Supply chains are present everywhere. From the largest global enterprises to our own households, everybody is involved in the supply chain. In the consumer packaged goods industry, we need to think about supply chains in terms of order management, planning, manufacturing, and physical (or software-based) distribution of the product or service – but the key to supply chain success is making them fully digital.
Consider an item in every household – the common toothbrush. In the past, a toothbrush was just that: a brush used to brush your teeth. The product you buy is the product you use. Modern toothbrushes are now Bluetooth-enabled and can recognize the amount of strength you exert on your teeth, your brushing behavior, and the amount of time you spend brushing your teeth by area. These types of smart products also incorporate services such as recommendations for improved brushing.
This example shows that you need to process more and more data, not just at the backend of the supply chain, but in all stages. If you don’t have digital tracking of the device, it becomes difficult to troubleshoot and help the customer. To keep track of these details and provide the level of service that is needed, you need to have two things: data and a digital supply chain.
In a digital supply chain, all the moving parts and components (order management, planning, manufacturing, and distribution) are connected digitally/electronically. Information created or received in any one place needs to be immediately available across all areas of the supply chain, thereby providing much better insight into supply and demand.
Connectivity across the complete digital supply chain can be accomplished by addressing these eight essential components:
- Sense and Respond: A supply chain is a very complex environment and as soon as you have sensors in place, you can manage it and respond to it. The reason to use sensors is not just to see how you’re doing. You want to optimize this end-to-end process and use analytics to provide early insight and turn this type of real-time information into actionable events.
- Data Synchronization: There is so much information, that if you don’t digitize, it becomes unmanageable. Products need to be managed and tracked on an individual basis. To correlate all the information and data, you need data synchronization so you can make the right decisions about the product from an end-to-end perspective.
- Visualization: When you have a lot of data, the information needs to be filtered, and spreadsheets become cumbersome, so it is much better to provide a visual way of looking at the data. You want to use artificial intelligence and machine learning capabilities that sit behind the data to provide recommendations on the best solution. The ability to visualize and drill down into the data gets you closer and closer to the information needed to take appropriate action.
- Logistics: You need to use data to improve shipment planning and routing of goods, then implement cost optimization to maximize the value of goods that reach retail shelves. You need to ask: How do I get products from the warehouse to the loading dock? How can I get goods from location A to location B in the most economical fashion? Wouldn’t it be nice to see across my total plant infrastructure? Wouldn’t it be better to maximize my use of resources?
- Campaign Optimization: The same thing goes for campaigns, you need to get the best view of what’s happening. If a product, for instance, is not selling in a certain store, there may be some specific real-time action that can be taken to move the product, such as offering coupons, recommendations, or in-store promotions.
- Digitization: The supply chain needs to be digitized end-to-end, and here are a few examples: Companies need to deploy production line inspections, a real-time check of everything that is being produced to make sure they are meeting quality criteria. Electronic checkpoints need to be installed that allows you to see how fast the process is moving and if there are any hiccups that need to be addressed. Finally, you need to know what is on store shelves and how fast products are moving, so you can act quickly.
- Mass Customization: We need to be able to provide customized products for anyone. This may seem easier in a high-value, high-priced product such as a car, but more and more consumers are asking for the same type of capability for mass produced products. Again, if the supply chain is not digital, you will never be able to do this because it’s going to be an enormous human effort to make it happen. If the system is software-defined, you can make changes to the physical components with software commands.
- User Experience: If a product does not meet the quality criteria right from the beginning, it’s a bad user experience. And if it’s not doing exactly what it’s supposed to do, it’s a bad user experience. Companies need to digitize and make sure that the quality is good for every product that rolls off the production line, and track user behavior to get constant feedback and make it better, giving customers a better user experience.
To conclude this series, it must be emphasized that there is a journey to digital. That journey is not just about the digital supply chain; it is about digitizing the whole enterprise. We want to make sure that we can make changes to an environment much faster and in a more consistent manner.
Find out what Gartner says is needed to build and expand your business in a digital world.