Digital Supply Chains and Why They Matter

With the rapidly evolving technology landscape and increasing customer demands, businesses can surely benefit from hopping on the digital bandwagon. In a study by McKinsey & Company, 70% of respondents reported using automation in one or more business processes to streamline repetitive day-to-day tasks.

Supply chains are the heart of businesses — and society as a whole, for that matter. They are responsible for getting products to customers, including food, medicine, apparel, and other necessities. Supply chains can benefit richly from digitization, seeing faster and more flexible operations. Learn more about the impact of digitization on supply chains in this post.

What Is Supply Chain Digitization?

Supply chain digitization replaces manual or analog processes — like warehousing, order fulfillment, and manufacturing — with digital solutions. Companies can use specialized software to store, organize, and access internal supply chain data from a convenient platform. They can quickly obtain the information they need, whether inventory levels, transaction history, or raw material storage locations.

Companies can also retrieve data from external sources, such as competitor prices, socioeconomic data, in-demand products, and other market trends. Whether it uses custom-made or out-of-the-box software, a digital supply chain aims to simplify data management, operations, and decision-making for small and large businesses alike.

What Caused the Digitization of Supply Chains?

What sparked digitization in supply chains? Let's look at a brief history of supply chain software and some events warranting its development.

The Origins of Supply Chain Management Software

The concept of software-as-a-service (SaaS) goes all the way back to 1999. Companies could sign up for subscriptions to access services in a cloud-based platform. They could use these features anywhere and anytime with a stable internet connection.

The internet and computers paved the way to digitizing the supply chain. Businesses could accept and submit orders via email, allowing them to obtain electronic paper records to maintain precise inventory levels. Invoice creation tools, spreadsheet software, and other business management tools began to evolve around this time. They assisted with recordkeeping and saved substantial amounts of time.

Enterprise resource planning (ERP) platforms also inspired supply chain modernization. ERPs date back to the 1960s and were designed to help manufacturers track and manage inventory more easily. However, early ERPs didn't allow for connecting cross-functional data points.

As supply chain leaders gained more access to information from ERPs and other sources, they explored viable ways to use this data to:

• Gather new insights.
• Overcome challenges.
• Make better business decisions.

Fast Forward to 2020

As we all know, the COVID-19 pandemic took a toll on many business operations, especially supply chains. The global lockdown considerably disrupted the supply chain, causing delays in production and manufacturing, shipping, and transportation. In response to these challenges, supply chain managers had no choice but to step up their digital transformation game.

Numerous technologies have helped businesses revamp their existing supply chain designs, many of which combined traditional paper-based and IT-supported processes. Some examples of these digital solutions include:

• Artificial intelligence (AI) and machine learning.
• Blockchain technology.
• Global positioning systems (GPS).
• Radio frequency identification (RFID).
• Embedded sensors.

To ensure timely deliveries and thrive in a competitive market, companies must optimize their supply chain processes from end to end. A multienterprise platform can simplify a variety of tasks, including product development, quality assurance, vendor management, sourcing, and shipping.

Companies can create more resilient, efficient, and collaborative workflows by embracing digital supply chains. Digitization is a vital step in combatting future obstacles in a post-COVID world.

How Does Supply Chain Digitization Work?

Digitization aims to optimize the supply chain by addressing specific challenges, such as order fulfillment delays, demand forecasting difficulties, and cost increases. Automating various processes can foster a more productive, adaptable supply chain overall.

While supply chain digitization can look slightly different for each business, it usually covers these three areas:

1. Digital data management: Supply chain software can gather large amounts of data quickly and accurately. It can record and analyze customer information and transaction records to facilitate distribution, demand forecasting, and other processes. Additionally, it can receive and process online orders for fulfillment, provide precise inventory counts, and update stock levels as needed.
2. Process integrations: Different supply chain technologies can integrate with each other, creating a comprehensive, end-to-end system. Unifying these processes enables better cohesion and transparency between different supply chain teams.
3. Technology in physical processes: A digital supply chain streamlines numerous physical tasks significantly. For instance, robotic automation in warehouses can quickly transport and retrieve items. Furthermore, real-time inventory data helps improve picking paths.

Benefits of Supply Chain Digitization

By choosing to digitize your supply chain, you can make better decisions for your brand, save money, ensure a more efficient workflow, and ultimately provide a better shopping experience for your consumers. Here are some perks you can reap from a digital supply chain.

1. Increased Productivity

Digitization speeds up many processes, like invoicing, product picking, and data entry. A digital supply chain reduces the burden of repetitive, mundane processes across multiple departments, allowing staff to tend to more pressing tasks.

Automation also eliminates human error. That means your team doesn't have to go back and fix those pesky mistakes, thus saving time and increasing productivity.

When you integrate supply chain software into your e-commerce store, you can automatically receive orders and prepare them for fulfillment. In turn, you can minimize lead times and accelerate your overall supply chain. Businesses with efficient supply chains can meet market demands faster, increasing their perfect order rates by up to 40%.

2. Cost-Effectiveness

Automated software provides real-time data regarding performance, inventory, and other important aspects of your supply chain. This information can help you optimize different processes, including: 

• Operational logistics
• Raw material flow
• Inventory levels
• Demand forecasting
• Resource planning

By improving visibility into your inventory activity, you can better manage your finances and reduce unnecessary expenses. For example, an automated system can notify you when it's time to reorder inventory. In turn, you can avoid high stockout costs.

You can also replenish items more accurately, helping you avoid dead stock and high inventory carrying costs. In fact, studies show that going digital can cut supply chain costs in half.

3. Cohesion and Organization

Let's face it — depending on email threads and spreadsheets to obtain the information you need can quickly lead to chaos. This method is both time-consuming and stress-inducing. Not to mention, it increases the risk of human error. 

Supply chain management software provides a single and accurate interface for business information, improving organization and streamlining communication across your entire team. A digital supply chain lets you organize and retrieve the data you need in seconds — leading to a lot less hassle and fewer headaches down the road.

4. Improved Decision-Making

Agility and quick decision-making are fundamental in the logistics industry. Supply chain management software provides real-time data, enabling companies to make faster and more informed decisions. For instance, tracking information about inventory levels across multiple locations can help you choose the best course of action for allocation, restocking, and order fulfillment.

Another example is tracking consumer buying patterns and historical sales data. This information can help you make accurate predictions to plan inventory types and quantities in warehouses accordingly. That way, you can save a few dollars and ensure more timely deliveries.

A digital supply chain lets you collect and assess large amounts of data with minimal time and effort, using this information to:

• Plan and build strategies for different scenarios.
• Reduce wasted materials and costs.
• Improve customer experience and sales.
• Predict the market and optimize your operations.

5. Greater Chance of Customer Satisfaction

Supply chain digitization aims to coordinate all activities into one seamless process, leading to:

• More accurate order filling and billing.
• On-time deliveries.
• High-quality products that arrive in good condition.

All of these factors are integral to a successful order and the customer's shopping experience. A digital supply chain allows the buyer to track the delivery process, receive push notifications, and access real-time views of their items' locations. Digitization gives the customer more visibility into their order, boosting their overall experience with your brand.

Automating tasks can also contribute to customer satisfaction by reducing human error and yielding better-quality products. Companies that digitize their supply chains and fulfill orders more rapidly can increase their customers' satisfaction by up to 30%.

How to Get Started With a Digital Supply Chain

Transitioning from a conventional supply chain structure to a fully digital one might seem daunting and complex. Fortunately, there are a few simple measures you can take to prepare for digital supply chain integration.

Whether your goals are to automate manual processes, improve decision-making, or better manage your supply chain finances, here are some steps that can pave the way to a successful digital shift.

1. Examine Your Current Supply Chain Status

First, assess your existing supply chain condition and needs. This is an essential starting point in the digitization process. Consider mapping out a strengths, weaknesses, opportunities, and threats (SWOT) analysis of your supply chain.

This technique can help you identify things that are working well, along with potential risks and complications to address. You might find improvement opportunities you didn't know existed. You can use these insights to set actionable goals for your digital supply chain.

2. Define Clear Goals

After looking at your current supply chain needs, you can start to build sensible goals. What are your short- and long-term expectations from this digital transformation? Some examples might include:

• Decreasing processing and lead times on all purchase orders.
• Reducing the number of backorders.
• Lowering total inventory cost.
• Implementing a better inventory count process to improve accuracy.
• Integrating a more robust quality control program to minimize defective products.
• Improving customer feedback and satisfaction.

Establish clear-cut objectives and key performance indicators (KPIs) to help you monitor your progress. Here are some metrics you might consider using:

• On-time deliveries
• Perfect order delivery rates
• Inventory-to-sales ratio (ISR)
• Reasons for returns
• Days sales outstanding (DSO)

3. Make It a Collaborative Effort

While supply chain digitization does relieve workers of manual labor, human decision-making and problem-solving remain just as essential. An educated workforce is key to successful digital supply chain execution. Therefore, a comprehensive training program is crucial.

Conduct training sessions surrounding the supply chain technologies you plan to implement. That way, your staff and external business partners are well-equipped to handle these new software and automation features. Break down these new processes into easily digestible formats, like manuals and guidebooks, presentations, and online tutorials. Developing user-friendly training materials can make the digital transition much easier for employees.

Work closely with your information technology (IT) team and ensure they have access to these resources. They can assist in distributing these materials to the supply chain team, as well as integrating the actual technologies.

4. Choose a Knowledgeable Supply Chain Software Partner

When switching to a digital supply chain, you don't have to navigate the process alone. A reliable software provider is well-versed in the e-commerce industry, understands different supply chain challenges and knows the strategies to address them.

Software developers specialize in various technology solutions to help you meet your supply chain goals — whether facilitating your warehouse processes, fulfilling orders quicker and more accurately, or better managing your inventory levels.

Osa's Role in Creating a Digital Supply Chain

If you're looking to upgrade your supply chain with automation and cloud-based solutions, our team at Osa Commerce is ready to assist you. Our platforms aim to remove the hassle from your supply chain once and for all. That way, you can focus on what matters most — meeting your customers' demands and needs.

When you partner with us to create a custom digital supply chain platform, you can seamlessly track real-time performance across orders, shipments, returns, and store locations. We can minimize the time you spend unifying data points across disparate systems.

Supply Chain Technologies We Offer

We've developed an array of software platforms to meet different supply chain needs. Here are some of the many features you can leverage with our innovative supply chain technologies:

• Collaborative visibility: Our Collaborative Visibility Platform lets you track, monitor, and deliver on all inventory activities from the cloud. You can sync data across all channels and systems within your supply chain. Create a more comprehensive and connected supply chain with Osa's Collaborative Visibility software.
• Data order management: Our blockchain- and AI-powered Data Order Management platform makes it easier than ever to optimize your shipping and delivery processes. You can track orders, ensure accurate data across channels, receive inventory alerts, and securely encrypt digital payments.
• Warehouse management: Osa's Warehouse Management Hub is designed to optimize distribution center operations by increasing efficiency, saving time, and cutting costs. You can access a wide range of features through this platform, including inventory forecasting, robotics integration, returns management, reporting analytics, and many more. Speed up repetitive processes, meet complex demands, and make more informed warehouse decisions.

Contact Us for Digital Supply Chain Management Solutions

Digitization is a critical step in navigating supply chain challenges. When you work with Osa Commerce for digital supply chain optimization, you gain an experienced partner who cares about achieving your business goals as much as you do. Our in-house tech team can help you address your supply chain concerns with customized solutions and integrations.

There's no time like the present to bring the concept of supply chain digitization to life. We would love to help you make this vision a reality. Get in touch with us to learn more about our digital supply chain solutions today!