22/05/2020 The Covid-19 lockdown has put renewed pressure on businesses to ensure their supply chains can keep up with fast-changing demand. Digital transformation, says Abhijit Pal, is the answer to avoiding delivery delays and inventory issues, and by making digital interventions that enhance efficiency and reduce costs, a business can weather the current storm and prepare for future success.
The supply chain is a vital component of any business – the lifeline that ensures products can make it to the market and the company is ready for its next opportunity.
However, in recent months, we have seen businesses risk commercial failure because they are running on outdated supply chains that leave them vulnerable to fluctuating demand. The key to protecting a business – in current times but also in more stable periods – is to integrate digital accelerators into the supply chain, which can improve internal processes, optimise turnaround times and shape better customer and employee experiences.
Practically speaking, supply chain transformation includes a combination of functional and process re-engineering and technological implementations, which address different areas, for example demand and supply planning, and recalibrating suppliers, logistics and inventory.
Five typical examples of digital interventions are:
- Automation methodologies using Enterprise Resource Planning (ERP), Internet of Things (IoT), BPA (Business Process Automation), RPA (Robotic Process Automation) and descriptive and predictive analytics to better organise and monitor logistics and inventory by increasing visibility of the supply. Applications of similar technologies in finance, accounting, procurement and other key functions of the supply chain are increasingly critical.
- Barcodes/RFIDs and IoT sensor technologies to track raw materials, finished and semi-finished goods, including the overall re-alignment of warehouses, which serves as a key component in the automation of warehouse operations.
- ‘Smart manufacturing’ and ‘smart factories’ featuring the extensive use of IoT and hardware sensors, along with the control systems that capture data and integrate it with application systems to efficiently track and maintain the different machines and operations on the shop floor.
- Introduction of online and mobile sales and marketing channels integrated with pricing models and order fulfilment algorithms to enhance the customer experience and drive sales.
- Introduction of collaborative remote working platforms so teams can effectively work together and deliver on expected outcomes. While these platforms are aimed at increasing employee welfare, they can also provide business continuity.
Outcomes and benefits
Overall benefits of supply chain digital transformation include cost optimisation, increased efficiency of key processes (planning, order management, delivery and logistics, manufacturing, procurement and payment) and deeper insights into how the business works and any necessary corrective actions to take.
Productivity, deadlines and profit – digital transformation can deliver it. As we enter the ‘new normal’, investments around automation and digitalisation initiatives will likely remain top of the agenda for CXOs seeking achieve the above benefits.
Impact of Covid
The last decade has seen businesses gradually integrate technology into their supply chains; and in recent months, the impact of Covid has widened the net of sectors prioritising digital intervention.
Take education for example: because of lockdown measures, students have not been able to attend school regularly in many parts of the world. Digital platforms are the only way to fill the gap. Those organisations that have digital at their heart will be the ones that can offer collaboration tools and keep education going.
Healthcare is another sector massively affected by the virus. In India we have seen robots deployed to scan patient X-rays and use artificial intelligence to make a diagnosis. Such innovation reduces stress on the system and can bring turnaround times down four fold.
While the immediate effects of Covid may be lessening, its consequences will stay with us. In response, businesses need to ensure that remote working and digital interventions are balanced with the human touch wherever possible. Moving forwards, there is likely to be increased investment in RPA, IoT, and other emerging technolgies, which were slowly becoming the key focus areas for companies before the virus hit.
Issues to expect
Supply chain transformation is often a straightforward journey but there are three key challenges that should be highlighted:
- Leadership commitment to the investments made into digitalisation and automation
- Cultural flexibility towards shifting to automated and remote ways of working
- User adoption of technologies, tools and platforms. To achieve that, users must be clearly shown how the new way of working will make their lives easier.
Last year we published a study that revealed China and India as outliers in digital transformation and that finding is consistent with the digital transformation in the supply chain. India and China, along with Brazil, Russia South Africa, Europe and the US, lead the way. Businesses in other countries will have to start their journey in the next 12-24 months or risk falling even further behind their global competitors.
Covid-19 has forced businesses to re-evaluate many aspects of how they work: with supply chains coming into sharp focus as they navigate radically different operating conditions, while meeting (and surpassing) customer and employer expectations.
Businesses should take this time to analyse their supply chain, locate weaknesses and use digital tools to improve them. Healthcare and education may be in the spotlight for now, but supply chain technology is sector agnostic and can be transformative for any business that takes the time to invest and integrate.