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Digital Transformation: The answer to many of your supply chain management pains

Melina Saliba
Melina Saliba
August 4, 2022
5 min read

Note on the authors

Heiner Murmann is the founder and CEO of Orkestra SCS, a logistics, technology and services company. In addition, Heiner serves as Executive Chairman for Evolution Time Critical and President of The Five Inc., and as an Advisory Board Member for both Metro Supply Chain Group and Black & McDonald Limited. Notably, Heiner previously held various senior executive roles at DB Schenker, one of the top three global logistics companies, as a Member of the Board of Management responsible for Air and Ocean Freight, and as CEO of the Region Americas.

Arnold da Silva, Senior Ocean Freight Advisor for Orkestra SCS, is head of an ocean freight consulting company where he actively advises global shippers on ocean freight strategy and execution. With 40 years of experience in the ocean freight industry, Arnold served as Executive Vice President for Ocean Freight Region Americas for DB Schenker. Arnold's passion is to conceptualize and implement innovative ocean freight solutions that transform one’s supply chain and promote a shipper's success.

In an ever-changing global market, supply chain leaders are being challenged to keep up. What once worked simply doesn’t cut it anymore. For some, this new reality is detrimental to their supply chains, but for others, it’s an opportunity to transform. Recent studies show that roughly 70% of global supply chains are adopting a digital transformation, with 55% of start-ups since 2018 are building their supply chains through a digitally transformed lens. While it’s always a great idea to get ahead of a problem, what does it mean for those supply chain leaders that might be stuck in the past? It’s never too late to start, and the first step is understanding your pain points.

The four biggest problems supply chain leaders face in the new world

The world has changed dramatically in the past few years with external disruptions such as pandemics and political instability that changed global supply chains like never before. As a result, the core pains facing supply chain leaders and their teams have completely shifted. Issues that were the focus a few years ago have been replaced by others, while some have intensified even more. Let’s explore four of the main areas we see supply chains are struggling the most in the new world.

Lack of visibility. Lack of visibility is an issue nearly all organizations face today and will surely become even more crucial in the future. Global supply chains are inherently difficult systems to manage, especially when you aren’t equipped with the tools to oversee vital operations and provided the appropriate data to make fast decisions to mitigate risks and plan ahead. A lack of visibility in your supply chain can manifest itself in many ways, including a lack of control on your supplier network, unreliable transport operations, and low performing logistics service providers, resulting in unhappy customers and strenuous supply chain costs.

Inventory shortages. Inventory shortages are inevitable in today’s volatile supply chain world. With external stressors like the COVID-19 pandemic, ongoing political instability and more, it’s a challenging task to anticipate what materials your supply chain should source and prioritize. Blockages at ports place an incredible strain on supply chain’s inventory levels, often forcing supply chain leaders to scramble to find a solution for a problem that is already out of hand.

Labour shortages. Labour shortages have been at the forefront of many conversations for supply chain leaders today. “The Great Recession” as it stands has affected supply chain operations at a global scale. Hitting especially hard for those organizations still reliant on manual systems to run their supply chains.

Unreliable logistics. More supply chain leaders today are seeing a deep disconnect in how their supply chain operations run. While outsourcing shipping and transport operations to multiple providers can seem like the right choice, many supply chain leaders run into the issue of a disjointed supply chain. Lack of communication and transparency can have a detrimental effect on your supply chain operations, setting your organization back weeks and months behind schedule. Attempting to connect every piece of a disconnected supply chain can result in money and time wasted, and leave you with siloed and out of date data.

What is a supply chain digital transformation?

A digital transformation refers to the implementation of modern technologies to reimagine the way organizations operate and collaborate. A digitally transformed company often realizes an increase in areas such as efficiency, productivity, and agility, delivering higher value to customers at lower cost. Supply chain leaders are beginning to re-assess the systems, technologies, and tools currently in place with the goal of understanding how to optimize their day-to-day operations.

It's important to not allow the term “digital transformation” skew your view on what it truly means. A digital transformation goes beyond a tool or system, rather it’s a purposeful change in the attitude and culture of your organization. It’s striving to optimize every area of the supply chain with the overarching goal of increasing efficiency, productivity, and agility.  

In such uncertain times, a shift in perspective is vital if organizations expect to keep up. While systems put in place in the past met the basic needs of global supply chains, today the ways in which organizations are led are a vital strategic differentiator of companies. Therefore, modern technologies must be deployed, empowering organizations to make the best use of these technologies and perform at their best.

Why a digital transformation could be the answer to your supply chain problems

Now that we understand where your issues might be hiding, you can start to think about how a digital transformation can change your supply chain. Think about transforming your supply chain to operate seamlessly with a digital platform, equipped to do the manual work of previous legacy systems while providing real time data you can use to optimize operations. The decision to undergo this transformation opens your supply chain up to as reimagined ecosystem- equipped to digitize, standardize, and automate all essential supply chain processes from order placement to delivery.

When we look at the human aspect of such a transition, your team will be enriched with new digital skills, foster a digital mindset that embraces technology, and instills control over your entire organization’s activities.

This type of transformation will allow you to ultimately predict trends, understand internal and external patterns, track performance and seek out pain points simply and efficiently.  

Increased flexibility. Undergoing a digital transformation opens up your organization to new freedoms in choosing the specific amount of centralization right for your company. This in turn will yield cost reductions in areas such as labour, production, and transport, allowing you to realize an increase in efficiency and productivity.

Faster decision making. Your decision-making process will be faster and more efficient than ever before. With new technologies in place, you have every piece of data necessary to stay informed and on top of operations. This in turn allows you to measure performance in all areas of your supply chain and make the appropriate decisions to save on cost and time. By adopting this new way of working, your customers will stay informed, allowing your brand an increase in customer trust and loyalty.

Optimized automation. With a digital transformation, improvements in data accuracy, efficiency and automation are quickly realized by reimagining manual labour systems. You can determine the most optimized shipping for your supply chain, choose the right carrier, and get a grip on the speed, accuracy, and priority of your shipments.

Up to date customer engagement. A digitally transformed supply chain always benefits the end customer. When placing orders, customers can track exactly where the shipment is, who’s delivering it, and receive updates on any roadblocks that may occur. This in turn allows customers to feel secure in their relationship with your organization, making them more inclined to choose you for future purchases.

Keep in mind such a transformation in extremely person centric. Tools and technologies are helpful and efficient but the minds behind your supply chain must be willing to adopt a new way of working. You can replace and upgrade every tool and system imaginable, but without prioritizing people at the heart of your organization the transformation is bound to fail. A digital transformation is essentially the agreement of a new vision; how operations, cost, responsiveness, and agility can all be improved through a newfound digital network. A holistic approach through the deployment of the appropriate technology and human capability will ensure your business continues on the path of steady growth.

Conclusion

Challenges in your supply chain are inevitable. They test your organizations resilience and force you to explore more efficient options so that you’re ready the next time you’re faced with a problem. By adopting a new outlook and undergoing a digital transformation tailor made to fit your supply chain, your organization can grow into a healthier, optimized more resilient version of what it once was.