Digitalize Your Supply Chain(4) Initiating Digital Transformation

Digitalization is rapidly becoming a much-discussed topic in the supply chain field. It is widely agreed that digitalization is increasingly necessary to maintain an efficient supply chain. However, companies are often at a loss with how to best start their journey of bringing their current supply chain into an increasingly digital world. In order to successfully enact this transformation, a two-step procedure must be taken. First, the company will need to find its starting point, followed by an in-depth planning process outlining how to best carry out the digitalization.

In this article, three simple ways will help identify a starting point for your supply chain digitalization process:

Enhance the core value of your supply chain

In the past, supply chains served a similar purpose across all companies- ensure supply flow. However, as supply chain theory evolved, companies began to re-evaluate value proposition within their own supply chain. For example, in the retail industry, a successful high-performance supply chain must guarantee fast inventory turnover and low operational costs to ensure their supply chain squeezes the highest possible profit margin for their business. Meanwhile, the supply chain’s primary focus in the energy sector is ensuring that production needs can be fully met in a timely manner, with cost being a lower priority than safety and timeliness, while still remaining a key factor in evaluating supply chain performance. So, albeit there are slight differences between various industry requirements for each specific supply chain’s needs,COSTandEFFCIENCYremain the two core values, and it is from this point that the digitalization processes can begin.

Identify any bottlenecks that prevent the supply chain from serving its purpose

Bottlenecks pose a serious negative impact on the successful functioning of your supply chain operation; however, it is from this deficiency that digitalization solutions can first be implemented. The bottleneck location varies from company to company and industry to industry, but several perspectives exist wherein there is potential for the supply chain to be improved.

Returning to the energy sector as an example, based on Inossem’s experience, spare parts management is a typical bottleneck that has potential to be eliminated through digitalization. Problems commonly seen in spare parts management include physical inventory and booked inventory un-match, operation inefficiency and inaccuracy of spare parts warehouse, over-purchasing and long-aged inventory dragging down inventory turnover rate and demand fulfillment rate.

These bottlenecks may be difficult to identify, since operational models that have been in place for years are difficult to alter smoothly. Sometimes it has been long enough that the original purpose of the supply chain has been forgotten, giving yet another reason to utilize digitalization of the company’s supply chain.

Guide supply chain decisions by the mantra "Business Driven, Technology Enabled"

A common misinterpretation of “digital transformation” is using technology as the primary motivator in updating supply chains by arbitrarily utilizing new technologies without careful consideration of the appropriateness of the technology. Inossem believes that in order to carry out a successful supply chain digital transformation project, maintaining a “business driven” mindset remains paramount.

Digital transformation must be primarily motivated by real business needs. However, it remains important to keep business units up to date with current technology developments, to empower them with the capability to identify their supply chain needs, and ”Business Driven, Technology Enabled” is the optimal jumping off point for such changes.

Once a starting point has been identified, engaging high level conversation and constructing a thorough planning process can begin, the key outcome of this phase being to set a clear goal with a complete roadmap to achieve the prescribed goal.

Two key factorsthat are crucial to building a successful digital supply chain transformation strategy have been identified below.

Involve executive level management in the conversation

In our project experience, we have found that successful supply chain digital transformation projects need full support from the executive level to drive the change. A steering committee needs to be formed early in the planning process. This cooperation ensures the supply chain digital transformation project aligns with the company’s overall strategy; providing meaningful support from management while moving forward with digitalization.

Build trustworthy partnerships with proper service providers

Building a partnership is not same as simply finding a competent supplier. A trustworthy partner needs to be involved in the process starting at its origin, with high levels of contribution to the overall supply chain transformation strategy, fostering a symbiotic business relationship that compensates for particular supply chain deficiencies by business partners.

For example, companies in the energy sector are familiar with their own supply chain structure, but they may lack the knowledge in how to best utilize new technologies, or correctly identifying which technology trends are appropriate for their particular company.

Inossemstrives to be a trustworthy partner when assisting with a company’s supply chain digital transformation. Inossem’sSupply Chain ONEsolution provides our client with a comprehensive business strategy to achieve supply chain digitalization. Our solutions consist of four major sections: business strategy consulting service, supply chain data management, warehouse & logistics intelligent operations and supply chain forecasting analysis.

Our consulting team is composed of a group of experts from a variety of industries, and our product team has direct access to cutting edge technologies, as well as the expertise to identify which technologies are best for your individual situation. Combining those two advantages, we provide our client with the tools, expertise, and guidance to transform your supply chain system into the modern age.

By赵晔 Sophia Zhao

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