Digital Transformation: Digitalisation & Digital Supply Chain Strategies

Digital Transformation: Digitalisation & Digital Supply Chain Strategies

by Dongkyun Kim, Vice President, Samsung SDS

Digitalisation as a necessity for Industrial Evolution

Digitalisation has greatly reshaped the modern business landscape. With technology driving fundamental changes, supply chains have become more intelligent, efficient, and interconnected. According to the 2023 MHI Annual Industry Report, emergence of supply chain related challenges from the global pandemic from 2020 to 2021 has convinced 74% of supply chain leaders () to increase their digital investments in digital transformation. Among them, 90% of them plan to spend beyond $1 million.

Leveraging advanced tools such as data analytics, artificial intelligence, blockchain, and the Internet of Things (IoT) have simplified operations, refined inventory management, and enhanced transparency across the supply chain. The integration of digitalisation not only yields substantial cost savings and operational enhancements but also empowers companies to swiftly adapt to market fluctuations and consumer demands.

Makings of a Successfully Implemented Digital Supply Chain

A digital supply chain, when successfully implemented, is made up of several pivotal components. Firstly, when it achieves end-to-end visibility, which facilitates real-time tracking and monitoring throughout the entire supply chain. By enabling a real-time view of the supply chain journey, organizations can respond to potential disruptions swiftly and meet the ever-changing demands of customers.

Next, the system must by nature be centralized to allow for data integration and advanced analytics features to empower data-driven decision-making and continuous process improvement. Data integration involves the seamless aggregation of information from diverse sources throughout the supply chain. Once this data is unified, advanced analytics come into play, providing invaluable insights and predictions.

In addition, the system must possess an easy user interface for accessible data management for all supply chain stakeholders. From a frontline operator to the strategic decision maker, the interface stands as a gateway to all stakeholders. Having ease of navigation allows all stakeholders to interact seamlessly with supply chain data, by ensuring that it’s readily available and provides accessibility to all stages of the supply chain.

Lastly, there must also be mandatory training and reskilling of employees and relevant stakeholders on how to operate the digital platforms. Comprehensive training ensures that employees not only understand the intricacies of digital supply chain platforms but are also able to harness their full potentials. Reskilling initiatives cultivates a workforce capable of leveraging technological tools at their disposal and enhances operational efficiency. Especially in a landscape evolving in the direction of digitalisation, an adept workforce is indispensable in propelling the success of a supply chain.

Challenges Preventing Digitalisation

Despite the promising benefits of digitalisation, achieving its proper full-scale implementation would incur formidable challenges. The first would be rooted to the industry’s fragmented nature, followed by a pervasive reluctance towards innovation and concerns of data security. The complexity of supply chain ecosystems often stems from a myriad of stakeholders, each utilizing their respective technological systems. Given the massive level of disparate systems used by different players, it only contributes additional layers of complexity from unstandardised practices across the industry. With a heavy reliance on legacy systems, businesses also face a huge inertia to upgrade or replace their systems, unwittingly creating a self-inflicting hesitation from adopting innovative technologies.

Another prevailing issue would be the industry’s hesitancy towards embracing transformative innovations for digitalisation. The supply chain industry has been traditionally risk averse and cautious in deviating from tried and tested methods, even in the face of a rapidly advancing technological landscape in the supply chain industry. Concerns revolving around initial business costs and potential disruptions in the midst of transition will only impede the adoption of digital systems. Moreover, the absence of existent process frameworks for digitalisation will produce a sense of uncertainty and result in a reluctance to commit to a comprehensive digital transformation.

The integration of large volumes of data would also call for concerns regarding its security and privacy. If improperly safeguarded, would pose a substantial risk for data leaks. The apprehension surrounding the misuse of sensitive information will prevent businesses from leveraging the transformative potential of digitalisation. Businesses would have to invest in robust IT infrastructures, encryption technologies and establish robust security protocols in order to address these challenges. Otherwise, the fallout from such incidents will extend beyond financial losses and even include reputational damage and loss in customer trust. Even though companies are well aware of the operational benefits of digitalisation, they remain realistic in weighing them against the potential risks of cyber threats.

Use Case: Empowering an electronics manufacturer through Shipment Visibility

Despite its stellar business performance a leading electronics manufacturing firm with outstanding levels of annual sales., was facing a lack of shipment visibility and lacked a digital platform for data analysis and management. The implementation of digitalisation was instrumental in addressing its longstanding visibility gaps, as well as its operational challenges that once led to delivery delays, diminished customer satisfaction and escalated transportation costs.

Previously, the lack of visibility brought forth notable pain points such as unclear in-transit inventory, frequent escalations, absence of cost tracking, reliance on manual tracking methods and an inability to predict transit times. The business struggled with non-clarity on its in-transit inventory levels, facing dual extremities of shortages and over supply. The perpetual confusion of inventory statuses only lead to cases of miscommunication and inaccurate reports, with frequent escalations for clarification.

The impact of these digitalisation measures reverberated throughout the organization. Overall productivity witnessed a marked upswing, propelled by streamlined processes and an informed decision-making culture. Escalations, once a frequent occurrence, dwindled as the digitized system afforded a proactive approach to identifying and addressing potential issues. The adoption of data-driven decisions yielded outcomes more closely aligned with strategic objectives.

The true testament to the success of this digitization journey lies in the profound shift in increased productivity. The improved visibility and transparency translated into expedited delivery times, elevating customer satisfaction and better outcomes resulting from data-driven decision making. Employees, buoyed by the newfound capabilities of the digital tools, have also embraced a culture of innovation and continuous improvement.

Conclusion

The role of digitalisation in the supply chain industry is in a constant state of evolution and continues reshaping the way businesses operate and adapt to a rapidly changing world. With Gartner predicting the supply chain industry to achieve digital maturity by 2025, digital transformation shows no signs of slowing down. Technology will continue to drive innovation, making supply chains smarter, more interconnected, and highly responsive to market dynamics. As we look towards the future, factors such as sustainability, ethical practices, and robust cybersecurity will play an increasingly critical role in the digitalisation journey.

Embracing these digital advancements is not just a choice but a necessity for businesses looking to thrive in an increasingly complex global marketplace. It is an exciting time for businesses to harness the power of digitisation, and the potential rewards are substantial for those who take the leap into the world of smart, connected supply chains.

The recognition of long-term benefits of operational efficiency and market competitiveness is necessary for the supply chain industry’s journey to digitalisation. It is through the navigation of the industry with strategic vision and a strong commitment to innovation that companies are truly able to unlock the capabilities of digitalisation for continuous success. In this era of digitalisation, the supply chain industry is poised for unprecedented growth and innovation.

About the Author

Dongkyun Kim

Vice President of Samsung SDS where he leads 8 branch offices in Southeast Asia, providing logistics services to clients in the region.
With over 20 years of global experience in various industries, DK has been at the strategic forefront of business development with major brands in Southeast Asia, developing global businesses and digital transformation initiatives in global logistics operations.

Read other articles from LogiSYM February 2024: