Digital Supply Chain – The Enabler of Business Innovation

Posted: 11/20/2018 - 05:34
We are in the midst of a perfect storm. Customers are becoming more informed and demanding, and therefore, organizations are rapidly implementing technology (IoT, AI, machine learning and blockchain) to address these demands. This hyper-competitive environment presents organizations with the opportunity to rethink business processes in a way that places the supply chain within the “eye of the storm.” 
 
Companies leading the new age of retail are already adapting to this innovative model, enabling them to bring new products, delivery models and services to the market.  
 
Here are just a few examples. 
 
From Mass Production to Mass Customization  
 
As customers increasingly expect individualized product options, companies must evolve their supply chain business processes to meet these demands.  
 
From the design of a product that can be customized to order from a base model to the logistical processes that deliver these high volumes of smaller batches (or even a single unit) to the customer, Industry 4.0 and Smart Factory initiatives are popping up all over the world. 
 
Companies supporting individualized products at scale are redesigning their plants to move away from continuous production lines that manufacture set quantities of a narrow set of products and toward manufacturing cells that can yield flexible quantities of various product configurations.  
 
From Selling a Product to Delivering a Solution  
 
There are also new ways of engaging with the customer. Leading companies are no longer pursuing the single sale of a product, but rather, the development of a relationship that requires the customer to pay on an ongoing basis for a service. In this model, because the customer is now using the product as a service, the supplier is not only the supplier, but is also the party responsible for maintaining and servicing the product. 
 
For example: 
 
  • Paying for a drill based on hours of usage or even the number of holes drilled
  • Paying for a pump based on the volume of water pumped
  • Paying a monthly fee for a car based on miles driven 
These examples not only alter the nature of the customer relationship by creating regular, sustained touchpoints, but also require the manufacturer to design and build assets that are smart enough to capture and share information about usage (for billing) and performance (for maintenance). As such, the supplier/customer relationship becomes a continuous exchange, with the ability to drive both customer loyalty and insight, as opposed to one single payment. 
 
On the flip side, if the asset is not in working condition, then the customer is not using it and the manufacturer is not getting paid—a lose-lose situation.  
  
From Cost Reduction to Increased Revenue 
 
The digitization of the supply chain through innovative technological solutions is not only a way to reduce costs but it can help expand an organization’s vision. When digital supply chains shift from reactive to predictive, setbacks can be avoided and operations will run smoothly regardless of external factors.  
 
Having a streamlined supply chain from end to end will help get products to consumers faster, delivering on high expectations and ultimately creating long-lasting customer relationships.  
 
We can now drive innovation, revenue and growth by utilizing the data, predictive analytics and innovation that a digitally enabled supply chain provides.
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About The Author

Richard Howells's picture

Richard Howells has been working in the supply chain management and manufacturing space for over 20 years. He is responsible for driving the market direction and positioning of SAP’s Supply Chain Management solutions. Prior to joining SAP in 2004, he spent 15 years with Marcam Solutions as VP of Marketing for the company’s Process ERP solutions. He has also implemented ERP and SCM systems at companies such as Nestle, Gillette, Colgate Palmolive, Rohm & Haas, Wyeth, Royal Worcester Spode and Dairy Crest. Richard holds a Bachelor of Science degree in Computer Science from the University of Mid Glamorgan in the UK.