By 2025, more than 50% of supply chain organizations will have a technology leadership role reporting directly to the chief supply chain officer.(Gartner’s survey, February 2021) This percentage will rise with the progression of digital supply chain initiatives. We then look at the future of digital supply chains transformation…
Today, more than ever, it is a strategic imperative for supply chain organizations to wonder ‘What will be the Future of Digital Supply Chains?’. What does it mean for a supply chain to be digital, agile, connected, and sustainable? And to answer those questions, we asked Shaun Philips, Product Director at QAD DynaSys and Ariel Weil, QAD DynaSys’ CEO to give us their predictions of the future of supply chain technology.
What is a Digital Supply Chain?
As a Product Director, how will you define Digital Supply Chains?
Shaun Philips: As we know recent years have brought us the digitization of everything, from the way we travel, to the way we shop. Supply Chains are no different and in fact, have led the manufacturing world in the adoption of digital technologies.
Digital Supply Chains are the appropriate and effective application of digital technology to supply chain management and the associated decision making. Digital Supply Chains act and think differently to traditional supply chains. They have different inputs and outputs, they have different stakeholders, and different business processes.
Digital supply chains are:
- widely connected to both internal and external systems and data sources.
- ultra-responsive due to their ability to receive near-time demand and supply signals and rapidly anticipate risks or opportunities.
- more inclusive and collaborative. Collaboration occurs between stakeholders that transcend functional silos and even business entities.
- highly intelligent. In a digital supply chain data is an asset to be leveraged to extract value, not an expense to be minimized.
Digital supply chain planning drives faster, more responsive, more agile, higher-quality planning decisions. Technologies such as GPS tracking, radio frequency identification (RFID), smart labels, and Artificial Intelligence all play a part in a digital supply chain.
Across industries, organizations are accelerating digital transformation for growth and profitability. According to an industry analyst, 63% of leading organizations report increased funding of digital transformation. What are the digital challenges for your customers?
Ariel Weil: Customers using traditional supply chain technologies often struggle with making accurate decisions in a timely way with the correct data.
The problem with traditional models is the focus inside the 4 walls of an enterprise. For example;
- with a traditional planning model data is sourced and stored within the four walls. Parameters such as lead-times are set once and rarely challenged again.
- with a traditional planning model the SC actors exist within the four walls. Internal demand planners and logistics teams. Collaboration is white-board centric.
- with a traditional planning model the applications and databases reside within the 4 walls of the IT department. This limits the ability to share and source externally.
Digital Supply Chains will help our customers to mitigate these limitations. It help to address the major challenges to accurate and timely planning decision making:
- with a digital planning model, Data is sourced globally. Digitalization uses advanced connectivity in the cloud to leverage data from more sources, internal and external to the organisation, more frequently enabling planners to make the right decisions at the right time. Digital technologies also reduce plan errors due to poor quality data. Machine learning is able to identify and adjust rogue data.
- with a digital planning model the design may be dynamically updated. Digital Supply Chain models are living things that continuously adapt using machine learning and IoT connectivity to enhance the quality of the planning decision. Digital models make a better real-world representation.
- with a digital planning model the actors may be internal, external, human, or machine. Digitalization uses intelligent collaboration techniques to identify processes, risks, alerts and facilitate resolution using social media type experiences. Digitalization includes natural language and conversational analytics to ensure the right data is available at the fingertips of the decision makers.
So, in summary, with a digital planning model, supply chains become more responsive, and more agile, enabling planners to anticipate and respond to disruptive events.
What are the next big challenges of the future of supply chains ?
Supply chain agility is one of the biggest things to impact the future of the supply chain world. From your point of view, what are the next big challenges of the future of supply chains ?
Shaun Phillips: If you had asked me that question in 2019 I may have given you a very different answer but the truth is the pandemic has refocused objectives for many manufacturers. The year 2020 was a year of supply chain lessons learnt. The focus on growth and margin is still important but no longer at the expense of risk.
Supply Chain practitioners will have several key challenges over the next few years.
- Post-pandemic, workers are becoming more transient. We can no longer afford to rely on long-term in-house expertise. We may increasingly be using short-term outsourcing often referred to as the “Gig” economy for both simple and complex tasks. But it is not just talent which will be outsourced in the Gig economy. Supply chain operations such as distribution and warehousing will also use this approach facilitated by companies such as Uberfreight and DHL. The Gig economy is based on utilising opportunistic supply, it is very different to traditional outsourcing. Also, to support this approach Supply Chain technology will need to have flexible modelling and a higher degree of external connectivity.
- The next big disruptor in the future of supply chains is Sustainability. The rising prominence of Corporate Social Responsibility initiatives is bringing an increased focus on supply chain sustainability. And a big part of this will focus on the circular economy. A supply chain analyst wrote in 2019 that by 2029, the only economy will be the circular economy. And I believe to a degree that will be correct. The reason is that there are so many independent forces driving the cause for supply chain circularity; such as scarcity of raw materials, consumer buying preferences, Regulatory Controls, rising Commodity Prices, as well as CSR & ESG mandatory disclosures.
Moreover, circularity does not happen to an individual manufacturer, it happens to a Demand & Supply network. Therefore Demand & Supply planning will also occur at a network level requiring more comprehensive forms of collaboration and network optimization than currently exist.
- Finally, lessons learnt from the pandemic have taught supply chain Resiliency. Supply chains can no longer operate with visibility that ends at the loading bay. There is a need to build visibility and resiliency across the total supply chain from raw material to end consumer. This won’t protect us from the next pandemic but it will provide more precise impact analysis and consequently more precise mitigation.
Ariel Weil: Indeed, the digitization of supply chains is a long journey and we have some ways to go. We will continue to see opportunities from emerging technologies and we are yet to see the mainstream adoption of Blockchain or other forms of distributed ledger technology–and maybe we’ll never see it. We should expect the adoption of 5G communications and the advancement of quantum computing will have a game-changing impact on supply chains.
QAD DynaSys Next Gen Digital Suply Chain Planning technology
We are evolving from traditional supply chains to digital, agile, connected, and sustainable supply chains. How does this transformation manifest itself at QAD DynaSys?
Ariel Weil: In 2021 a supply chain is no longer a cost centre to serve operations. Supply Chain is a point of competitive differentiation. It drives growth and margin, it minimizes risk, and provides a clear path to navigate even the most black-swan of disruptions.
At QAD DynaSys, we have been committed to supply chain planning excellence since 1985. We have developed some fantastic features to support and anticipate our customers’ future needs. But market perspectives are rapidly changing. Thus, we need to go quicker. Our solutions need to provide value faster. QAD DynaSys is uniquely positioned to deliver the next generation of digital supply chain planning technology.
Finally, the digitalization of supply chains brings immense capabilities. We are living in the era of the democratisation of digital technologies. I believe that Digital Supply Chain Planning can be available to any manufacturer without major investment nor disruption. At QAD DynaSys, our raison-d’etre is to provide a supply chain planning experience that evolves with the customers. In other words, an experience that scales in the cloud as they grow, an SCP experience that anticipates the customer needs and dynamically adapts the planning model. In much the same way that Netflix can suggest a movie based on learnt experiences, our vision is to provide a preemptive planning solution that suggests where and how planner intervention is required; and equally where it is not.
It is imperative for organizations to get a real interest in the future of digital supply chains in order to replace long, manual processes and highly organized manual communication management systems and gain in productivity and minimize risk.