sustainable Supply Chains and Digital Transformation. In addition, the entire program is being renewed in order to ensure you’re well prepared for the digital transformation currently taking place in your field.
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