How Digitization is changing the Supply Chain Management

How Digitization is changing the Supply Chain Management

In the early days, the supply chain was more of a sequential process with very less visibility from one process to another. The traditional supply chain model can be depicted as:

In this model of the supply chain, all the blocks kind of worked independent of each other as the suppliers did not know the exact demand from the customers and there were too many layers which inserted the noise and never the exact demand or likings and disliking went up the chain till the suppliers. 

The model has changed completely in the digital age which is also known as the Digital supply chain, This model certainly gives a better transparency and the visibility of the different processes involved in the supply chain and better meets the customer demands and also optimizing different processes. The model can be represented as:

Comparing the two models we can see the increased efficiency of the overall supply chain, 

The goal of the Digital Supply chain is to deliver the right product to the customer as soon as possible. This goal can only be achieved by integrating the whole supply chain and connecting suppliers, customers, logistics and warehousing.

For suppliers with the increase in the amount of data regarding the customers' purchases and feedbacks they certainly have a better idea of the customer demands as compared to the traditional supply chain model. Also with this amount of data the suppliers can use analytics to perform trend analysis and get an insight into the customer taste and alter their offering accordingly.

For the Producers, the ERP software is the biggest advantage of digitization. These softwares collect input from the market demand at the same time it helps the producers to manage the raw materials provide an estimate of the number of units in demand and help the producers to manage their end to end production cycle.

For distributors, the most important part is to manage the logistics and with the help of latest analytics techniques and algorithms, they are able to route the delivery services in such a way that it incurs minimum expenses but covering the maximum number of delivery points. Also, the information regarding the weather, transportation etc gives them a better estimate of the delivery time.

For customers, the visibility of the supply chain is advantageous as they have the exact expectations of when would the product be delivered to them and they also have provision to trace their product real time. Track and Trace applications are what the logistic companies shifting you which gives the visibility of real-time delivery to both distributors and customers and helps the distributors plan the deliveries better.

Smart warehousing is also an option for the distributors as they have automatic control over the inventory and gets notified about the lack of availability of the products and also helps the distributors to keep a track of the customer trends.

In all, we can see that the visibility for all the entities has increased in the digital supply chain which overall increases the efficiency of the whole supply chain and in turn increasing the customer satisfaction as well as helping the suppliers and distributors with the amount of data present to better manage their inventory and production.


reference : https://www.strategyand.pwc.com/media/file/Industry4.0.pdf