The VOX Group

Digitalisation’s disruption of supply-chain management

There’s been a lot of talk about what digitalisation is over recent years – and how it is upending every industry from e-commerce to manufacturing. Digitalisation, for the unaware, is simply the process of leveraging digital tools to streamline and improve your operations, and perhaps even provide new revenue opportunities.

However, this first relies on a company ensuring that the information it needs has been digitised, which is the conversion of offline information into a digital format – for instance, location or quality data. With the explosion of smart technologies, powered by the Internet of Things (IoT), data analytics and artificial intelligence (AI) driven software, there is vast potential to improve every stage of your business’ operations.

And although this isn’t a new concept, there are plenty of reasons why it’s more important than ever to consider where you stand with such technologies. From COVID-19 bringing heavily globalised supply chains to a standstill to organisations reassessing their business models to meet environmental commitments, companies need to consider all avenues for improving their operations. And, in the case of digitalisation, an investment that can result in so many benefits.

Supply chain benefits

Supply chains are no exception to this move towards digital transformation, with several benefits already being experienced. Many supply chains are disjointed and siloed – but digitalisation can help smooth away this friction and integrate disparate departments. There are two ways of thinking about these benefits. On the one hand, digitalisation can be used to save money. And on the other hand it can help to boost ROI.

Some of these benefits include:

1) Faster product distribution can be realised. Predictive analytics can estimate future demand and market trends, for instance, by taking into account things like the time of the year, school holidays or unusual weather projections.

2) Such forecasting can help improve accuracy, making sure the right quantities of goods are delivered at the right times to various stores. With an explosion of SKUs amid a difficult logistics environment, it’s never been more vital to guarantee delivery during what can be short promotional windows.

3) End-to-end visibility, for instance, time-stamped location information can be instantly shared with customers, reducing the need to answer queries or provide updates, whereas data on a product’s condition could allow for a manufacturer to find and respond to damaged goods.

4) Such real-time information subsequently means that companies can become more flexible, with planning a continuous, dynamic and data-driven process – for example, feedback showing constraints could allow for capacity to be found elsewhere.

5) With sensors becoming smaller and more affordable, and a range of cloud technologies gaining traction, companies are able to access more diverse and granular information on their operations than ever and bring all stakeholders to the same page.

6) Efficiency is another major component. Whether this is through automating administrative or manual processes or identifying areas that can become streamlined, this allows companies to better manage their resources.

7) Companies can reduce waste by identifying inefficient or carbon-heavy areas via better oversight – like design, logistics or packaging. Not only does this save money and time, but it could also go towards helping companies to achieve their sustainability commitments.

Digitalisation and the POP industry

Within the point-of-purchase display industry, there’s a number of notable takeaways. Did you know that shoppers make 76% of all purchases in-store and that 68% of these are also impulsive? This means that in-store marketing is central to finding new consumers – potentially leading to brand loyalty and long-term ROI through repeat sales. This underlines the importance of getting POP right. Any issues can result in negative knock-on effects, from wasted resources to competitive weakness.

The displays themselves could also benefit from digital technology in future – for instance, being able to collect more data on consumer behaviour, which has to be collected manually at present. In addition, technological innovations could allow retailers to create customised experiences or interactive displays – either to entertain shoppers or allowing them to find out more information about the product. Tesco’s virtual store in South Korea is one example of how these capabilities can be creatively used. This can help bridge the data collection divide between online and instore retail, as well as bringing customers some of the capabilities they’ve come to expect from e-commerce. However, shopping behaviour is just one piece of the puzzle. There are many more steps to focus on in the supply chain before getting to this stage – and ones that are far easier to implement.

Progress with caution

But companies must tread carefully – building the correct capabilities and creating a supportive culture are both essential parts of a foundation. When applied properly, these processes can be game changers. But, companies need to not be afraid of learning from their failures, instead incubating an environment where quick feedback and rapid changes can take place – reflective of having a growth mindset.

As technology continues to march forward, even more digital disruption is expected across supply-chain management. According to Gartner, by 2023 AI, advanced analytics and the IoT will be employed in supply chains by at least half of large global companies. The past two decades alone have demonstrated how rapidly digital processes can be adopted at scale and help companies get ahead.

Without the insight and efficiency that digitalisation brings, companies will become less and less able to compete. Digitalised services are coming to be expected from clients as standard. And the longer you take to adopt these, the further behind you will inevitably fall. As well as improving client relationships, this kind of digital transformation can also give companies the edge – helping them to become more innovative, competitive and efficient – providing them with the basis for adopting future technological innovations. It’s a win-win situation.

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