What is a Digital Supply Chain? [Digitization of Supply Chain Management]

Written By: Eric Kimberling
Date: April 28, 2023

The 2020s are witnessing a rapid digitization of supply chains, and it's a trend that's only accelerating. Let's discuss what a digital supply chain is and what it means.

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At Third Stage Consulting, we focus on helping organizations improve their supply chains through automation and technology. The COVID-19 pandemic has made it clear that supply chain improvements are crucial for organizations to navigate uncertainty in the 2020s and beyond. In this article, we will discuss the major components of a digital supply chain and how they can be applied to your organization. To learn more about best practices for digital transformation in supply chains and other business functions, you can download our annual digital transformation report. This report provides strategies and best practices for organizations going through supply chain transformations and overall digital transformations. You can access the report at the bottom of this article.

Improved Business Processes

The first characteristic of a digital supply chain is improved business processes. To have a digital supply chain, businesses need to start with defining their business processes. Supply chains are complex and cross-functional, spanning from customer orders to procurement, production, storage, shipment, cash collection, and future forecasting. To transform supply chain processes into a digital supply chain, businesses need to define their future state supply chain. A common process improvement in the 2020s is diversifying the vendor base. The pandemic highlighted the risks of overdependence on certain vendors, and diversifying the vendor base can reduce that risk.

The digital supply chain requires defining process improvements and identifying technologies that will help achieve those goals. Measuring and tracking the vendor/supplier scorecards is a potential process improvement. To learn more about the basics of supply chain management, check out other available resources.

Better Supply Chain Technologies

Once you have defined the desired improvements to your supply chain processes, you can start looking at the different technology options available in the market. These options include supply chain management-specific software vendors like Manhattan Associates and Blue Yonder, which provide end-to-end automation for supply chains. Alternatively, you can opt for more specialized solutions that focus on specific functions such as procurement or logistics. You can also consider a broader, more integrated supply chain management solution or an enterprise-wide ERP system that encompasses all organizational functions.

There are many technologies available, and the key is to choose the ones that best align with your goals and objectives. If you want to learn more about the specific types of technologies you might consider for your supply chain modernization efforts, I encourage you to download our digital transformation report. This report offers independent reviews and software rankings, as well as best practices for your supply chain management initiatives. It provides objective and independent reviews of different supply chain technologies, and can serve as a valuable resource as you look to move towards a digital supply chain.

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Improved Human Performance

After identifying potential technology improvements within our digital supply chain, we must consider the human aspect of our supply chain. Improving the performance of people involved in our supply chain management functions throughout the organization is essential. Organizational change management is critical to ensure that our people understand and embrace the new business processes that will affect them. A clear adoption and change strategy is necessary. People need to know how those processes will affect them, how they will use technologies to do their jobs going forward, and ultimately, what their new roles and responsibilities will be. In supply chain modernization efforts, job functions can be automated, and we need to figure out how to replace those job functions with something of higher value that will be even more important to the organization. Without this, we not only miss out on the benefits and value of this new technology, but we also cause panic among people because they do not understand what their new job roles and responsibilities will be.

Defining a change strategy and an adoption strategy is essential for digital supply chain efforts. For a deeper understanding of change management and the workstreams that should be considered to improve the human performance of your supply chain, download the guide to organizational change management. This guide covers best practices and lessons for addressing the human side of any transformation, whether it's a supply chain transformation, digital transformation, or ERP initiative. Find the link to the guide below.

Better Data and Visibility

The next step in implementing a digital supply chain is identifying the analytics and metrics that will be used to drive and manage the supply chain. Data and visibility into the data are crucial for this purpose. It is not just about automating processes with new technology but also about gaining better visibility into the supply chain through that technology.

To ensure the success of a digital supply chain, it's important to have accurate and reliable data. This involves cleaning up the data and loading it into new technologies and managing and preserving it over time to prevent corruption. It's crucial to address the human adoption component of digital supply chains to ensure that people don't unintentionally corrupt or render the data inaccurate. This can lead to bad decision-making and hamper the overall business's growth. Therefore, it's essential to have good data, analytics, reporting, and visibility into the overall supply chain.

Digital Supply Chain Strategy

These are key components of an effective digital supply chain strategy, but it's important to remember that your strategy should be customized to fit your organization's specific goals and objectives. It's not a one-size-fits-all approach.

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These are the decision points that organizations must go through to determine the best fit for their needs. If you are looking to strategize an upcoming transformation or are looking at selecting an ERP system, we would love to give you some insights. Please contact me for more information eric.kimberling@thirdstage-consulting.com

Be sure to download the newly released 2023 Digital Transformation Report to garner additional industry insight and project best practices.

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Eric Kimberling

Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.

Author:
Eric Kimberling
Eric is known globally as a thought leader in the ERP consulting space. He has helped hundreds of high-profile enterprises worldwide with their technology initiatives, including Nucor Steel, Fisher and Paykel Healthcare, Kodak, Coors, Boeing, and Duke Energy. He has helped manage ERP implementations and reengineer global supply chains across the world.
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