Supply Chain & Logistics: Digital Technologies Realign the Traditional Supply Chain

Not that long ago, the idea of a digital supply chain referred to a relatively small handful of tech-savvy companies who sold and distributed digital products, whether it was e-books sold by Amazon, MP3 music files sold by Apple, or movies sold by Netflix. While those companies helped familiarize consumers with the idea that billions of dollars of products could be sold without the need for a physical supply chain -- and without production, warehousing or transportation costs -- technology has advanced so quickly that today, even the most traditional type of manufacturers are signing onto the digital supply chain revolution. "In order to be a high-performing supply chain, you can no longer think linearly," says Gary Hanifan, North American lead for Accenture's Operations group. "You need to think in terms of a network that leverages SMAC (social, mobile, analytics and cloud) technologies, along with machine-to-machine digital conversations and instant visibility throughout the supply chain of information."

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For instance, Hanifan notes, manufacturers are using telemetry within their manufacturing units so the machines can digitally tell you their exact needs with regards to maintenance, inventory, bottlenecks and the like. And it's not just the high-tech industry and online storefronts that are tapping into the digital side of their supply chains, he adds, pointing out that he's been working with white-good appliance manufacturers, food and beverage producers, health care conglomerates, automotive companies and consumer packaged goods manufacturers on various projects.

"If you look outside the four walls of manufacturing, you're now starting to see information flowing instantaneously," he says. "Think of a specific point of sale, maybe at the retail level, where somebody pulls a product off a shelf and purchases it, and that transaction is shared instantaneously all the way back up the supply chain."

The four distinct advantages that digital supply chains will offer, Hanifan says, are that they are connected, intelligent, scalable and rapid. "We'll see unprecedented real-time visibility, so that every single point on that supply chain simultaneously has the same information. You're going to be left behind if you're not using digital technology to enhance your visibility throughout the end-to-end supply chain."

One of the most popular digital concepts, according to Hanifan, is an analytics center of excellence, also known as a control tower, where manufacturers are able to monitor both the fulfillment and transportation of their products, as well as the demand planning and supply planning processes. Companies are using digital technologies not only for self-diagnostics but also to better understand the analytics behind failures, tracking all the way back up the product life cycle with the goal of improving the engineering of the product itself.

Not every manufacturer will embrace digital supply chain management as a core competency, Hanifan notes, opting instead to partner with a third party well versed in these new capabilities. But for those companies looking to invest in digital, he suggests they focus on just three or four KPIs, such as forecast accuracy, perfect order or on-shelf availability, and then identify which capabilities will actually "move the needle" -- not just within a single silo of the company, but across the entire enterprise. Then, they need to do a capability assessment to determine, "Where's the skill level that we need to actually implement these changes and run our business at this new level? Where is our team now, what is that gap, and then what can we do to bring our team up to speed quickly and efficiently, and have that be a long-term capability investment?"

Learn how high-performing supply chains outdo the competition at www.industryweek.com/supply-chain/how-get-more-your-supply-chain.

Ultimately, Hanifan believes, digital supply chains will require "a higher order of thinking, as it will impact costs, revenue, brand, risk and all the other areas that are paramount in a manufacturer's business strategy."