Supply chain management is one of the most important – and complex – elements in the modern enterprise. An organization with a fully optimized supply chain can guarantee competitiveness in the market because its production cycle costs less and takes less time to complete.
But optimizing a supply chain is not an easy task, and it gets harder as the organization grows. Modern enterprises have more suppliers than they can reliably govern without an integrated digital ecosystem:
- Consumer goods enterprise Procter and Gamble has stated that it has over 75,000 suppliers
- Retail giant Walmart has more than 100,000 suppliers
- French oil conglomerate Total buys from more than 150,000 individual suppliers
Even small enterprises can quickly find themselves overwhelmed by the responsibility of effective supply chain management. Business professionals need to prepare for shortages, recalls, late deliveries, and a broad range of other unwelcome contingencies for every single one of their hundreds or thousands of supply chain agreements.
Digitization of the supply chain will not only help companies prepare for whatever situation they’re presented with, but will also provide a beneficial, transparent, and accessible way for all parties to work together.
Supply Chain Challenges and Pain Points
Supply chain performance relies on effective communication, which itself hinges on accurate data gathering and analysis. Without digital solutions in place for data capture and analysis, supply chain professionals tend to find themselves separated from the data they really need, which remains locked away in some other department’s organizational silo.
Traditionally, enterprises have dealt with this problem through various kinds of forecasting. Manufacturers, distributors, and retailers make their best attempt to guess what the future holds for supply and demand, and they act accordingly. Although this technique works most of the time, it is prone to disruption from unforeseen contingencies:
- Weather conditions can disrupt shipping or agricultural output
- Raw material prices can fluctuate according to their availability.
- Major facilities can go offline due to accidents, economic factors, or political needs.
- Customer demand can change at a moment’s notice due to cultural trends and concerns.
Integrity and trust also play an important role in the overall strength and reliability of an enterprise supply chain. Investigators have recently traced the 2013 European meat scandal – where dozens of frozen food manufacturers came under fire for switching beef with cheap, potentially unsafe horse meat – back to two raw meat suppliers now facing criminal conspiracy charges.
Without a robust digital solution for supply chain management, enterprises expose themselves to risks that grow steadily with each new supplier added to the network. Digitization breaks down the walls preventing the flow of economic signals between the nodes that comprise that network, giving organizations the ability to gather data and plan ahead effectively.
How Digitization Improves Supply Chain Performance
The traditional supply chain model is linear. Suppliers interact with producers, who interact with distributors, who interact with retailers, who interact with customers. These interactions involve planning, ordering, and confirming transactions without a great deal of information about the other elements in the chain.
In an integrated, digital supply chain, data does not necessarily move linearly. Suppliers may plan, qualify, and confirm production based on real-time retail data showing (or predicting) an increase in consumer demand. Distributors may effectively track and trace orders to ensure they meet demand in a cost-effective manner, without losing resources to inefficiency and waste.
In these cases and all others, digitization improves the responsiveness of the system while making it more flexible and transparent. Supply chain digitization empowers every member of the supply chain to make better decisions using higher-quality data. This, in turn, reduces costs and allows every member of the chain to improve operational efficiency and profits.
The Next Step: Automation and Robotic Technology
It should be clear that supply chain digitization improves the flexibility and profitability of suppliers, processors, distributors, and retailers alike. But as long as every step in the supply process remains manual, preventable contingencies will still occur. Enterprises that wish to streamline their supply chains for optimal efficiency need to take the next logical step: robotics-powered automation.
Robotic technology is already redefining the industrial and manufacturing sectors. Some of the world’s best have taken a step back from designing products and started focusing their attention on how to design the product manufacturing line for optimal efficiency.
The same holds true for supply chain management, where transparent, automated processes reduce resolution times while improving outcomes throughout the entire system. Organizations that integrate automated systems throughout the supply chain position themselves to consistently make the most intelligent supply chain decisions.
Ripcord uses robotics for records digitization, playing a pivotal role in its clients’ supply chain management systems. Talk to a digitization expert today to find out more!