Digitization has revolutionized one industry after another, and the supply chain industry is next. A backbone of many other industries, supply chain operations have benefited greatly from new digital tools but have been lagging behind in this trend.
Improving efficiency and reducing costs are the top priorities for 63% and 59% of supply chain leaders respectively. However, changes that can produce these ends, such as the digitization of manufacturing and digital upskilling, have received little attention. That's starting to change as more organizations realize the potential of these technologies.
Implementing new digital technologies can help supply chains achieve their goals now and into the future. Here are eight innovations transforming the industry.
The Internet of Things (IoT) is one of the key technologies that has entered the supply chain in recent years. These wirelessly connected devices provide remote access to critical functions and real-time information. In supply chain operations, this means in-depth shipment tracking.
IoT tracking solutions can transmit location information in real time, as well as shipment quality factors such as temperature and vibration. When these data fall outside of acceptable parameters, the device can alert relevant staff and stakeholders, adjust operations as needed, deliver sensitive goods ahead of schedule, and prevent damage.
This transparency also helps improve customer-supplier relationships and builds trust with drivers. These advantages make IoT one of the most popular digital technologies in the supply chain, with 56% of industry leaders planning to invest in it.
The supply chain is a complex interconnected network involving multiple stakeholders. Therefore, clear and efficient communication is key to success in the industry. Digital collaboration platforms provide supply chain organizations with the tools they need to maintain this level of communication.
Remote collaboration software is similar to ERP and WMS in that it uses the cloud to provide a unified point to manage multiple processes. This simplification is critical for communication across departments and locations. Real-world case studies bear this out, with some organizations seeing productivity gains after streamlining workflows and reducing data silos.
Digital collaboration tools make the supply chain a more cohesive unit. As disruptions continue, this type of fast and informed communication will become increasingly important, allowing for faster and more effective responses.
Another new digital technology that may revolutionize supply chain operations is machine learning. This subset of AI is good at identifying patterns and their causes, and improving over time. Therefore, it is an ideal resource as supply chains strive to become more flexible and resilient.
Machine learning can come up with practical process optimization steps in almost any supply chain operation. Predictive analytics, which can predict upcoming changes such as demand shifts or logistics disruptions, is one of the most helpful. With these reliable insights into the future, supply chains can adapt to these changes before they occur, minimizing their impact.
Enterprise resource planning (ERP) solutions may also play an increasing role in supply chain operations. These software platforms integrate multiple core business processes into a single solution. This way, stakeholders across departments can quickly and efficiently access the information they need and understand the process.
In addition to bringing together typically separate processes, ERP often includes automation features that further simplify management. ERP insights and efficiencies have helped some businesses increase productivity by 30% and reduce inventory by 20%. When supply chain leaders don’t have to constantly switch between multiple platforms, they can gain better visibility into operations and make more effective strategic decisions.
A similar digital technology that has huge potential in the supply chain is the warehouse management system (WMS). WMS solutions provide a digital, highly automated alternative to traditional inventory management systems. It provides a single access point to view and control inventory tracking, picking, shipping and related processes.
Traditional manual warehouse management methods are inefficient and error-prone. In some industries, inventory accuracy can drop below 60% due to these limitations. WMS provides solutions through real-time data tracking and automation.
The increased accuracy and efficiency of WMS make it easier to adapt to upcoming supply chain disruptions. As more organizations implement these systems, product shortages, delays, and similar errors will become less common.
Robotic process automation (RPA) is another important tool for saving time in the supply chain. Managing a supply chain often involves many repetitive administrative tasks such as scheduling, billing, and data entry. While these are critical to successful operations, humans are not suited for the job due to slow efficiency and high error rates in this type of work.
Instead, RPA tools automate software-based tasks much like physical robots automate human labor. Delegating this repetitive, date-heavy task can help streamline the management process while reducing errors.
As technology advances, automation will appear in more processes, such as driving, to reduce driver stress and similar challenges. Until then, supply chains can use RPA to free up workers' schedules and help them reach peak productivity.
A newer digital supply chain trend is on-demand warehousing. In this approach, digital platforms allow organizations to access unused or underutilized facilities for short-term adjustments or fluctuations in demand. Businesses with excess capacity can use it to connect with customers to fully utilize their assets, while those with limited space can avoid delays.
Warehouse space has become an increasingly popular commodity, resulting in high prices and limited expansion. On-demand warehousing helps alleviate this problem, democratizing available space and helping organizations minimize losses on both sides of the equation.
Another emerging technology that has great potential for supply chains is blockchain. These are decentralized digital ledgers with open, transparent and immutable records. While the technology is initially intended as the underlying platform for cryptocurrencies, it can also increase visibility across the entire supply chain.
Because blockchain records are immutable yet easily accessible, they are an ideal tool for building trust and traceability throughout the supply chain. This transparency can help attract potential partners, meet regulatory requirements or reduce issues such as counterfeiting.
While using blockchain technology in supply chains is a new practice, practical use cases already exist. At the height of the COVID-19 pandemic, two UK hospitals used blockchain to track vaccine shipments. As the technology develops, it could bring the same benefits to other products.
These eight technologies are just a sampling of the emerging digital tools that can improve supply chain operations. Innovations like this will shake up the industry as more organizations realize their potential.
The digital transformation of supply chains may lag behind other industries, but that trend is changing. These digital technologies can help supply chain companies achieve and exceed their most critical goals and become more efficient, transparent and agile. Over time, digital transformation can help the industry overcome its tarnished reputation from disruptions and delays.
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