Smart digital supply chains can drive efficiency and agility

05 March 2020 Consultancy.eu

The advent of advanced digital technologies is transforming supply chains globally. New ways to harness data and automation are enabling organisations to extract greater efficiencies, drive top-line growth, reduce risk, act with increased agility, and gain greater control and visibility of the end-to-end supply chain.

In a new report, titled ‘The value of the smart supply chain’, experts from PA Consulting outline what is driving the shift to smart supply chains, and shed light on the benefits that can be expected once some form of maturity has been reached.

How mature is your organisation’s smart supply chain vision?

What’s driving the shift to smart supply chains? 

Cost pressures
For most organisations, the push to digital is driven by the search for new ways to reduce costs. Increasing globalisation, lower barriers to entry and greater competition, combined with deteriorating margins driven by market micro-segmentation, all make cost reduction an imperative.

Advances in technology
Technology such as cloud computing, mobile devices and automation enable the supply chain to connect with other parts of the organisation. They facilitate streamlined processes, support data-driven decision-making and reveal new cross-functional opportunities. 

Changes in consumer or customer behaviour
Customers move in a digital world where they want sustainable products supplied with immediacy and personalisation. At the same time, brand loyalty is declining and customers are getting more savvy on price.

Rate your organisation’s understanding of how the smart supply chain can unlock hidden valueNew business models
Integrated supply chain systems are becoming the foundation for new business models. For instance, businesses are exploring servitisation models through connected products to deliver customer-centric services, or deploying e-commerce platforms to better connect with both consumers and customers and achieve alternative revenue streams. 

Fear of being left behind
Four in ten organisations are motivated by fear of being left behind as their competitors start making digital moves. Failing to keep pace risks losing market share, driving away vital talent and neglecting customer demand for new products and services. Leaders should replace the fear factor with a view of the upside, and embrace the opportunity and the value waiting for them.

What are the main benefits of a smart supply chain?

Enhanced visibility and transparency
Data from digital systems reduces errors by removing data collection and manual reporting processes. Data visualisation and analytics are enabling supply chain leaders to make effective decisions on managing inventory, reducing overall cost and lead time. They also improve risk management by helping organisations identify and address risks earlier, and support the sustainability agenda by enabling organisations to trace materials back to their source. 

How much value will the smart supply chain deliver you over the next one to three years?

Cost reduction
Improved visibility of supply and monitoring of process status is enabling reductions in inventory, improving the balance between supply with demand, and enabling predictive maintenance and real-time process interventions. In combination, this is supporting greater asset utilisation and end-to-end cost reduction. An unprecedented degree of precision helps some organisations achieve a reduction in baseline operational costs of more than 15 per cent, and free up time and energy for growth. 

Enhanced customer focus and service
Data from smart supply chains helps organisations understand how customers buy and use their products and services. This greater intimacy can be a springboard for developing new offerings that meet customer needs and preferences, opening up new revenue streams. 

Furthermore, digital enables organisations to provide customers with the immediacy and personalisation they’re beginning to expect, supporting customer satisfaction, service levels and retention. 

Support for agile and dynamic operating models
In fast-changing markets, organisations must stay agile to compete successfully. That includes being able to adapt their operating models to respond to new demands, and to identify and seize new opportunities. 

What level of smart supply chain investment is your organisation expecting over the next 12 months?

Performance improvements
Performance improvements stem from a combination of cost reductions, quality improvements and increased capacity for growth. Digital technologies in the supply chain can help deliver all of these. For example, using artificial intelligence and machine learning can optimise production lines to improve yield.

Further opportunities will stem from organisations using the same insights with their suppliers to optimise their products and supply.

George Marinos, smart supply chain expert at PA Consulting and lead author of the report, said, “Every leader should look to the smart supply chain to power the possible in their organisation – the opportunities are too considerable to ignore.“