The Importance of Digitisation of the Supply Chain for Navigating Disruptions

Technology can bring suppliers and consumers together to make the supply chain process smoother and more efficient.

Technology is revolutionising many industries, including logistics.

Industry 4.0, or Supply Chain 4.0 for logistics, is the application of the Internet of Things (IoT), analytics, and robotics to improve supply chain management and navigate disruptions. With the application of technology, supply chains can perform better and address the needs of customers and businesses.

Learn more about the importance of digitisation of supply chains, the integral technologies, and the outlook for the future.

Technology’s role in the supply chain

Supply chain digitisation can keep supply chains efficient in an industry that’s under increasing stress, pressure, and disruptions.

Vital technologies can allow businesses to better serve the needs of consumers and navigate the challenges and disruptions.

The future of supply chains includes:

  • Speed: Product distribution has the goal of delivering goods to consumers quickly, which can be achieved with predictive analytics and forecasting. By identifying internal and external factors, businesses can address these demands.
  • Flexibility: Real-time forecasting and planning offer agility in the midst of rapidly shifting supply chain conditions and expectations. As the market shifts, businesses must plan and stay flexible, and technology enables them to. For example, customers can redirect shipments as needed for better convenience.
  • Accuracy: Supply chain management relies on real-time, end-to-end transparency throughout the entire process, from the business processes to the exact location of a delivery vehicle. Technology offers this elevated level of accuracy and transparency.
  • Efficiency: Supply chain efficiency can be achieved with automation, such as robotics and autonomous trucks. These automated processes can be used to streamline nearly every process, including transport and packing.
  • Personalisation: Consumers are looking for more and more personalisation, driving businesses to adapt to micro-segmentation and mass customisation. If consumer needs can be addressed in granular clusters with a variety of products and logistics customisation, the overall experience is improved. One example of this is drone delivery.

Key technologies in supply chain digitisation

Smart technology

Smart technology is experiencing adoption among consumers and businesses in virtually every industry. Logistics is getting on board with smart devices for automation, cargo tracking, robotics, and remote fleet management, which can provide vital insights into shipments and vehicles within the transportation network.

Automation is also necessary to stay flexible in changing market conditions. With automation handling repetitive, day-to-day tasks, employees are free to focus on mission-critical tasks to improve the overall business processes. Automation also reduces human error and mistakes that cost time and revenue.

Business intelligence technology, for example, can be used to optimise the supply chain and adapt to internal and external factors, fed by data from IoT devices. These devices have sensors that collect and deliver real-time data insights for rapid-fire actions on critical tasks, all without human intervention.

RFID technology and cloud-enabled GPS enhance tracking and remote fleet management by offering real-time data on the location of vehicles and goods within the warehouse or transportation network. This helps to keep the supply chain efficient and transparent.

Digital thread

A digital thread is the use of digital tools and representations for design, evaluation, and life cycle management. Essentially, this is a closed-loop between the digital and physical environment, facilitating the sharing of information to consumers and keeping the supply chain responsive as conditions change.

This technology isn’t enough on its own, however. People and workflows need to be involved to create an integrated value chain that supports better collaboration between suppliers and customers. This not only improves communication and transparency but reduces costs.

Demand-driven supply chain management

Flexibility in the supply chain is necessary for logistics and transportation amid rising challenges and expectations. Demand-driven supply chain management has always been a focus of logistics, but improvements in data collection and analytics prompt more agility to adjust and adapt to these demands in real-time.

IoT devices with sensors, predictive analytics, and machine learning can be used to gather, process, and analyse the data in the environment and offer deep insights. Using data, businesses can respond rapidly to the changes that occur.

Consumer expectations

Changing consumer demands and expectations are a big driver of supply chain obstacles and disruptions. Consumers have become accustomed to rapid order processing and delivery, putting pressure on businesses to deliver as quickly – and cheaply – as possible.

They’re not tolerant of delivery mistakes, long processing times, or delayed shipments, and that could be enough to send them to a competitor. To combat this, some manufacturers have been incorporating centralised distribution and real-time inventory management systems.

Consumers are also looking for better customisation options and supply chain transparency. Rapid prototyping and additive manufacturing are allowing manufacturers to restructure supply chains and adapt to these changing demands.

Cyber threats

Cyber security and risk are affecting every industry, but they prove significant for supply chains and the logistics industry. The digital supply chain has intrinsic security vulnerabilities that bad actors can exploit, such as multiple ingress points. Logistics also involves multiple parties, and just one partner neglecting security can open the entire network up to security threats. It’s vital that suppliers, manufacturers, and all other partners prioritise security across the entire ecosystem.

End-to-end security measures are the only reliable option to remove these ingress points for hackers and keep the network safe. Suppliers and manufacturers must share a partnership committed to the security and strict protocols to monitor and assess risk across the whole ecosystem.

Looking to the future of logistics

The logistics industry is experiencing negative disruptions in supply chains, but positive disruptions from modern technology and Supply Chain 4.0. Data analytics, cloud-based GPS, automation, robotics, and other technologies can be revolutionary for supply chain management and help businesses adapt to changing consumer demands. Implementing the right technologies and digitising the supply chain allows businesses and partners to improve agility, efficiency, and personalization to deliver better customer service, and as a result, better growth and profitability. 

About the author

David Buss is CEO of DB Schenker USA, a 150-year-old leading global freight forwarder and 3PL provider. David is responsible for all P&L aspects in the United States, which is made up of more than 7,000 employees located throughout 39 forwarding locations and 55 logistics centres.

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