Supply Chain Digital Transformation

Supply chain digital transformation is the process of using and integrating digital technologies into supply chain operations to fundamentally advance it. The process involves a wide range of technologies, including the internet of things (IoT), cloud-based computing, big data analytics, artificial intelligence and machine learning, and blockchain.

What is the Role of Supply Chain Digital Transformation?

A supply chain is a sequence of processes that consists of all steps involved in creating products, transforming them into goods, and finally, delivering them to the customer. There is ongoing work on finding the best methods to make the supply chain more efficient, successful, and sustainable, and emerging technologies are playing a crucial part in it. 

Now more than ever, supply chains are becoming more international and interrelated. The supply chain is a key component of an organization’s overall operations. It is necessary for managing the flow of goods from suppliers to consumers, and it is also an important part of an overall digital transformation strategy.

The aim of supply chain digitalization is to improve the functioning and efficiency of an organization's supply chain by leveraging technology to enable customers to better connect with their suppliers. It is an integral part of many organizations’ strategies to improve operational efficiency, customer experience, and cost savings while also addressing new challenges they face.

Four Steps in the Supply Chain Digital Transformation

The supply chain transformation process is a long-term strategic initiative that requires the cooperation of all stakeholders in the supply chain. It requires a clear vision of how the organization will achieve its goals and what resources it needs to deliver those results.

The steps in this process include determining your vision for digital transformation, assessing your current state, creating an action plan, implementing an organizational structure, and finally, measuring outcomes.

Here are four critical steps for a successful supply chain digital transformation: 

1. Evaluate the supply chain’s current digital maturity

The first step is to understand your current supply chain’s digital maturity and the challenges it faces. The digital maturity of a company's supply chain is the level at which it has embraced new technologies and tools. This will help you identify the gaps in your current processes and set realistic goals for how you can improve. 

Assess the current situation of your existing systems and resources, compare them with the latest trends and best practices in your industry, and identify which areas need improvement. Carefully analyze whether your current technology supports your organization’s goals, if your systems can collect and analyze data efficiently, and if your employees have the right skill set. 

2. Create a digital transformation roadmap

A digital transformation roadmap is essential for organizations to be able to meet the challenges of today’s fast-evolving industries. It can help organizations to better understand their digital journey, define their vision and ambition for the future, and identify the best plans to move towards the digital transformation’s goals.

To create a supply chain digital transformation roadmap, organizations need to define their goals first, set expectations, decide how much time and effort is needed, and create a plan determining responsibilities for everyone involved in the process. The roadmap should be developed in consultation with everyone who will be affected by its implementation. 

It is worth noting that a digital transformation roadmap does not just focus on technology — it also includes non-technology-related elements, such as: organizational structure and processes.

3. Manage change

Implementing the changes within an organization requires leadership support and commitment from all levels of management. However, for some people, the process of adjusting to a digital transformation of the supply chain can be a challenging one, which is why, a change management process, is a critical tool in overcoming this difficulty. 

A successful change management process encourages open and honest communication with everyone. Having a clear understanding of the transformation helps people adapt to the changes and not feel overwhelmed.

4. Manage and mitigate risks

In order to successfully implement a digital transformation, it is important to manage and mitigate risks. A risk is a factor that could negatively affect the success of the transformation. By identifying and controlling risks, you can ensure that your project is on track for success.

According to Deloitte, organizations exposed to digital environments can face risks in the following areas:

1. Technology – Potential technology failures or other related issues which can impact systems, people, and processes.
2. Cyber – Risks related to cyberspace that can threaten the availability, integrity, and confidentiality of the systems.  
3. Strategic – Risks associated with external factors that can impact an organizational strategy.
4. Operations – Events that affect the organization’s ability to meet its business goals and objectives.
5. Data Leakage – Information from internal sources is disclosed without the required authorization.
6. Third-party – Risks posed by external parties of the supply chain.
7. Privacy – Risks concerning the privacy of personal and sensitive data.
8. Forensics – Investigation of the digital environment in case of a security breach or similar occurrences.
9. Regulatory – Risks related to statutory requirements, which include technology laws, sectoral laws, and regulations. 
10. Resilience – Risks of disruptions high impact on operations and activities.

In order to manage and mitigate their risks, organizations need to strengthen their risk management processes and identify the risks, analyze them, prioritize, treat, and monitor them. 

Top trends in Supply Chain Digital Transformation

In today's environment, the current trends in supply chain management are evolving rapidly. With new technologies and methods being developed everyday supply chain is becoming a key competitive advantage for organizations. More than 70% of supply chain leaders have reported significant improvement in data quality, integrity, visibility, and speed by removing human intervention.  

The importance of digital transformation in supply chains is growing due to new trends, such as:

1. Internet of Things

Internet of Things (IoT) has impacted supply chain processes by using internet-connected devices to track the location and movement speed of goods, monitoring the goods conditions, such as environmental factors, and optimizing the overall operations.  

2. Artificial Intelligence and Machine Learning

Artificial Intelligence (AI) and Machine Learning (ML) are technologies that use algorithms to emulate human thought and perform real-world tasks. Their integration in supply chain management can help automate many processes and increase efficiency, enhance safety, reduce costs, and facilitate delivery. The ability of AI and ML to process and analyze huge amounts of data helps in making decisions, detecting irregularities, and performing better. 

3. Robotics

In the supply chain, robotics has upgraded the industry through the design and production of many useful intelligent devices that support and automate complex processes throughout multiple phases. These devices are positively impacting workflow efficiency, the organization of archives, and the safety of workers. 

Different types of robots are used for different processes. For example, some mobile robots are able to sense their surrounding which comes in handy whenever the routes on warehouses are blocked. Other robots are designed to load and unload heavy pallets of goods, which when done by humans is one of the most frequent injury-prone tasks.  

4. Digital twins

A digital twin is a virtual representation or a digital replica of the physical supply chain. Organizations can use digital twins as a model to conduct different tests, to identify how disruption or any changes would impact the operations, to prepare for disruptive events, and to discover new manners for improvement. 

Benefits of Supply Chain Digital Transformation

Digital transformation of a supply chain can have many benefits, as it can:

• Improve efficiency
• Reduce costs and improve financial key performance indicators
• Improve visibility into operations
• Improve customer service
• Decrease errors and human-related risks
• Improve data-collection
• Reduce waste and enhance the ecology
• Improve end-to-end customer engagement
• Enhance decision making
• Increase organizational flexibility

How can PECB help?

PECB training courses are always a great way to learn about new trends in supply chain digital transformation. Whether you are new to the world of digital transformation and want to learn more about it, or you have been working in the industry for years, there are always new things that are happening.

ISO 28000 Supply Chain Security Management System Training Course

ISO 28000 is a globally recognized standard that specifies the requirements for implementing a Security Management System for the supply chain. With ISO 28000, certification experts can be a valuable component part of organizations by helping them to improve both quality and profitability. 

Digital Transformation

Digital transformation can be a challenging period for many organizations. However, a successful strategy designed and implemented by competent professionals can help organizations face and avoid such issues. 

A Digital Transformation certification will prepare experts to effectively establish and manage digital transformation strategies and will equip them with the needed knowledge and skills regarding the newest technologies of digital transformation which can be applied in a variety of industries, including the supply chain.

About the Author 

Vlerë Hyseni is the Digital Content Officer at PECB. She is in charge of doing research, creating, and developing digital content for a variety of industries. If you have any questions, please do not hesitate to contact her at: content@pecb.com