Digital transformation of the supply chain
An integral strategy to digitize the supply chain is the basis for its successful implementation. Evaluating the process to date plays a major role to assess how sustainable and profitable a company will be in the future.
It is critical to focus on key performance indicators (KPIs) as reducing costs sustainably and optimizing processes. Evaluating parameters of service performance for the customer, optimization of machine workload, and retrofitting of a plant drives the digital adoption wave. It requires a technology-first approach to handle elements of product development, ranging from conceptualising, design, to the manufacturing of the defined components.
Secondly, a company must not immediately digitalize its entire supply chain. Often it is enough to optimize the supply chain at the right points first, to markedly improve the process overall. Another important aspect is the transparency of data. To provide important information accessible to everyone involved in the supply chain, creating data transparency, and optimizing the supply chain, these are the imperatives that a company has to consider before it sets up projects to digitise its supply chain.
Transparency and footing for long-term decisions
Deployment of a unified business platform involving all departments and offering a user-friendly interface plus a connected, interactive environment. The process is simplified further to create a transparent data pool available to all the departments, comprising centrally held company data which contributes to better decision-making accelerating the manufacturing processes.
Such integrated platforms are ideal for advancing the digital adoption of supply chain management. In addition to a central data pool, it offers applications for computer-aided support in decision-making processes. Accelerating the process of a company to assess its supply chain from different angles and optimize it accordingly. The emphasis to date has been mostly on deciding between optimization costs and service to the customer. If service is a priority, for example, minimizing costs will tend to be the second priority. To sustain the reduction of costs, it is observed that quality services usually have to compromise.
Make-to-stock or make-to-order
How products are manufactured today will change increasingly. To date, there are two classic concepts in the supply chain: make-to-stock (MtS) and make-to-order (MtO). Depending on how a company manufactures its products, the so-called order penetration point varies in the supply chain.
MtO places a heavier demand on processes in a supply chain compared to Mts relying on order penetration on the general demand. And this is where the digitalization of the supply chain plays a substantial role. In planning the supply chain, many enterprises today must decide on a trade-off between costs and services. In the MtS domain, the costs are usually reduced maximally during the production process. Turning to MtO, individualization, and service to the customer is a priority over cost.
The biggest challenge and focus area for companies today and even more so in the future, is to enhance customers’ experience and sustain consumer engagement. Recently we have observed that the majority of consumers would purchase customised products with a fast delivery service, regardless of their location. That means the market offers a sizeable demand for companies and their supply chains. And this trend forecast illustrates why time is of the essence for companies to promptly address the digitalization of their supply chain.
Many companies today are at a cusp of digital transformation induced by the global pandemic. Future demands and needs can no longer be satisfied without an integral and digital adaptation of the supply chain. That means exploring, questioning, and optimizing processes that already exist can lead to becoming a market leader in the industry across sectors.
Processes can thus be planned and performed cross-enterprise, enabling holistic decisions. The global pandemic has vaulted five years forward in consumer and business digital adoption in a matter of around seven months. With the changing global landscape, businesses should focus on supply chain digital remodeling as one of the important pillars of their business dynamics.
(The writer is India Channel Head – Senior Director, Strategy at Dassault Systèmes)