Digital transformation: threat or opportunity for Supply Chain?

Or how Digital and IoT could help for a smarter supply chain.

By Yvan Coutaz, Hardis Group Managing Director

Digital transformation and omnichannel imply big changes in supply chain. Generally, this transformation is underestimated since people usually focus on front-office and digital customer experience. Of course, supply chain managers know that it is a big challenge to implement this transformation. Why? Because it implies changes in organization, process… and IT.

And everyone knows how easy it is to manage these kinds of changes, regarding to IT complexity or strong silos in companies!

Nonetheless, digital is also an opportunity to improve supply chain performance, thanks to innovation, mobile solutions, analytics and IoT (Internet of Things). Therefore, it is crucial that companies top management are aware about this breakthrough.

According to Gartner, Digital Business means big change for supply chains

This was the conclusion of the last Gartner Supply Chain Executive Conference in May, 2015 in Phoenix.

According to Gartner, « In leading organizations, one quarter of enterprise costs will be devoted to the digital transformation. About 20 percent of that will be allocated directly to supply chain transformation. »
In other words, high investments are needed to transform supply chain. Why is such a transformation required?
If performance is still a priority (cost effectiveness, quality of service…), this is not the only issue to deal with. It is clear that customers are expecting organizations to answer their highly changeable needs. Supply chain must absorb rapid shifts in demand. Customers order on line, expect to be delivered at home or in store, change their minds and return back products etc.
In this context, it is necessary for the retailer not to miss sales: if stock is available somewhere in a warehouse, in a store or at a supplier, you should know it to deliver your customer. Better, your customer should know it.
That implies big changes in IT systems. For instance, you should be able to see all stocks, make a stock reservation wherever stock is … You need a solution that allows you to manage customers’ orders from distinct IT systems (e-business, ERP, store system…) and to identify automatically the best channel to fulfill the order among all possibilities.

Could innovation and digitalization radically improve supply chain?

Digital and more generally innovation could be synonymous to benefits that fit to actual consumer needs.
Mobile solutions in stores, or mobile delivery solutions allow a better flexibility with real-time information to make decisions. Efficient order management systems are a necessity to deal with omnichannel requirements.
But the real big change is the emergence of IoT (Internet of Things), with sensors, robots, drones (…) that are connected and which collect data in the Cloud to monitor in real time and to alert, if need be, so that companies can react quickly.

Gartner predicts that, by 2017, 20% of logistics organizations will use drones to monitor and to carry out search activities. If this prediction is certainely over-estimated, this trend is becoming a reality.
For instance, Hardis Group has invented a solution named Eyesee. This is a drone solution allowing to perform automatic inventories in warehouses. Thanks to this solution, logistics providers will save costs, improve productivity and ensure a better security for employees. Above all, it provides a better accuracy and reliability on stock levels, which is a key to ensure realistic promise dates for order requests.
IoT provides many other benefits for supply chain. In a recent survey conducted by Forrester, over 80% of surveyed firms indicate IoT solutions will be the most strategic technology initiative for their organization.
Personnally, I think that this will be the real breakthrough that will allow marketing and sales people to fulfill their promise to a better customer experience thanks to supply chain.

Yes, but in a digital world, what is the future of humans?

Of course, humans are still needed! But the real change is certainly the fact that people can now concentrate themselves to more value-added activities and, above all, develop closer customer relationships and service.
I am really convinced that organizations should systematically balance digital AND human approach to a successful customer experience and a better service.
Who predicted that digital solutions, sensors, robots and drones (…) would help developing humans’ relationships?

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