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Supply chain transformation with digital native technology

Supply chain management is amidst a profound transformation, and those who hesitate to adapt will struggle to keep pace with the market and customer demand.

2023-12-08

Robert Frost famously wrote: “Two roads diverged in a wood, and I— I took the one less traveled by…” In supply chain and logistics, the path of digital native technology is the road less traveled, but it is the one that distances you from your competition. Supply chain management is amidst a profound transformation, and those who hesitate to adapt will struggle to keep pace with the market and customer demand. Groundbreaking technologies like generative artificial intelligence (AI), robotics, and the Internet of Things (IoT) are not just trends, but indispensable factors for thriving in the future supply chain.

With a modern supply chain, businesses can foresee future challenges, and disruptions are predicted and proactively managed rather than responded to. Emerging technologies – particularly GenAI – provide this capability, empowering organizations to sift through vast troves of real-time data, offering unprecedented supply chain agility and resilience.

Adopting cutting-edge technology goes beyond offering operational improvements. Integrating digital native technologies allows organizations to thrive in the current landscape and exist in a future world. Predictive supply chain analytics enables proactively identifying and resolving disruptions, optimizing inventory levels, and significantly reducing operational costs. Automation and robotics streamline repetitive and error-prone tasks, enhancing efficiency and accuracy. IoT for asset tracking provides vigilant monitoring and ensures that goods reach their destinations unscathed, following the most fuel-efficient routes.

Harnessing emerging technologies is the key to digital transformation in supply chain management. In a world where supply chains confront unprecedented disruptions – whether due to global crises or shifting consumer preferences – adopting emerging technologies is a strategic necessity. Organizations that harness AI, robotics, and IoT will create intelligent, adaptive, and customer-centric supply chains—those that resist adoption risk obsolescence.

Digital Transformation in the Supply Chain

Supply chain management is primed for a digital transformation: many areas can be optimized with technology and a digital-first strategy. This includes transportation, warehouse equipment management, and inventory management.

Digital transformation within the supply chain is crucial for overcoming various disruptions, such as natural disasters, public health crises, shifts in the labor market, and unforeseen material shortages. Historically, companies have taken a siloed approach to supply chain optimization. They used a “cascaded” decision-making process, where each function only optimizes its own KPIs, and these decisions have implications across the whole organization. But no one has visibility over the entire supply chain system.

Today’s consumers demand speed and personalization, and the macroeconomic environment is volatile with trade, regulatory changes, and tariffs. To contend with these challenges, organizations must transform their supply chains to be more accurate and agile in decision-making, enabling them to pivot from risks and embrace opportunities.

Companies that digitize their supply chain will improve efficiency, agility, and visibility because modernized supply chains function in real-time. Traditional supply chains, on the other hand, operate on rules based on historical transactional inputs. By migrating from a traditional supply chain to a modernized supply chain, businesses can mitigate risk, reduce costs, and optimize growth.

There are many considerations when integrating digital technologies into supply chain and logistics. We explore driving forces, evolving technologies, and potential limitations in integrated supply chain networks to help supply chain managers navigate changes and challenges.

Driving Forces: Foundational Tools For a Digital Supply Chain

IoT Devices

IoT devices and sensors are becoming ubiquitous, moving into the mature stages of adoption. They offer real-time monitoring and data collection capabilities, enabling supply chains to gain insights into product conditions, asset tracking, and inventory management, ultimately enhancing efficiency and reducing operational costs.

Cloud Computing

Cloud technology advancements power data-driven supply chain optimization with real-time data sharing and collaboration. The capabilities of cloud computing improve upon on-premises capabilities sans infrastructure maintenance or scalability worries, enabling faster and simpler task execution.

Robotics and Process Automation

Robotics streamline supply chain operations by minimizing errors and increasing efficiency. They are pivotal in automated inventory control, order processing, and warehouse operations. Demands for faster processing times make these tools essential.

Evolving Technology: Potential Future Solutions for a Digital Supply Chain

Supply Chain Digital Twins

Digital twins create virtual replicas of physical supply chains, allowing for simulation, testing, and optimization of processes. This technology minimizes risks and helps identify improvements in logistics and operations.

Autonomous Vehicles

Self-driving vehicles are transforming the logistics and transportation sector. They promise safer, more efficient, and cost-effective delivery options, reducing the dependency on human drivers and mitigating delivery bottlenecks.

Real-Time Supply Chain Monitoring

Immediate insights into supply chain activities power proactive decision-making, reducing disruptions and improving overall performance.

Future Constraints: Challenges in a Digital Supply Chain

Data Collaboration

Data sharing between different entities along a supply chain is crucial for seamless coordination and collaboration. Real-time insights and informed decision-making are enabled by fostering a transparent exchange of information among supply chain partners. Collaboration leads to heightened efficiency and responsiveness in supply chain operations. Transparency is a fundamental aspect of this process.

Organizations that refrain from participating in data sharing may risk being excluded from the broader exchange of goods and services. The emphasis on data collaboration thus streamlines operations and cultivates a more interconnected and cooperative supply chain ecosystem.

Environmental, Social, and Governance (ESG) Responsibility

Heightened environmental awareness and social responsibility present an ever-changing challenge for supply chains. These regulations promote sustainable practices, ethical sourcing, and corporate transparency. Supply chain professionals must grapple with evolving compliance requirements and adapt their operations to meet the demands of responsible business practices while ensuring supply chain efficiency and competitiveness.

By leveraging advanced data analytics and machine learning algorithms, AI systems can efficiently monitor and analyze vast supply chain data. With smart supply chain solutions, organizations can proactively identify potential compliance risks and areas of non-conformance with ESG regulations. Although AI effectively identifies existing compliance risks, it cannot predict future compliance challenges. Navigating new ESG requirements will continue to be a complex and dynamic challenge. AI works for current risk assessment, but organizations must also cultivate a culture of continuous learning and adaptation to handle new regulations.

How to Prepare Your Supply Chain for the Future

Preparing the supply chain industry for the future requires a dual focus on technology and workforce. Efficient data management and analytics are crucial components. Companies must invest in advanced data analytics tools to glean actionable insights from their data, driving informed and real-time decision-making. Upskilling the workforce is necessary to deploy new technologies. Employees at all levels should be trained to utilize data effectively, fostering a culture of data-driven decision-making. This empowers professionals to leverage data for strategic planning, risk mitigation, and performance optimization.

Laying the foundation for these advances will require embracing emerging technologies like AI, robotics, and IoT, which provide enhanced data visibility and collaboration with suppliers, logistics providers, and technology companies. Building agile and responsive supply chains enables organizations to adopt a customer-centric approach focusing on real-time tracking and personalized experiences. Changes in supply chain strategy can ultimately facilitate achieving the primary business objective of satisfying customer demand.

When you take the road less traveled, as Robert Frost concludes, “…that has made all the difference.” The supply chain industry is evolving rapidly, and to stay ahead of the game, you must adopt a future-ready mindset. This means integrating cutting-edge technology, developing a highly skilled workforce, implementing sustainable practices, fostering collaboration, and putting customers at the center of every action.

Digital native technology is the path less taken because it requires change. Embracing this transformation, however, will provide exceptional service and increase efficiency. That way, your businesses can boost customer satisfaction and build lasting loyalty – an imperative goal in today's dynamic business environment.

You can begin modernizing your supply chain and increasing customer satisfaction by partnering with an experienced technology provider. Ollion’s dynamic approach ensures that your supply chain and logistics are optimized and at the forefront of innovation while meeting you where you are in your digital journey. Ready to begin your business transformation by modernizing your supply chain? Contact us today to reshape your supply chain and logistics strategy.

Ryan Lewis, Managing Consultant - Data Insights