Insights Into Digitalization in Supply Chain Management and Logistics

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When done properly, digitalization is a process that can dramatically revolutionize a company’s operations, but it can only happen once an organization has successfully gone through the process of going digital. Digitization, which serves as the enabler, involves converting information and products, such as images and documents, into a digital format. Once converted, these resources can be used to modernize and streamline procedures, doing away with necessary elements like paper and in-person communication. This can be especially useful in the challenging time COVID-19 has brought. Hence, we witness a clear picture of digitalization in supply chain management and logistics.

What is Supply Chain Digitalization?

By creating dedicated master data that collects information from your whole supply chain as well as some external sources, supply chain digitization (also known as supply chain digital transformation) is the process of converting analog supply chain processes into digital ones (e.g., internal historical sales data, point-of-sale consumer data, socioeconomic data such as unemployment rates, and external data such as Google trends or competitor prices). Software that focuses on automation and business intelligence, whether out-of-the-box, custom, or a combination of both, is the primary tool for digitalization in supply chain management and logistics.

Trends in Supply Chain Management System

Industry 4.0 causes upheaval and forces organizations to reconsider how they plan their supply chains. Several new technologies have arisen that are changing conventional workplace practices. Megatrends and changing customer expectations are additional factors. Along with the requirement to adapt, supply chains also have the chance to utilize newly emerging digitalization in supply chain management and logistics business models, reach the next level of operational effectiveness, and change the organization into a digital supply chain.

Supply chain management is significantly impacted by several megatrends, such as the continued global expansion of rural areas and the distribution of wealth to previously underserved areas. The demands on logistics to reduce carbon emissions and traffic restrictions imposed for socioeconomic reasons are additional difficulties. However, as the workforce ages, shifting demographics also result in decreased labor availability and rising ergonomic needs.

Customer expectations are rising at the same time because of the recent trend of shopping online, which has increased demand for services and sharpened order granularity. Additionally, there is a very clear trend toward increased individualization and customization, which fuels the SKU portfolio’s rapid expansion and ongoing changes. The rivalry in digitalization in supply chain management and logistics is driven by online-enabled openness and simple access to a wide range of options for where to purchase and what to buy. Supply chains must become considerably faster, more granular, and much more exact to capitalize on these developments and meet the new criteria.

Digital Supply Chain and its Advantages

The digitalization in supply chain management and logistics offers a significant opportunity to change the course of your company. A digitized supply chain has the following benefits:

  • Preserving unity and connectivity

You will fall behind if you continue to rely on spreadsheets and email chains to gather the data you require. The lengthy and laborious nature of those tasks reduces efficiency and increases the possibility of human error. By digitizing your supply chain, you may connect different systems, enable communication throughout the entire company, and provide a single source of information truth.

  • Possibilities for automation

Your team’s administrative workload will be lessened by reducing manual activities, which will free them up to work on other projects that may have been neglected and let them concentrate on their respective strengths. Additionally, automating decreases human mistakes, which results in recovering lost money from correcting those errors. Processes are accelerated by automation as well; automated invoicing, for instance, enables speedier payment.

  • Use data to inform decisions

Agility is essential in the digitalization in supply chain management and logistics since choices must be made fast. In comparison to analogue systems, a digital supply chain enables you to collect and analyze enormous amounts of data with a lot less work and in a lot less time. Then, you may put that information to use by developing strategies, making decisions, and generating contingency plans. Real-time data from your digital supply chain can be incorporated to improve customer satisfaction, increase revenue, and decrease waste, among other benefits.

The Future of Digital Supply Chain

Since digitalization in supply chain management and logistics is an incredibly complicated aspect, no corporation has so far been able to create a fully digital one. Many of the necessary applications are, in fact, still quite new. However, this will drastically change over the next five to ten years as various businesses deploy digital supply chains at diverse rates. Companies that arrive early will have an edge in the race to Industry 4.0 that will be tough to overcome and will be able to set, or at least influence, technological standards for their specific industry. The benefit won’t be restricted in any way to the higher efficiency. The numerous new business models and revenue streams that the digitized supply chain will enable will be the true objective.

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