About the Author
Marian Temmen is a progressive change agent at heart and has been working at the intersection of global Supply Chain, procurement, and value chain optimization for the last 15 years. He has been steering major transformational turnarounds and M&A integrations across Europe and Asia, translating complex commercial needs into high-performance and agile solutions in dynamic environments. Marian is particularly passionate about a compassionate and emotionally intelligent leadership culture of empowerment and is keen on driving this new agenda into the future.
Three-quarters of C-level executives believe that; if they do not move beyond experimentation to aggressively deploying Artificial Intelligence (AI) across their organizations, they risk going out of business by 2025.
~ a 2019 study by Accenture (NYSE: ACN).
Supply Chain functions are linear, sequential and systematically overlap as they get operationalized. Ironically, despite their operational linkage, these functions are often managed in isolation. That’s why digital transformation is important for Supply Chain.
The advent of digital technology, especially the interconnectivity the technology enables, makes it easier for functions and processes within Supply Chain to be more aligned, optimized and significantly transformed into one robust, flexible and resilient process.
Digital transformation is the necessary, good and highly rewarding disruption, businesses and Supply Chains, in particular, can not afford to ignore.
Transforming Supply Chain through digital alignment does not end with merely substituting manual with digital processes. It entails the rolling out of end-to-end technology powered by; Internet of Things (IoT), Big Data, machine learning and Artificial Intelligence (AI) among others.
However, building, aligning and achieving a digitally transformed Supply Chain is not an event, but a process, a journey. It is not a fad, but a strategic undertaking that requires patience in allowing employees to get accustomed and settle into the new system.
Essential Supply Chain functions in need of digital transformation and alignment, include:
i. Procurement.
ii. Transportation logistics.
iii. Manufacturing
iv. Inventory management
Now, let us look into these four key functions and see how digitalization of these enhance Supply Chain transformation in general.
1. Procurement:
Usually, Procurement is comprised of repetitive Procure to Pay (P2P) tasks. It is, in fact, about business relationships between buyers and sellers along a Supply Chain Network.
Digital alignment and coordination of procurement tasks and related entities not only improve transparency into the process, but it also enhances and transforms Customer Relationship Management (CRM) across the supply network.
Several software is used to automate Procurement tasks, and they include; Ariba, Coupa, Sunsmart Global.
Apart from enhanced process alignment, digitized and cloud-based Procurement to Pay (P2P) technology provides companies with remote connectivity that enable their Supply Chains to apply standard systems across all functions, therefore, easy to monitor and control from different locations.
Artificial Intelligence is a transformative technology that assists Procurement and all relevant parties with real-time visibility into daily activities across the network. Such visibility enables Procurement to detect risks end-to-end and deal with operations-related challenges more proactively and robustly, thus reducing Supply Chain cost while delivering optimal performance to customers.
2. Transportation Logistics:
Success or failure of a Supply Chain system is measured by how the structure functions from source to consumption.
Digitally aligned and transformed Supply Chain will have to factor-in all transportation legs, including; inbound, outbound and the last-mile delivery.
Regardless of where commercial terms in use place the burden of responsibility on, a digitalized and transformed transportation system provides all relevant parties with real-time visibility, from collection all the way to delivery.
Outstanding performance in transportation and delivery logistics is also achieved through the application of usual Fleet Management Formulas, Tactics and Techniques. For that does not only save lives but time and resources as well.
Dispensing of digitally aligned and real-time data on all activities, including those of Third-Party Logistics (3PL) providers, is the best transformative approach to streamlining and optimizing transportation and logistics processes.
Digitalising and granting relevant parties access to all transportation documents, such as; Loading tally sheet, Cargo manifest, Bills of lading, Airway bills – etcetera, is so vital, as it ensures that all members understand the value and risks involved hence, the necessary collaboration and effort required.
Industry 4.0 is here. Customers are increasingly demanding for real-time transparency into their transportation logistics. They are no longer content with traditional notices about their cargo being on board or on its way; they want to track the location of their consignments, in real-time.
3. Inventory / Warehousing management:
Managing inventory manually is the most laborious and time-consuming task in Supply Chain management.
To efficiently conduct warehousing inventory management, Supply Chain needs to leverage track and trace technology. Digital Track and Trace provide the visibility required to detect and deal with inventory management risks or bottlenecks in a more proactive way.
Digital technologies like Radio Frequency Identification (RFID) assist businesses in tracking the movement of items within the warehouse or factory. Using digitized tags, RFID systems can detect or identify specific types of inventory and its location in the warehouse.
Internet of Things (IoT) is another useful digital technology in warehousing and inventory management. This technology commonly uses internet linked digital devices that are attached to objects or stocked items to transmit and receive real-time data.
Digitalized stock replenishment systems provide real-time transparency and ensure that the business never runs out of stock.
Automated Re-order point and Safety stock or Buffer inventory calculation, assist businesses to effectively maintain the flow of stock, thereby boosting its operational strength and resilience. Lest we forget, buffer inventory acts as a cushion for sudden disruption or shortage in supplies.
Warehousing management systems including; FIFO, LIFO and FEFO, are equally simplified and significantly enhanced with the use of digital technology.
4. Manufacturing
Value-adding or conversion of raw materials and parts into finished products is one of the key Supply Chain management functions.
Given the current pandemic and the need for less human contact, the steady deployment of digital and automated systems in manufacturing is the best approach forward. Such that; 3D printing or robots working side by side with humans are not far-fetched approaches, but more efficient and cost-effective systems, and in fact, the reality companies will ignore at their own disadvantage.
Digital systems like; cloud-based solutions and analytics technology, improve the flow of real-time data, enhance transparency, collaboration and coordination throughout the manufacturing process. This leads to fewer damages, more excellence in performance and superb output.
The efficiency that comes with digitalized processes does not only lead to improved worker coordination, better decisions, or optimum performance, it significantly reduces operational cost and hugely contributes toward return on investment (ROI) for the business.
Read ‘Prerequisites to a digitally transformed Supply Chains’ here.