What’s the core difference between today’s supply chain and the digital supply chain? Look down at your desk. What do you see? If you see paper, pen, and a computer, you see the typical, modern supply chain. If asked, could you provide the latest information on your current automation, key performance indicators, data, use of IT applications, and finance government? The chances are good that much of this information is stored digitally. However, you would probably need to look through some of the physical, tactile paperwork to find all of the information. Also, is the information stored only your computer or a server? Now, how long is that going to take you?
This is a model example of why the physical and digital supply chain must merge. The use of paper in modern business and the supply chain is tantamount to inefficiencies. What happens if you have the right documentation but your business partners in another city have no clue what is going on? The answer is simple:  your information is living in a world of silo-based tracking. This independent, unconnected tracking of data may feel and seem efficient, but this methodology is severely flawed. Information in one location does not necessarily translate to efficiencies across an organization, and the increasing use of the Internet is making more data available. Yet, supply chain giants are trying to embrace the digital world and increase efficiency in the quest for a more digital supply chain.

Unfortunately, the results of a 2015 report on the use of digital efforts in the supply chain, created by SupplyChainDigest(SCDigest), indicate many supply chain partners are somewhat out of touch with the best way of leveraging data, analytics, KPIs, and the digital supply chain. Let’s take a look at why this is important and what it means for the future of the supply chain.

What’s Wrong With Today’s Hybrid Supply Chains?

Recall the opening example. This is a hybrid supply chain. Some information is digital, some information is physical, and some information is kept away from the overall scope of the company in local, individualized centers or silos. However, this model is not conducive to modern society. In 26 years, the number of people with an Internet connection has grown from 2.8 million to more than 3 billion.

The number of connections is increasing exponentially every second. It would stand to reason that 20-year-old processes are inherently inefficient when applied to the modern society businesses and consumers. Therefore, the only solution is truly embracing the digital nature of the modern world by making it a fundamental part of modern supply chain management.

The digitization of the typical supply chain is the most significant change in society and history. explains Daniel McMurray. Termed the “Third Industrial Revolution,” the Digital Revolution holds many promises for today’s supply chain partners, and the supply chain needs to change to meet the demands. However, the way of adaption to survive, much like the extinct species of the past, relies on how well these entities respond to their environments. As a result, the true way of adaption requires insight into process automation, KPIs, process management, data collection and analysis, organizational design, and the full integration of IT applications across an organization, which make up the Digital Supply Chain Network.

What Are the Benefits of the Digital Supply Chain Network?

A supply chain is only as strong as its weakest link, asserts Accenture. For supply chain partners who have yet to take advantage of the digital supply chain network, the weakest link is actually every single process, communication, connection, and point in the supply chain. True, some process automation is beneficial, but this information lacks value if not compared against the information from across geographical, physical, or digital boundaries. When a supply chain partner embraces the scope and possibilities of the DSN, some real benefits are realized.

1. Become More Forward-Looking

Supply chain entities have created bad habits when it comes to maintaining a backward-looking approach. in fact, 40.1 percent of supply chain entities work almost exclusively in this manner. However, most respondents in the SCDigest report indicate becoming more forward-looking is the greatest opportunity for use of the digital supply network.

2. Connect and Relate Data Sources

The Internet of Things (IoT) has become a fundamental aspect of a successful, modern supply chain. The IOT is responsible for many improvements in processes, preventive maintenance, and identification of better ways to move products. However, the IOT relies on the sharing of data, and the DSN can catalyze the current limitations of the IOT exponentially. for example, connected devices in the IOT can be used to deliver its data across multiple site, processes, and even organizations. As a result, a more connected system will naturally lead to more connections and sharing of such data.

3. Generate Data-Driven Plans Through Data Visualization

As data becomes more available, this data will be applied to advanced analytics opportunities.  Additionally, the use of data visualization capabilities will make applying data simpler. For example, providing a manager with data from yesterday’s transactions is great, but giving a manager a graph with what time performance faltered will go much further in allowing the manager to change today’s operations to prevent the failures of yesterday. For example, the following graph, produced by A.T. Kearney, emphasizes how data visualizations tools arise from the use of digital technologies, which may be applied to augmented reality, customer self-service opportunities, cloud-based tracking and processing, and precision, local technologies. In fact, the image itself is a form of data visualization.

4. Improve Collaboration

Since data visualization tools help make changes in both the digital and physical aspects of the supply chain, collaboration will be improved.

5. Enter the World of Digital Products and Services

Modern services and products are not necessarily physical. Apps, Netflix, Pandora, and Uber represent real enterprises that are based on the Internet. Some apps, such as Etsy, go a step further by directly linking the creation of goods with customer-generated designs. As a result, the need for embracing change is essential. The manufacturer, a third-party between the seller and the customer, needs to receive customer- or seller-generated data and apply it to production. Furthermore, the benefits of the digital supply chain can be seen in this A.T. Kearney’s graphic.

The age of the paper-based, silo-based supply chain is dying. As the use of local information for local production only grows more obsolescent, the need to embrace the digital supply chain network will be stronger than ever. For supply chain entities, the question is not about how increasing technology will help reach new markets, define new strategies, or reach more customers more adequately. Instead, the question focuses on if the technology can be implemented fast enough to prevent a company’s extinction.