Posted by Ashwin Patil on March 23, 2017
There are lots of moving parts to a digital supply chain network. Think of it as a constellation of interlinking stars that provide transparent value to all. Those stars linked to speed of delivery, for example, share information smoothly and instantly. As a result, transformative strategic decisions are enabled faster and with greater impact. Supply chains are shifting from linear, sequential operations to a new interconnected, open system of supply operations–called a digital supply network (DSN). This shift lays the foundation for how companies will likely compete in the future. “The rise of the digital supply network” explores this new frontier by examining four key areas:
- Technological evolutions make it possible. Lower computing costs, cheaper storage, less costly bandwidth, and cloud computing have enabled leaders to combine information technology and operations technology. No longer does it have to be prohibitively expensive or time intensive to gain insight into each minute step of operations or to deeply understand customer or supplier demand patterns. Evolution in big data, cognitive computing, and predictive analytics is a game changer. Ultimately, these technologies could dramatically increase differentiation for the organization that can harness and leverage them.
- DSN casts a wider net over business strategy. The collaborative relationship between machines and humans creates a continuous and bidirectional loop of learning. The entire value chain benefits from centralized, standardized, and synchronized data. While sensors and location-based services provide instant visibility, data-driven analytics can enhance strategic decision making and outcomes. Real-time communication enables improved collaboration with suppliers, partners, and customers, and transparency across silos allows for better decision making for the entire network. DSN creates visibility into both customers and a smart business strategy in an all-encompassing way.
- The trade-offs inherent in a typical supply chain, mitigated. Manufacturers often question whether they can pursue multiple goals, as focusing on one area can often mean sacrificing capabilities in another. DSN enables holistic decision making. As different stages of the supply chain communicate with each other via connected technologies, priorities identified during the strategic decision-making process, such as speed or service, can be addressed on multiple fronts. In effect, this gives DSNs (and supply chains) new strategic decision-making abilities. It’s easier to ramp up multiple efforts.
- How to build a DSN. As manufacturing organizations evolve, information clusters will likely move from separate silos to free-flowing, integrated hubs that are supported by interconnected technology solutions. To start building a functional DSN, organizations can take several steps:
- Think big. Explore the art of the possible. Push the organization to understand the application of various technologies and their potential impacts on the business. Assess what steps should be taken to build the technological capabilities necessary for a functional DSN.
- Start small. Start with smaller stakes where strategies can be tested and refined with relatively fewer consequences. Prioritize areas that can unlock several waves of potential value, and build on those successes to continue to establish DSNs where they make strategic sense.
- Act fast. Small successes can serve as proof points, leading to a greater willingness to take a chance on more substantive investments. Sharing examples of successful DSNs can evangelize skeptics within the organization. It can also demonstrate to customers that the organization is at the forefront of technology and is focused on their needs.
Transitioning a traditional, linear supply chain into an always-on, holistic DSN can allow companies to shift their strategies, competing across nodes of the supply chain simultaneously rather than simply focusing on one area. One of the potential benefits—and challenges—of the DSN is its agility. Advancing to an “always-on” DSN is about developing an agile supply culture and promoting a more strategic approach to meeting customers’ needs. As companies determine the strategy they wish to pursue, they may find it easier to meet customers’ demands and remain competitive in the market with a DSN in place. Don’t lose out.