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The Development of The Digital Supply Chain

Amy Hill takes looks at how technology and data is changing supply chains

8Jul

Thanks to digital technologies, we are now more connected than ever. Despite this, many businesses are not using them properly and remain fundamentally disconnected - late payments are still rife, virtual invoicing is not being properly exploited, and financing for SMEs is too low.

To utilize business relationships to their full potential, companies need to engage with their partners in the supply chain - from suppliers to customers. This not only helps increase efficiency, it also helps build trust. The key to managing supply chains has always been communication and collaboration at as high a speed as possible, which is digital’s raison d’être. Gartner predicts that by 2018, half of Chief Supply Chain officers in global companies worth in excess of $1 billion, will design and manage supply chains that provide support to digital businesses. They may well have to if they are to maintain any kind of competitive edge.

There are many benefits to having a digital supply chain, the majority of which rest on how much easier it is to communicate. It also greatly helps improve transparency, with all parties able to access the necessary information in real time.

There are a number of things that will be central to digitally enabling supply chains in the near future. One of these is the Internet of Things (IoT). The IoT is set to spread its tentacles throughout the supply chain. It will control the external environment and execute decisions independently, bringing unprecedented transparency in terms of customers, products, locations and assets. The IoT uses sensor-embedded factory equipment to communicate data about parameters, for example the temperature of the machine, and also help change equipment settings and process workflow. This not only helps optimize performance, but also safety.

Another thing set to have a massive impact is prescriptive analytics. Predictive analytics are already providing a massive boon to the supply chain. However, these are moving to a more prescriptive model - both predicting outcomes in the traditional sense, as well as predicting outcomes under multiple 'what-if' scenarios, which help to provide insights into things that may have gone unthought of.

Perhaps the most important aspect of a digital supply chain is social media. There are business platforms starting to emerge that use social technology in conjunction with hard business transactions, connecting users across systems. Such platforms are available to all businesses in the chain. These are accessible by mobile and on the move, and help foster a sense of community. All of this helps to increase transparency in the supply chain, with everyone included and able to access the same information in a shared language. The obvious issue with this, and it may be why many are still proving to be a laggard when it comes to embracing the digital supply chain, is security. If companies can be assured of this though, there should be no reason that they are not turning to the digital supply chain.

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