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  • Writer's pictureYvonne Badulescu

The Digital Supply Chain: Leveraging Technology for Efficiency and Agility

The digital supply chain is a transformative shift in the way supply chains are managed, leveraging the power of digital technologies to drive greater efficiency, agility, and customer satisfaction. It encompasses the end-to-end flow of goods, services, and information, from the sourcing of raw materials to the delivery of finished products to customers.

Digitalisation has led to changes in how key performance indicators (KPIs) are measured and monitored, with new KPIs focusing on real-time visibility, efficiency and effectiveness of automated processes, and customer satisfaction, loyalty, and retention. In this article, we will explore the different aspects of the digital supply chain, how to measure its performance, and how it has impacted supply chain management. We will also look at the benefits that companies can gain by leveraging digital technologies and data analytics in their supply chain operations.


The ABCs of Supply Chain Digitalisation

At its core, the digital supply chain is an integrated system of technologies and processes that enable the end-to-end flow of goods, services, and information, from the sourcing of raw materials to the delivery of finished products to customers. It encompasses all aspects of the supply chain, from procurement and production to transportation and logistics, and leverages a range of digital technologies to optimise performance and improve decision-making.

The digital supply chain includes several interconnected processes, consisting of digital planning, digital sourcing, digital manufacturing, digital logistics, and digital customer experience.


Figure 1: Digital Supply Chain Management

These processes are enabled by various digital technologies such as advanced analytics, simulation tools, digital platforms, robotics, 3D printing, automation, IoT, AI, big data analytics, and cloud computing. The aim of the digital supply chain is to optimise the flow of goods, services, and information from the sourcing of raw materials to the delivery of finished products to customers, leading to increased efficiency, agility, and customer satisfaction. The digital supply chain also involves the real-time tracking and analysis of data, leading to the development of new KPIs that measure real-time visibility, efficiency, and effectiveness of automated processes, and customer satisfaction, loyalty, and retention.


Impact of Digitalisation on Supply Chain KPIs

Digitalisation has had a significant impact on the supply chain, leading to changes in how KPIs are measured and monitored. With the advent of digitalisation, supply chain managers now have access to real-time data and analytics, which has led to the development of new KPIs that focus on:

  1. Real-time visibility: Supply chain managers now have access to real-time data and analytics leading to the development of new KPIs that focus on real-time visibility, such as tracking the location and status of goods in transit, as well as the performance of suppliers and carriers. The Industry 4.0 technology enabling the data collection and transmission are IoT (Internet of Things) devices, and selecting the best IoT devices for your business is essential [2].

  2. Integration of systems: Digitalisation has made it possible to integrate various systems and technologies used in the supply chain, such as warehouse management systems (WMS), transportation management systems (TMS), and enterprise resource planning (ERP) systems. This has led to the development of KPIs that measure the integration and interoperability of these systems. This is especially significant to build resilience within the supply chain [3].

  3. Process Automation: Such as order processing and inventory management, can be measured by tracking the number of processes that have been automated, the reduction in manual labour required to complete tasks, and the resulting reduction in errors and delays. Process automation can also be measured by tracking the time required to complete a process before and after automation, the cost savings achieved, and the improvement in quality and consistency of output. [4]

  4. Collaboration: Digitalisation has made it easier for supply chain partners to collaborate and share data, which has led to the development of KPIs that measure the performance of these partnerships and collaborations. Network analysis involves using graph theory to analyse the relationships between different entities in the supply chain network, while survey-based methods collect data from stakeholders to assess the level of collaboration. Performance metrics such as on-time delivery, lead time reduction, and inventory turnover can also be used to measure the effectiveness of collaboration in the digital supply chain.

  5. Customer-centricity: Real-time and accurate data about customer behaviour, preferences, and feedback can be used to create personalised marketing strategies, improve customer service, and create a seamless and consistent customer experience across all channels. Metrics such as on-time delivery, order accuracy, and response time to customer requests can be tracked and analysed to measure supply chain performance from a customer perspective, leading to a more customer-centric supply chain.

Overall, digitalisation has led to the development of new supply chain KPIs that focus on real-time visibility, integration, automation, collaboration, and customer-centricity. These KPIs are essential for monitoring the performance and effectiveness of the digital supply chain and driving continuous improvement.


Benefits of Supply Chain Digitalisation

Digital technologies and data analytics can offer various benefits to companies in their supply chain operations. These benefits include improved efficiency, increased visibility, enhanced collaboration, better risk management, and improved customer service. By leveraging these technologies, companies can achieve greater profitability and competitiveness.

Figure 2: Benefits of Supply Chain Digitalisation

The digital supply chain is a comprehensive approach to managing supply chains that leverages digital technologies and data analytics to optimise the end-to-end flow of goods, services, and information, leading to greater efficiency, agility, and customer satisfaction. The impact of digitalisation on key performance indicators has resulted in the development of new KPIs that focus on real-time visibility, integration, automation, collaboration, and customer-centricity, enabling supply chain managers to monitor and improve supply chain performance continuously. By embracing digitalisation, companies can achieve significant benefits such as improved efficiency, increased visibility, enhanced collaboration, better risk management, and improved customer service, thereby increasing profitability and competitiveness in the marketplace.

 

References:


[1] Rasool, Faisal, Marco Greco, and Michele Grimaldi. “Digital Supply Chain Performance Metrics: A Literature Review.” Measuring Business Excellence 26, no. 1 (January 1, 2021): 23–38. https://doi.org/10.1108/MBE-11-2020-0147. [2] Badulescu, Yvonne, Manoj Kumar Tiwari, and Naoufel Cheikhrouhou. “MCDM Approach to Select IoT Devices for the Reverse Logistics Process in the Clinical Trials Supply Chain.” Nantes, France: Springer International Publishing, 2022. Link

[3] Frederico, Guilherme F., Vikas Kumar, Jose Arturo Garza-Reyes, Anil Kumar, and Rohit Agrawal. “Impact of I4.0 Technologies and Their Interoperability on Performance: Future Pathways for Supply Chain Resilience Post-COVID-19.” The International Journal of Logistics Management ahead-of-print, no. ahead-of-print (January 1, 2021). https://doi.org/10.1108/IJLM-03-2021-0181.

[4] Ivanov, Dmitry, and Alexandre Dolgui. “A Digital Supply Chain Twin for Managing the Disruption Risks and Resilience in the Era of Industry 4.0.” Production Planning & Control 32, no. 9 (July 4, 2021): 775–88. https://doi.org/10.1080/09537287.2020.1768450.

 


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