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Digital Disruption Gives Rise to Digital Supply Networks

June 6, 2014
To fully realize the benefits of the digital supply network, companies need to develop data analytics capabilities that can help them manage complex, end-to-end supply chains.

Whether you shipped a load of freight, waited for a shipment of materials at your plant, or wanted to quickly re-route a shipment in the face of an unexpected event in what felt like a far corner of the world—irrespective of the nature of it—in the absence of an end-to-end view of your supply chain, you probably experienced frustration or possibly even a sense of helplessness.

Most businesses today typically do not have that end-to-end view, nor do they have the agility to make the changes that many companies could benefit from in the face of volatility that characterizes today’s marketplace.

However, digital technologies can be used to create a competitive advantage. And, so it is with the emergence of digital supply networks.

Replacing the classic supply chain concept—a series of hubs or modules linked by information and transportation networks—a digital supply network is seamless and interconnected through digital technologies such as machine-to-machine, analytics and Big Data, mobile, social media, and the cloud.

Four characteristics contribute to the value of the digital supply network:

1. Connected. Digital supply networks give senior management and their operations teams an unprecedented level of real-time visibility into all aspects of the manufacturing and distribution process. This visibility supports more effective collaboration within an enterprise, and throughout its ecosystem of partners and suppliers. Collaborative tools combined with analytics, for example, can show companies which ports around the world have the greatest capacity for handling shipping, and which ports have the shortest “dwell time” for turning around shipments.

2. Scalability. Digital supply networks promote end-to-end network integration, and they deliver the flexibility and agility that can support rapid expansion into new geographies or growth in new product lines. Through advanced analytics, they can help companies deliver a personalized customer experience on a mass basis.

3. Intelligent. Digital supply networks use analytics, smart devices, mobile and other innovative technologies to deliver actionable insights in areas ranging from shipping times to quality control. They foster the automation of manual processes, helping reduce labor costs and the opportunity for errors that would otherwise require rework.

4. Rapid. Digital supply networks facilitate enhanced responsiveness, including quick changes in product configuration or immediate transfers to new suppliers in the event of an emergency. For companies, that can translate into greater strategic agility and tactical flexibility to handle volatile and unpredictable market conditions.

To fully realize the benefits of the digital supply network, however, organizations will want to develop robust data analytics capabilities that can help them manage complex, end-to-end supply chains—particularly the ability to handle vast quantities of data generated from structured (internal) and unstructured (external and third-party) sources. Many companies find that the best way to do this is by establishing what has become known as a control tower—a shared service center that monitors and directs activities across the end-to-end supply chain, making the most of the enhanced visibility provided by the digital supply network. The control tower can turn data into actionable insights to optimize supply chain operations.

Although a well-established concept, few have evolved the control tower to explore advanced capabilities that use information gathered from across the digital supply network to develop management insights that support executive decision-making. And, better decisions can lead to other operational improvements, positively affecting inventory turns and working capital reduction; the composition of a company’s product portfolio; and product pricing, to name a few.

To avoid being left behind, disrupt your market now. Develop a vision of what a digital supply network could mean for your company. Establish a set of objectives to help you realize your vision. Include your list of desired outcomes; a blueprint encompassing your people, processes and technology; a plan for integrating partners, suppliers and customers into the network; and an architecture and infrastructure that can turn massive amounts of data into valuable information. It’s our belief that first movers have an opportunity to capture significant value from this digital transformation, so the time to begin is now.

Gary Hanifan is the managing director for Accenture Strategy Operations, North America, and these comments are based on remarks he delivered recently at the U.S. Chamber of Commerce Global Supply Chain Summit in Washington, D.C.

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