According to the Harvard Business Review, nearly 90% of global companies have digital and AI transformations underway. These are spread across nearly every sector of the economy and impact nearly every aspect of supply chains and operating models.
Introduction to Supply Chain Transformation
From sourcing and procurement to warehousing and fulfillment to process automation, the modern supply chain is undergoing profound changes.
What Is Supply Chain Transformation?
Supply chain transformation is the reimagining (and restructuring) of a traditional supply chain network by integrating advanced technologies and streamlined solutions. It requires a comprehensive approach focusing on efficiency and agility to ensure competitiveness in an increasingly complex marketplace. Supply chain digital transformation is not focused on small improvements, but rather a total rethinking of the way you operate and the supply chain processes you use.
Importance in Today’s Business Environment
Over the past few years, businesses have suffered significant disruptions that have limited their access to raw materials and goods. The supply chain evolution continues today as competitors adopt innovative solutions to ensure a reliable throughput to meet growing customer demands.
Your supply chain strategy must evolve to deliver robust business continuity and operational efficiency. A solid supply chain transformation plan enables businesses to:
- Increase resilience: Improve your ability to withstand disruptions.
- Enhance the customer experience: Achieve faster delivery times and better visibility.
- Reduce costs: Optimize your processes and reduce your waste.
- Improve sustainability: Reduce your environmental impact and unlock ethical sourcing.
- Foster innovation: Adopt new technologies and collaborative partnerships.
How do you progress with supply chain operations? The key is to maintain a balanced approach between the speed of implementation, your organizational readiness (and capacity) for change, resource availability, and risk management.
The Need for Supply Chain Transformation
Several factors are driving the digital transformation in supply chain processes.
Drivers Behind Transformation Efforts
There’s increasing pressure to reduce operational costs without sacrificing quality. It’s a tall order — especially when you factor in the rising costs of goods and services, labor challenges, and the high cost of capital. Next, add the growing complexity of global supply networks and the push for sustainability. It can all seem overwhelming.
To remain competitive, though, your supply chain strategy must evolve and leverage more efficient, resilient, and cost-effective ways to do business.
Challenges Faced by Traditional Supply Chains
There’s no shortage of challenges within traditional supply chains. Most still rely on manual processes that are time-consuming and prone to human error. This creates severe inefficiencies in inventory management, which can result in costly overstocks and stock-outs.
Without accurate, real-time visibility into your supply chain, you simply don’t have the transparency you need. This impacts your demand forecasting and inventory management, hindering your ability to adapt to changing market dynamics.
Role of Digital Technologies
Digital technologies are front and center in supply chain transformation. Artificial intelligence and machine learning are automating manual tasks and improving accuracy. Advanced analytics are improving demand forecasting, automating reorder points, and powering transportation management systems.
Sensors and Internet of Things (IoT) devices, powered by real-time and near-real-time data, enable operators to make better decisions throughout the supply chain.
Core Elements of Supply Chain Transformation
Let’s take a look at four key steps involved in a successful supply chain transformation.
1. Strategic Planning
You need to have a clear vision of what you’re trying to accomplish. This starts with defining clear objectives that align with your business’s strategy. As part of this process, it’s important to evaluate your current capabilities and identify areas for improvement.
Strategic planning includes building a detailed road map outlining your goals, timelines, and resources.
2. Technology Integration
Once your strategy and goals are defined, you need to choose the technology that will support your goals. If you continue using legacy software or material-handling solutions, you’ll need to make sure any new tools you select will seamlessly integrate. For example, AI integration is key to unlocking efficiency, but you’ll maximize its potential only if it works with your infrastructure.
3. Process Optimization
There are multiple approaches to process optimization, but they all have the same central purpose: streamlining your operations. Common process optimization methods include:
- Six Sigma: using data, statistical analysis, and the DMAIC (Define, Measure, Analyze, Improve, Control) cycle to minimize defects
- Lean manufacturing: eliminating waste to streamline workflows
- Total quality management (TQM): engaging all employees in continuous improvement efforts
- Business process management (BPM): identifying, modeling, analyzing, and improving business processes through structured frameworks
- Continuous improvement (kaizen): promoting ongoing, incremental improvements through active employee participation
- Process mapping: creating flowcharts to illustrate process steps, decision points, and handoffs
- Process mining: discovering, monitoring, and improving processes by identifying inefficiencies
Process optimization requires more than just implementing technology. You need to employ a change management strategy to incentivize your people to evolve and not default to old habits. With any significant change, resistance will be common, even among your top employees.
4. Measuring Success Through KPIs
What is supply chain process improvement? Supply chain transformation is not a one-and-done effort. Optimal efficiency requires consistent improvement. This requires consistent measurement of KPIs to track your performance against your goals. Examples include:
- Operational metrics: inventory turnover, cycle time, perfect order rate, and supply chain costs
- Customer-centric metrics: on-time delivery, order accuracy, and customer satisfaction scores
- Innovation metrics: digital adoption rates, data accuracy and availability, process automation efficiency
Boost Your Supply Chain Transformation With Surgere
Not all supply chain transformation efforts are successful. Partnering with the right technology provider will be critical to your success.
Surgere is an industry leader in digital transformation, helping organizations reimagine their supply chains while deploying advanced technology to track, measure, and implement systemic changes. We can provide you with real-time insights and a single source of truth to optimize your operations and future-proof your supply chain.
Surgere creates and manages the IoT supply chain solutions you need to achieve your goals. Contact us today to see how you can get started.
