How to Achieve a Digital Supply Chain

Mike Davis
Fri, Aug 26, 2016
Digital supply chains use advanced technology like online and offline mobility to improve traceability.
Digital supply chains use advanced technology like online and offline mobility to improve traceability.

The use of technology in business endeavors isn't just an advantage; it's a necessity. This is especially true along the supply chain, where changing consumer demands, extreme weather and strict regulations have made the production and distribution process more complex than ever. Company leaders must leverage what's called a digital supply chain to remain successful.

What is the Digital Supply Chain?
According to EBN, supply chain management can create a digital supply chain by developing procurement, manufacturing and logistics processes that use advanced technology like 3-D printing, the Internet of Things, digital imaging and mobile devices.

Currently, many supply chain stakeholders call on these type of tools. According to research from Supply Chain Insights, 15 percent of respondents reported having a digital manufacturing strategy. Meanwhile, 16 percent use 3-D printing during production and the same number has integrated mobility into manufacturing plants.

The popularity of using tech along the supply chain is growing, which means supply chain management is tasked with aligning strategies to better leverage these tools. However, not all teams in this field have been able to complete this task, according to Supply Chain Insights CEO Lora Cecere.

She wrote in the report that the gap between the current status of the digital supply chain and its potential is significant. Even though tech has made its way into nearly every aspect of people's personal lives, the supply chain is not yet taking full advantage.

Benefits of the Digital Supply Chain
Supply chain management can get a head start on building a digital supply chain by better understanding the benefits this advanced process offers. As Food Online explained, more effective traceability capabilities are a major perk. This is especially crucial in the food and beverage industries considering all the regulations and health concerns surrounding food safety.

As the RFgen white paper, "Protecting Your Brand: The Food Traceability Survival Guide," explained, not having the ability to track food from harvest to retail shelves can have serious ramifications in the event of a recall. Just consider what happened with Sunland Inc. The U.S. Food and Drug Administration shut down the company's New Mexico plant for selling peanut butter contaminated with salmonella for two years. The recall, including getting tainted products off the shelves and the closing of the plant, cost Sunland Inc. an estimated $1 billion.

Greater traceability with the help of data collection devices and other technology does more than contain costs; it can also help businesses avoid legal dilemmas. The 2001 Bioterrorism Act requires food processors to know where all ingredients came from and be able to turn data on the lot number or code of each item to the FDA within 24 hours notice. Meanwhile, the 2011 Food Modernization and Safety Act requires companies to not just know where food originates but also have a process for tracing items. A digital supply chain that calls on advanced data collection devices ensures companies adhere to these regulations.

Of course, the food industry is not the only sector that could benefit from utilizing a digital supply chain. Any company that partners with suppliers can improve relationships with advanced technology. As Inside Supply Management magazine explained, delinquent invoices are on the rise, which can leave suppliers feeling frustrated or looking for a new partner. Supply chain managers can avoid this issue by using digitized payments, which guarantees payments arrive on time and thus better uphold the supplier relationship.

ISM also noted that a digital supply chain can assist with sustainability efforts. Relying on paper documentation increases a company's carbon footprint, whereas going digital reduces waste. Besides, paper strategies are nowhere near as efficient or accurate as using automated data collection solutions or other technologies. Streamlining processes along the supply chain inevitably leads to cost containment and higher customer satisfaction.

How to Achieve a Digital Supply Chain
According to a 2016 GT Nexus survey, 75 percent of respondents listed digitization of the supply chain as "important," and 70 percent have already started the technical transformation. However, a mere 5 percent of those who have started their campaign to a digital future are "very satisfied" with their progress, and more than 30 percent are flat-out unhappy with it.

These numbers demonstrate that while the majority of supply chain management constituents want to move toward the digital supply chain, not all of them have the right strategy for getting there in an efficient and effective manner.

Writing for her blog Supply Chain Shaman, enterprise strategist Lora Cecere explained that the first step in building a digital supply chain is adopting technologies. This may be a trial-and-error effort, as companies have different digital needs. A good place to start, though, is to select a solution that integrates into an existing ERP system. RFgen mobility solutions provide connectivity from mobile devices to back-end systems, allowing for the seamless flow of data throughout the supply chain.

However, data sharing is far from the only capability of a digital supply chain. There are other innovations that business leaders can integrate into the supply chain that promote efficiency and accuracy. For instance, the RFgen white paper "Tomorrow's Warehouse Today: Three Technologies for Exceptional Operational Efficiency" highlighted voice-enabled picking. By adapting supply chain processes to accommodate for voice-enabled picking technology, companies can increase their accuracy and complete shipments on time.

Whatever route businesses take, training workers in proper use of the equipment is integral for achieving optimized efficiency.

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