Digital Supply Chain Management: Supply Chain 4.0

With the introduction of digital supply chain management, supply chains across industries have seen greater efficiency and improved visibility. Traditional supply chains are quickly becoming a thing of the past now that supply chain 4.0 has made its impact on businesses worldwide.

The Shortcomings of Traditional Supply Chains

Despite ever-evolving technology, supply chains across industries still face several challenges. Especially if companies rely on the ‘plan and react’ strategy employed by traditional supply chains, they will have a much more challenging time implementing strategies to improve their supply chain.

A traditional supply chain relies on a linear approach wherein each step is dependent on the one that precedes it. Although it makes logical sense for the flow of products to go through a process of design, procurement, order, and sale, failure at any point in this process can go virtually undetected for days. As a result, companies have poor visibility and may miss deadlines — both for inbound goods, causing production delays, and outbound shipments causing their products to arrive late. This, in turn, can lead to unsatisfied customers and poor reviews.

Not only are traditional supply chains complex and have several moving parts, but the entire process is inflexible and can crumble under unexpected changes. Unlike digital supply chain management which continuously analyzes real-time data, traditional supply chains rely on historical data. Because they can only use historical transactions, they often do not catch problems until after they have occurred.

The lack of visibility and potential for failure is unacceptable in today’s market. So instead of sitting back and hoping that enough planning will solve every problem, many companies are implementing a supply chain digital transformation.

What is a Digital Supply Chain? 

Similar to traditional supply chains, the goal of a digital supply chain is to increase visibility within a company so that it can better understand risks and respond to problems. However, the traditional supply chain is much less effective at enhancing visibility than digital supply chains are.

Digital supply chains offer companies a way to see data in real-time so that they can respond to problems as they occur. Not only can companies collect more data regarding their supplier performance and customer needs, but digital supply chains offer the ability to automate supply chain processes and form a more connected supply chain.

Further, digital supply chains help form and maintain better relationships with suppliers which can help mitigate sources of disruption. These more flexible relationships work to integrate both internal and external data systems so that there is constant two-way sharing between suppliers, company leaders, and all stakeholders.

Digital supply chains are also much more customer-centric. Not only does the use of real-time data analysis benefit companies, but provides a more accurate prediction of timelines and allows customers to better track the products that they order. This enhanced visibility can definitely improve customer relationships. 

The Benefits of Supply Chain 4.0

There are many benefits that come with adopting a digital supply chain. Supply chain 4.0 not only automates processes to improve supply chain planning but also inherently creates a more connected supply chain that improves visibility and efficiency.

Increased Efficiency 

With the induction of supply chain 4.0, companies have begun to see more efficiency in their processes and work to combat areas that contribute to disruption. By utilizing the Internet of Things and embracing advances in robotics, companies can now focus on automating their systems to drastically improve performance. Yet, robots can do more than just crunch numbers. In fact, they can handle materials and almost completely automate all warehouse processes, including receiving, shipping, packing and more. 

Greater Visibility 

Digital supply chain management provides companies with greater visibility into every aspect of their supply chain. This allows companies to see each stage of their supply chain in real-time and not have to rely on historical data to make decisions. In addition, supply chain planning can be more precise due to weekly forecasts and better predictive software. Instead of having to rely on manually identifying challenges and risks within a supply chain, the integration of digital supply chains will automatically identify risks and can even suggest ways to mitigate those risks.

Integrated Planning 

Digital supply chains that utilize integrated planning can help reduce and prevent waste as well as maximize efficiency within each step of the supply chain. By using software, such as ERP software, companies can engage in better supply chain planning from inventory optimization to manufacturing planning to financial planning.

In addition, demand planning can help companies better anticipate and respond to challenges that arise due to market fluctuations so that sales and operations planning is efficient. Demand planning software can help prevent the purchase of too much or too little material so that companies can ensure optimal profits.

The Future of Supply Chain Digital Transformation

The supply chain digital transformation will continue to improve the systems that make up a successful supply chain. Not only does the role of ERP in supply chain management continue to improve the analyzing and collection of data, but the use of supply chain software to reduce waste and mitigate risks has revolutionized supply chain management.

The future of the supply chain is rooted in digital technology and enhanced automation. Among some of the key features of a digital supply chain, cloud integration can be useful for real-time data analysis and better communication among stakeholders. Further, the use of AI and automation will continue to reduce waste and decrease error. Digital supply chains will become more important as companies seek to solve internal and external problems as well as predict and prevent challenges. The future is now, and automated technology will revolutionize supply chain processes.  

QAD Supply Chain Management Solutions

To integrate a digital supply chain into your business today, contact the professionals at QAD. Not only can QAD supply the software to support a connected supply chain for your business, but its enhanced data collection and analysis capabilities can drastically improve your supply chain.