Customer behaviours and expectations are changing dramatically, challenging the established supply chain and operations setups of leading industrial companies. Supply chains are increasingly facing major disruptions, with the impact of COVID-19 at the top of the list. And digital technologies are affecting every aspect of how companies run their businesses. To succeed in this evolving marketplace, companies need to transform linear supply chains into autonomous supply chain ecosystems.
Customer behaviours and expectations are changing dramatically, challenging the established supply chain and operations setups of leading industrial companies. Customers now do their research and buy products across multiple channels and increasingly demand product personalisation. They expect not only transparency around
order status and delivery, but near-instant order fulfillment. And they’re increasingly concerned about product origin and quality, as well as product and supply chain sustainability.
Tomorrow’s supply chains will be connected and selforchestrated ecosystems. Next-level supply chains will be
connected end-to-end. All relevant internal functions will be connected using one common data network, from R&D and procurement through manufacturing, logistics, and marketing and sales. In addition, all relevant supply chain partners, such as suppliers (including tier 1, tier 2 and even beyond), logistics service providers, customers and innovation partners will also be integrated within the supply chain.
Rather than a linear chain, where data is transferred from one stage to the next, data is available continuously throughout the supply chain, now more accurately termed a supply chain ecosystem, giving partners near-real-time and simultaneous access to relevant information and enabling optimised and informed decision-making. Data transparency across this ecosystem allows for synchronised demand and supply planning, as well as connected and transparent logistics. Companies will take advantage of artificial intelligence (AI) to make key activities self-orchestrating by defining optimisation parameters and embedding these in the algorithms which steer decisionmaking. Optimised choices — for example, which supplier to use for individual orders at the best manufacturing location, or which transport mode and logistics service provider to use — will be made autonomously, in near-real-time and across all functions. This also helps companies to proactively identify and manage supply chain risks. And as one size won’t fit all, companies will use dynamic supply chain segmentation to be more customer-centric across multiple channels and optimise their cost-to-serve at the same time.
Our research — which included asking companies to report on the current state of their supply chains and how they expect them to look in 2025 — shows that most companies have begun this journey and have invested into new supply chain capabilities and organisational models, but that Digital Champions are far ahead.
Investments into supply chain excellence pay off. Digital Champions are reaping the benefits of investments into digital supply chains: In 2019, they achieved operational savings of 6.8% annually in supply chain costs,well ahead of less advanced companies, coupled with a 7.7% revenue increase. They’re enhancing customer satisfaction through greater levels of on-time in-full (OTIF) delivery too. Digital Champions will continue to enjoy the benefits of focussing on supply chain excellence — they invested 9.1% of their supply chain costs into advanced supply chain capabilities last year and plan to continue even stronger levels of investment. Both are higher investments than the other companies we surveyed.
The advantages go far beyond just the numbers. That’s true for all the companies we surveyed, especially for the Digital Champions — in addition to enjoying higher profitability and better asset utilisation, they’re also using supply chain to drive improvements across their business. For example, 28% of them say more effective risk management is one of three key benefits they are gaining from their investments into advanced supply chain capabilities.
To read the full article click HERE