Transitioning from analogue to digital for anything — a map, a budget, a scheduling system — probably seems obvious and overdue. But for a process as complex as supply chain, it’s just not that simple: Employees, customers, suppliers and other partners are as far flung as they are numerous; state-of-the-art technology is expensive to implement and can be difficult to learn; and interpreting massive amounts of data is a specialized and delicate task.
Despite the challenges, complications and costs, it’s clear that this transformation is desperately needed. And 2023 is the year: According to ASCM’s Top 10 Supply Chain Trends in 2023, a top priority in the coming months will be digital supply chain. Furthermore, it will be an essential element of numerous other trends on this list, including risk, resilience and security. The report stresses, “Best-in-class organizations will adopt digital supply chain capabilities or be left behind by nimbler and more efficient competitors.”
In another ASCM research report, authors Nada R. Sanders, Ph.D., and Morgan Swink, Ph.D., surveyed dozens of supply chain leaders to arrive at the definition of digital supply chain, which is one that “develops and applies technologies to automate, integrate and illuminate all processes including data capture, communications, analyses, decision-making, transactions and transformations.” In other words, a digital supply chain leverages technology and data to improve end-to-end processes and the overall business.
Armand van Oostrom, senior lecturer at Hague University of Applied Science, spoke to ASCM over videoconference about the trends. He noted that COVID and the war in Ukraine are “accelerators,” which are forcing people to rethink the way we manage our networks. He then went on to say that the top 10 trends, digital supply chain among them, demonstrate the proactive actions supply chain professionals can take to prepare our networks for the coming years.
Build resilience in the face of crisis
Digital supply chain made the 2022 list too, but the ranking leapt from number seven last year to number two this year. Jit Hinchman, CSCP, founder of Supply Chain Adviser, explains the surge in ranking like this: “The global pandemic and supply chain disruptions have directly turbocharged the jump and …have fundamentally changed how we live, interact, work, and shop. Individuals and businesses alike were facing the same challenge in finding solutions to cope with the obstacles of continuing operations while complying with the pandemic requirements to safeguard people and communities. In times of crisis, profit shrinks, and organizations cannot afford operational inefficiency. These needs sped up the digitization adoption to be more efficient and save time if done right.”
In fact, the theme of the 2023 trends list is “supply chain goes digital,” underscoring the importance of this transformation. Amy Augustine, CSCP, senior director, network supply chain at USCellular, explains that the entire trends list demonstrates that “all technology or processes that help the supply chain go digital … from big data and analytics to robotics, all require and use data.” Digital supply chains, then, “focus on the need to tie all the data together, not only your own companies, but your supplier’s and your supplier’s supplier.”
Whether because of personal experience or professional understanding of the business landscape, supply chain leaders are concerned about how their organizations will thrive in the next year, and complications in the supply chain are at the top of their lists, trailing labor issues and cybersecurity threats by a narrow margin. According to Edelman’s 2022 Connected Crisis study, 78% of the more than 300 CMOs/CCOs surveyed are worried about the impact of supply chain issues or disruptions, even though just 31% experienced a crisis in their supply chain over the past three years. Seeing and understanding the effects other organizations have experienced is enough to make clear that a disruption could be catastrophic for their organizations.
“The constant challenges of global crises from disasters, pandemics, wars, political conflicts, recession, and inflation pose threats to higher business risks and operations instability,” Hinchman adds.
But there is a way to prepare for these crises. In response to the pandemic, “the companies that were well on their way to implementing their digital supply chain strategy were able to see the warning signs and pivot much faster than the others,” says Augustine, emphasizing the importance of the connectedness of digital technology, not only to react to the shock of the pandemic and the resultant shipping delays and new health regulations, but to prepare ahead of time.
Julie Gerdeman, CEO of Everstream Analytics, a supply chain risk analytics company, told Bloomberg, “The pandemic demonstrated that digitizing supply-chain operations was far less expensive than absorbing the financial and reputational cost of constant disruption.”
Begin the transformation
“It starts with a robust multi-year strategy and roadmap of where you are, where you are going and how you are going to get there,” says Augustine. “The digital supply chain will also allow supply chain managers to run risk planning scenarios and then see how their plans to respond actually will work [so] that supply chain leaders have a set of plans that can be implemented … as soon as a leading indicator suggests that there could be an issue in the supply chain.”
To do this, companies are implementing technology platforms that can help them manage, monitor and optimize inventory, network flow, and energy usage. Hinchman explains that, because of the restrictions for operating during the worst of the pandemic, businesses were forced to install foundational digital technology, if they didn’t have it already. But recently they have been able to adopt more innovative technologies and other crucial building blocks. This type of software allows third-party logistics companies to monitor truck movements in real time and know right away if there’s a delay; customize products to fit consumers’ exact specifications; or find new supply partners who share the same values, such as sustainability or the circular supply chain.
Include your people
Even though digitizing an existing supply chain is a worthwhile endeavor, it’s not always straightforward. Hinchman cautions that companies can make mistakes on this journey by focusing “too much on technology, tools, processes and cost over people and customer needs.”
Communication and training are crucial for any functional organization, but when undergoing a major change, employees and suppliers alike will need help along the way and reassurance that this is a positive change. Augustine says, “You cannot forget about the change management piece when implementing your digital strategy. You need to have your employees’ and suppliers’ buy-in and embrace the changes. Don’t wait until you are ready to roll out a new part of your strategy to communicate and train.”
Supply chain professionals can keep up with advancing technologies through regular training, including attending conferences, reading industry publications, watching webinars or earning certifications or new credentials. Augustine also suggests networking as a method for staying current. “I really stress networking because you can hear from someone who has implemented a technology or is in the process of implementing a technology. You can ask them questions, get an understanding of the ‘gotcha” items, and a true understanding of adoption rates and the impact of change in their organization. Being involved in an organization like ASCM, where you can get insights and trends along with mentoring, is invaluable.”
