As the saying goes, to move forward we must look back. Supply chain management is the cornerstone of the different industrial revolutions from the First Industrial Revolution of 1765 to the current. Different scholars have their theories of when supply chain management began. Some pin it to the start of global shipping networks in the 17th and 18th centuries. Others go even further back to ancient empires in Rome and Egypt, and the logistics they used to transport armies and a vast range of goods.
There may be different times when supply chain commenced. However, before the computer era, most of the data was manual and in paper form. Communication was mainly in person or by phone. By today’s standards there were archaic, inefficient, and costly.
The Third Industrial Revolution of the late 60s heralded an entirely new dimension for supply chain management. One of the initial high-tech inventions was the barcode. Now pervasive on nearly every product, the barcode revolutionised inventory management and tracking by providing a standardised way to identify and capture product information. This became especially useful with the rise of spreadsheets, algorithms, and other technology that could help predict logistics issues. This is the period when global GDP growth was at its highest with most countries experiencing double-digit growth.
The end of the Cold War in the late 80s brought the world together and fuelled globalisation as trust, cooperation, and collaboration increased. On the technology front, ERPs that centralised business processes emerged providing data-based decision-making. This was the first step towards automation. The rise of the internet and cloud services enhanced connectivity between the different stakeholders in the supply chain.
Covid-19 significantly destabilised the world. All industries were affected, including supply chain management. The lockdowns disrupted every industry, especially those that had no redundancies in their processes. This is understandable given that there are inherent additional costs in holding extra inventory. Post-pandemic, the supply chain strategy shifted from efficiency and low-cost sourcing to supply chain resilience. Covid-19 changed the focus to customer-centric, data-enabled, digital technology. Many companies wanted to implement these before the pandemic but deferred due to indifferent efforts, legacy systems, costs, and so on. Of course, now they have no choice.
Supply chain digital transformation is proven to mitigate supply chain risk and optimise supply chain cost. However, it requires strong alignment between business and supply chain strategy to succeed.
The supply chain digital transformation aims to achieve the following:
- Reduce costs: Digitalising and automating the supply chain enables companies to improve supply chain efficiency, speed up processes, provide better insights, and reduce manual errors. This helps to reduce total acquisition costs.
- Increase productivity: Automating lower value-added tasks and processes removes the human element to a significant degree. Supply chain teams can now focus their time on managing more strategic processes.
- Improve decision-making: Seamless integration of different data sets across the supply chain process and the use of disruptive technologies such as Big Data, IoT, and AI ensures that decisions are fact-based and more accurate. By relying on reliable, relevant, and real-time data flows, companies can optimise the management of their stocks and supplies while improving their agility and responsiveness.
- Collaboration: Digitalisation enables companies to communicate with their network of suppliers, channel partners, and so on, through an omnichannel. Through this, they improve the quality and reliability of supplies and products.
Supply chain digital roadmap
Digital transformation is an investment in any company’s future. Costs may feel like a barrier, but a failure to keep up with competitors and changing customer expectations will be more expensive in the long run. Many businesses are struggling with how to integrate new technologies into their supply chains. Making integration an explicit part of the transformation roadmap is required.
The supply chain digital roadmap is built on five steps:
- Identify the supply chain’s objectives for supporting digital optimisation and transformation.
- Determine changes in the supply chain’s capabilities and processes.
- Prioritise investments in technology.
- Create a plan to address the supply chain’s digital talent gaps.
- Determine a governance framework and finalise the supply chain’s roadmap.
Through this journey, we consider it our job to partner with clients in all verticals to integrate these various advancements into their supply chain.
