How digital optimization is transforming supply chains: Part 1

Managing supply chains has been an increasingly unstable proposition since 2020; do a poor job at it and all the planning and innovation underway in other areas of an enterprise may not be enough to stay in business.

As shortages and transport issues become the norm in an era of global challenges, some forward-thinking supply chain managers are embracing new ways of supporting their enterprises. What worked in the past – a self-contained approach centered on oversight of delivery schedules and costs – is no longer enough.

A recent article in Harvard Business Review explains what is needed: “It will require managers responsible for developing supply chain relationships, such as account managers or supply managers, to adopt a boundary-spanning mindset in order to facilitate collaboration, experimentation, and trust across organizational boundaries.”

Are you ready for supply chain 4.0?

More leading-edge enterprises embrace digital optimization as a means for reworking their supply chains to better accommodate the new reality. By employing digital tools and platforms, they allow supply chains to become more flexible in design, more pinpoint in function and more cost-effective throughout.

McKinsey & Co. terms this new reality “Supply Chain 4.0,” part of an ongoing transformation of business practices known as the Fourth Industrial Revolution, or “Industry 4.0.” McKinsey identifies six main value drivers for supply chains, all of which can be activated via various digital optimization strategies: Planning, Physical Flow, Performance Management, Order Management, Collaboration and Strategy.

To that end, forward-thinking supply chain leaders are incorporating such innovations as advanced analytics, robotics, the Internet of Things, drone technology, the cloud and much more to forge a supply chain that is more consistent, reliable and cost-effective.

The business case for supply chain digitalization is a fundamental one. MIT estimates that “transforming the supply chain digitally can lead up to a 50% reduction in process costs and an increase in revenue by 20%.” It is not a question of whether supply chain innovation makes business sense, but rather how ready an enterprise is to take up the challenge – and, if implementation is successful, reap the reward.

What digital optimization can do

From mobility-as-a-service vendors to online merchants, delivery expectations are being reshaped around higher demands for precision and efficiency. Digitalization of supply chains allows for closer realization of ideals once thought unattainable, such as end-to-end visibility and up-to-the-second tracking.

Such processes can be adapted across a wide range of industries to facilitate deliveries that lessen the impact of high energy costs, traffic congestion, shipping delays and resource shortages while simultaneously improving reliability and lowering costs.

Forecasting tools can be brought to bear to better negotiate unavoidable variables like traffic and weather. A centralized-control model can give supply chain officers the intelligence and authority to act on issues developing hundreds of miles away.

Artificial intelligence and machine learning systems also can be brought to bear, solving supply-chain issues before they morph into bottom-line concerns. Leveraging such tools as predictive analytics, digitally optimized supply chains can capture savings and ensure chain cohesion to keep supply flow steady during periods of sustained shortage or delay.

Collaboration is key

There is a need for collaboration between supply-chain partners and vendors, to better manage problems and drive process improvements. Another form of collaboration should take place within an enterprise, breaking out from the siloed approach of the past to consider better ways of coordinating answers to supply needs across departments.

A digitally-optimized supply chain provides opportunities for making collaboration into an immediate, cost-reducing strategy for any enterprise. McKinsey & Co. take a collective view of the possibilities: “Digitally integrated supply chains could generate billions in new value—if industries find ways to manage perceived risks, realize the value at stake, and distribute it fairly among partners.”

One way enterprises are taking on the digitalization challenge is by investing in platforms and tools that capture data across the organization reliably, securely and quickly; then transmit that to dashboards for immediate action. Dedicated Fiber Internet (DFI) by Spectrum Enterprise provides organizations with the high-speed data infrastructure network they need to understand and respond speedily to critical issues, including those impacting supply chains. 

Digital optimization of supply chains can seem a lot to chew on when one takes a long view. But it can be managed in more actionable bites. In Part 2, we will look at specific digital optimization strategies around supply chains to help improve efficiencies and lower costs.

How can your enterprise better seize the promise of supply chain optimization? Learn how to exceed your business goals today and tomorrow with Spectrum Enterprise solutions.