In this 3-part blog series, we explore the current state of supply chain digitalization and show how you can use a blend of people, processes, and technology to manage it effectively within your own organization.
The constant stream of new technologies is pushing organizations further along in their digitalization journeys, but the unprecedented levels of data access, automation, and connectivity are creating roadblocks for some companies. Within the supply chain, for instance, the COVID-19 pandemic exposed new vulnerabilities, effectively forcing some organizations to completely rethink their approaches.
For some, that meant replacing aging systems and spreadsheets with modern software platforms. Others replaced their disparate technology systems with connected, aligned solutions that can effectively manage their complete supply chain processes—all with the goal of gaining end-to-end visibility across those activities.
Even with the pandemic awakening some companies to the need for more unified, integrated platforms, it seems that most organizations consider themselves to be behind the digitalization curve right now. According to a new Accenture report, 81% of supply chain leaders say the pandemic has been their organization’s “greatest stress test.”
Rewind the clock back three years and Accenture says 16% of supply chain leaders believed that their organizations had predictive operations while none had future-ready operations. Today, 4% of supply chain leaders call their operations future-ready, while 65% see them as predictive.
By 2023, 34% of those companies expect to be future-ready—an ambitious jump, by Accenture’s measure. It defines future-readiness as an organization’s ability to scale eight characteristics of operating model maturity: analytics, automation, data, stakeholder experiences, artificial intelligence (AI), business and technology collaboration, leading practices, and workforce agility.
“This evolution in thinking suggests that supply chain leaders are optimistic about the future,” the firm adds. “Yet jumping from 4% to 34% in just three years is an ambitious undertaking that requires significant transformation of both supply chain and enterprise operations.”
Why Digital Transformation Now?
With everything from global raw material shortages to the ongoing labor crisis to events like the Ever Given’s blockage of the Suez Canal taking its toll on the world’s supply chains in 2021, the time to reassess existing digital strategies and build more future-proof organizations is upon us. A reset that’s grounded in new technologies, digital transformation factors in an organization’s go-to-market strategy, product offerings, and ways of working. True journeys (versus just short “trips”), digital transformations take years to complete. “Digital transformations must be bold and ambitious,” Boston Consulting Group points out, “yet thoroughly pragmatic at the same time.”
While advancements in technology have given supply chain organizations a broader swath of options to choose from, culling through those opportunities to find the best fit isn’t always easy (see Part II of this blog series for more insights on this). Any company that was forced to accelerate their progress on digitalization by the pandemic, the supply chain shortages it caused, or the lack of transportation capacity that ensued, could find themselves having to make quick decisions under pressure.
And while supply chain disruption is always lurking in the wings (i.e., the electronic logging mandate, catastrophic weather events, natural disasters, and geopolitical shifts like Brexit), the current environment is rife with interruptions, many of which are impacting supply chains on a global basis. Companies that came into 2020 relying on lean inventory management strategies, for instance, quickly found themselves scrambling to fulfill orders and replenish their inventories.
Driving the Massive Acceleration in Digitalization
This and other problems pushed more companies even further along the road to digital transformation. “With the limited staff (due to the pandemic and the labor shortage) and inventory that companies were dealing with, the need for supply chain transparency increased significantly,” says Ken Sherman, a former GE Supply Chain Manager who joined IntelliTrans in 2003 and who has served as the company’s President since 2014.
“Companies needed robust tools for figuring out exactly what was going on and what options they had for dealing with the significant disruption,” Sherman continues, adding that throwing more people at the problem is no longer an option in today’s high-cost, labor-constrained business environment.
“Now, having technology that provides both transparency and decision-making insights is more critical than ever,” Sherman adds. “That's really what's driving the massive acceleration in digitalization.”
In Part II of this blog series, we’ll delve deeper into the digitalization conversation and explore the different steps that companies can use to advance down this path with the least possible amount of friction along the way.