What are the advantages and challenges of digitalisation in the supply chain?

Digitalisation and automatisation process
October 17th, 2023
Share :
{{totalComments}} comments

Digital transformation is now a priority for supply chain managers, regardless of the industry concerned. Decision-makers are planning to increase their investment in supply chain digitalisation by 16.5% over the next two years. This is because they want to increase their flexibility, responsiveness, and therefore competitiveness in the long term, notably through new technologies and optimised business operations. In today’s uncertain and volatile world, this is a step all companies simply must take. However, companies must also overcome certain key challenges in this area.

The benefits of supply chain digitalisation

According to the latest survey co-conducted by the Council of Supply Chain Management Professionals and ToolsGroup, a global specialist in digital supply chain planning and optimisation software, 93% of companies say they are actively engaged in the process of digitalising their supply chain. The reason so many companies are investing in digital supply chains is because it offers a significant competitive advantage for their business. 

Reduce costs

Digitalising and automating the supply chain enables companies to improve supply chain efficiency, speed up processes, provide better insights, and cut down manual errors, which all help to reduce total acquisition costs. Logistics teams are thus relieved of low-value-added tasks (such as filling in delivery notes, for example) and can focus their resources on managing more strategic processes. 

Increase productivity

As mentioned above, logistics teams no longer have to fill in administrative documents, (re)enter data or search for information. As Julien Morin, Sales Director of the software division (Easy WMS) at Mecalux, a leading company in the global market for intralogistics systems and storage solutions, points out: ‘Digitalising the supply chain increases the company’s productivity substantially, by around 40%.

Improve decision-making

The use of new disruptive technologies (Big Data, Internet of Things, Artificial Intelligence, etc.) facilitates and accelerates decisions that are to be made; they improve operational efficiency through predictive analytics with data that are constantly up to date. By relying on reliable, relevant and real-time data flows, companies can optimise the management of their stocks and supplies while improving their agility and responsiveness.

Improve collaboration between the various stakeholders

Digitalisation also enables companies to set up smoother communications (via EDI messaging, web portals, etc.) with their network of suppliers and sales partners, thus improving the quality and reliability of supplies and products. In the long run, this translates into better service for the end customer by avoiding stockouts and other inconveniences through a higher level of supply chain management.

Contribute to the CSR strategy

Digitalising the supply chain also contributes towards the Corporate Social Responsibility strategy. Firstly, organisations are able to reduce their environmental impact. According to JLL, the world leader in corporate real estate consulting, a quarter of all road transport traffic is empty.

With the right digital tools, loads can be optimised to reduce the number of trucks on the road and the greenhouse gas emissions they can produce. More broadly, companies can finally drive their CSR approach with the help of appropriate digital solutions, thanks to new technologies’ advanced analytics capabilities.

Companies stand to gain on all fronts by digitalising their supply chain. As a result, they boost their operational, economic and environmental performance.

The major challenges of supply chain digitalisation

There are a lot of challenges involved in successfully digitalising the supply chain. Although the nature of these challenges varies according to each company’s maturity, there are three unavoidable issues arising from technical tools and human factors. 

The information system and data

Today, the main challenge of supply chain digitalisation is still on the technical front. This mainly applies to companies’ current information systems as well as the availability and quality of data. It is vital for companies to implement a solid technical foundation based on clear processes and governance to initiate this digital shift.

Team training

A lack of qualified supply chain employees is also one of the main obstacles to supply chain digitalisation. In this respect, a recent survey entitled ‘PwC’s 2023 Digital Trends in Supply Chain Survey’ underlines that two-thirds of decision-makers expect that digitalising their supply chains will require employees’ skills to be improved.

Organisations need specific skills for their respective industries (data analysis, statistical modelling, demand planning, inventory management, etc.) before they can make any progress in strategic projects like this. However, the supply chain sector is suffering from a shortage of talent. It is therefore essential for companies to alter their recruitment and continuous training strategies so that they can adapt and grow.

Change management

As in any transformation process, team appropriation and the adaptation of the company culture are key. Companies must use genuine change management and adopt effective communication to support teams with this digital shift. Providing teams with appropriate resources is an essential condition if you want to obtain team support and guarantee that the transformation is successful in the future.

This is all the more important as, still according to the CSCMP and ToolsGroup, more than a third of decision-makers believe that fear of change at their company is one of the main obstacles to implementing digital transformation plans in their supply chain.

Successive crises have reminded us of the strategic dimension of the supply chain, with the key words being: agility, traceability and security. As such, automating and digitalising the supply chain and possibly other business processes, as well as digitalising procurement, represent a whole new lever of value creation. Although the vast majority of companies have initiated this digital shift, they still need to adapt to this new situation in order to reap the full benefits.