Digitization Challenges Every Supply Chain Faces
The shift towards the end-to-end digitized supply chain has fundamentally changed the logistics industry. Digitization is being quickly adopted in order to augment traditional supply chains and improve them in practically every aspect.
Although the processes involved in the digital supply chain and the traditional supply chain remain unchanged: sourcing materials, creating a product, distributing the product, and finally selling the product; the way in which this process is carried out is not the same.
Supply chain technology, like any tech, is always advancing, and supply chain digitization may be the biggest update to the supply chain we’ve seen in modern times. Digitization of the supply chain means that the supply chain can use automated features and tracking technology to monitor each step of the process in order to complete tasks. In other words, it means greater efficiency, more agile processes, improved decision making, and increased revenue.
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While supply chain digitization is certainly a significant advance of existing supply chain tech, it doesn’t come without its challenges. When implementing any new system into a large-scale business there can be issues, and digitization is not an exception. In this blog post, we will discuss three major challenges companies face when digitizing their supply chain and the steps companies can take to prevent or solve these problems.
Challenge #1: Aversion to Change
Every manager and business owner wants to believe that employees are excited about changes. Unfortunately, this is not always the case. Resistance to change can come from any part of the supply chain. This makes the process of implementing the system more difficult. Early on you may find that institutional knowledge gaps and reluctance to effectively use and turn over control to the new system are significant hurdles toward successful implementation.
The solution to this problem is the same way you deal with any big change in your company. You create a plan and give employees at every level notice about what is happening and what’s expected of them. Also, additional training may be required at first to make sure that all employees understand the changes. This will help ensure successful implementation from the bottom up. It may help to make it clear that while the transition may take some getting used to, it should make everyone’s job a little bit easier in the end. During this time, rely on your supervisors and managers to help their subordinates adjust to the change.
Challenge #2: Integration
One of the main challenges of implementing supply chain digitization is grouping existing systems into one global system. Many traditional supply chain systems are varied and made up of many different planning, production, and data management applications. In other words, there is no global software catalog that binds these varied systems together under one umbrella. Therefore, digitization becomes difficult as it needs to navigate various systems. In the process, it becomes disjointed rather than one, unified system. Poor integration leads to a host of problems including poor coordination within the company and poor user experience.
In order to prevent this problem, companies switching to digital systems need to overhaul their systems using a top-to-bottom approach that brings each individual application under one system. Doing this will further ensure the successful implementation of the new system and eliminate functional problems that would otherwise come up. Furthermore, it will bolster coordination and communication around each stage of planning and production.
Challenge #3: Coordination and Poor Visibility
Successful supply chain digitization involves every layer of the supply chain communicating, collaborating, and sharing data in real-time. The digitized supply chain allows for data to be accessed at multiple points. Additionally, that data can be uploaded and shared more quickly and easily. This eliminates the long wait times of traditional supply chains to review and communicate data across the system.
However, successful communication, coordination, and good visibility are not something that will naturally come about in the organization without proper planning, preparation, and intervention. A failure to do this can create disruptions in the supply chain, bottlenecks, and even breakdowns.
The connection between each facet of the supply chain must become fluid to ensure proper visibility of order flow. Therefore at each stage, there has to be immediate input of data, automatic acknowledgment of new orders and delivery notices. This allows each part of the system to better collaborate with one another. Additionally, this also gives customers can receive better visibility.
Employees must be trained to use the new system to ensure that it improves coordination between all employees. This helps the supply chain as a whole can improve communication, cooperation, visibility, and thereby become more efficient.
The days of waiting hours, days, or weeks to communicate data and the results of data are long gone with digitization and require better cooperation and visibility between every part of the organization to make it a well-functioning machine. Therefore, make expectations clear across the organization so that all employees understand how to input and share data as soon as they can.
Although there are many formidable digitization challenges that every organization in the logistics industry must face when implementing digital supply chain technology, they can be overcome with improved oversight, training, and company-wide communication.
This is a transition from traditional systems to digitized ones. Therefore, you need to rely on every employee at every step of the supply chain to learn the nuances of the change and adapt. The best way to do this may look different for each organization; regardless, it will likely involve some form of training and education. In addition, it will require significant planning and effort on the part of supply chain management to make sure the transition goes smoothly and successfully.
Companies may face digitization challenges during this transitional period. However, the benefits of supply chain digitization cannot be understated. Organizations that resist this change may find that they cannot compete with digitized supply chain companies, as they will not be able to match their efficiency, visibility, and overall better optimized and agile system.