The Evolution of the Digital Supply Chain
Logistics Management, May 2017
How digital supply chain management—the broad concept that Cloud-based systems, analytics and monitoring of goods, vehicles and other assets via the Internet of Things (IoT)—will improve the way supply chains run, is top of mind for many in logistics today. Also discussed under similar terms like digitalization or Industry 4.0, digital supply chain management spans multiple technologies and includes its fair share of buzzwords—but there is evidence it’s more than hype.
According to MHI’s 2017 annual survey on next generation supply chains, 80% of respondents believe that the digital supply chain will be the predominate model within the next five years—with just 16% saying it’s happening today. Similarly, a 2016 survey from Capgemini found that 50% of those surveyed see “digital transformation” as “very important,” yet only 5% were very satisfied with their progress toward it.
Clearly, digitalization will change supply chains, but our understanding of how it will play out is a work in progress. Breaking down some of the enabling technologies should help logistics managers figure out how to embrace this new era.
Technologies like predictive analytics, better visibility over the movement of goods, and robotics that help warehouses and distributions centers (DCs) keep pace will all play a role in digital supply chain management. So will the realization that the new technologies may often layer over existing systems as a means of trading partner communication.
“From my perspective, we’ve had a digital supply chain for a long time,” says Steve Banker, vice president and head of supply chain management research at ARC Advisory Group. “If you use a warehouse management system with radio frequency guns, you’re not executing processes with paper, you are doing things digitally. The same holds true if you’re using electronic data interchange, which also has been around a long time. What’s new today are things like network-based, end-to-end visibility solutions.”
There are other enablers of digital supply chain management, say analysts and technology executives. At the crux of these advances is the ability to reflect and react to what’s going on in the real-world supply chain—to track the condition or location of goods, or crunch sensor or real-time traffic data to spot trends—and trigger appropriate changes.
Overall, the digital supply chain is about how systems can be much more aware of what is developing, and smart enough to change the chain’s physical processes for optimal performance.
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