Digital Supply Chain: Reinventing Supply Chains for the Future
Since last few decades, digital transformations have catapulted most of the business industries, and supply chain & logistics industry is no exception to it. In the aftermath of severe disturbances from series of economic downturns such as COVID-19 pandemic and Russia-Ukraine war, it is imperative for enterprises globally to review their supply chain strategies to become resilient, collaborative, and coordinate with clients, suppliers, and other stakeholders. The importance of visibility and resilience is a breakthrough for effective decision making towards future investments which is being supported by digital transitions in the industry. Digital supply chains possess enormous capabilities to provide real-time visibility into different operations ranging from supplier performance to customer needs, thus enabling development of effective business relationships and acts as a safeguard to protect the company assets against any disruptions.
According to a new report published by Allied Market Research the digital supply chain market was valued at $4,728.61 million in 2022, and is projected to reach $17,768.1 million by 2032, registering a CAGR of 14.2% from 2023 to 2032. Numerous changes in supply chain industry are being fuelled by application of leading-edge technologies such as big data analytics, Internet of Things, and robotic process automations, among others. The integration of these technologies in industry has transitioned the traditional linear-fashioned supply chain functions into automated, networked and connected operations. These forefront technologies such as IoT, and predictive analytics have enabled businesses to collect, monitor, and analyse data and assisted them to predict and strategize real-time actions. In addition, digital twin has played a crucial role in transforming supply chain industry as it helps organizations to test the capabilities of their supply chain design and its effectiveness in case of disruptive events such as blocked transportation routes, warehouse shutdowns, and so on. It further allows organizations to have greater visibility across their supply chain, and discover improvement areas along with eliminating inefficiencies, and optimizing current processes.
Why are Digital Supply Chains Crucial?
Unlike traditional supply chains, a digital supply chain [PP2] offers several advantages. Its real-time functioning, innovative approaches in product distribution, and prediction of consumer demands accurately can significantly optimize the delivery time for products. In addition, it promotes opportunities among businesses to utilize real-time sales and demand insights and become more flexible to changing demands. Also, it helps companies to focus to strategize their operations by analysing the change in demand of products among specific end-users, thus reducing the manufacturing of products with lower demands.
Furthermore, granularity offered by digital supply chain allows its businesses to provide customer-centric products which can suite their needs. Nonetheless, transparency and visibility play a crucial role in choosing digital supply chain as a forefront technology for their operations. The integrated network of distributed systems and technologies allows different stakeholders as well as customers to have end-to-end transparency throughout different stages of the supply chain. It enables improved relationships among stakeholders and helps them to eliminate any bottlenecks. Also, it leads to greater customer satisfaction as they can track their products through fulfilment processes. The automation of physical tasks in turn drives time-efficient and accurate business operations.
Industry challenges
There are certain risks associated with digital supply chains, owing to involvement of new technologies in the industry. Digital supply chains lead to potential security issues associated with connected devices and their components. Malfunction in any of these devices or software may attract attackers to exploit supply chains and compromise critical data security of enterprises as well as their customers. Moreover, costly implementation, need of massive storage servers, and necessity of sustainable optimum internet bandwidth can be some of the major challenges while moving towards digital supply chain strategy.
Supply Chain 4.0 to Offer Opportunities for the Industry
Supply Chain 4.0, the next-generation digital supply chain, is making organizations faster, more flexible, more accurate, more granular, and more efficient. It comprises the use of advanced robotics, implementation of the Internet of Things, and application of advanced analytics or big data analytics in supply chain management.
The emergence of Supply Chain 4.0 has created the need for companies to rethink the way they design their supply chain. Moreover, digitization of the supply chain due to Supply Chain 4.0 enables companies to address emerging requirements of customers, challenges on the supply side, and expectations in efficiency improvement. Hence, the emergence and proliferation of Supply Chain 4.0 offers growth opportunities to the market.
Key Players and Their Strategies
Companies are constantly focussing on new strategies to strength their foothold in the industry through numerous strategies. Partnership among market players for product development and enhancement has been the key strategy to attract new customers as well as improve existing customers’ experience. Accenture acquired Inspirage [PP4] in 2023 with focus on digital supply chain technologies, such as touchless supply chain, and digital twins. Inspirage, an integrated Oracle Cloud specialist firm which has been emphasised in supply chain management, will help Accenture to accelerate innovation for their supply chain clients through its supply chain and emerging technologies capabilities. Similarly, Logility, Inc. acquired Garvis to enable a new supply chain planning paradigm. Garvis’s ChatGPT and AI-native demand forecasting capabilities will help Logility to assist their clients in demand and inventory planning. More such mergers & acquisitions focused on AI innovations and touchless supply chain are expected to boost the digital supply chains in upcoming years.
Final thoughts
Considering digital supply chain as the future of supply chain & logistics industry, business can’t stay behind and must switch from traditionally fashioned processes to digitized ones for improved business outcomes. The benefits are expected to outweigh the risks while implementing the digital supply chain for majority of the businesses. The future of the supply chain is rooted in digital technology and enhanced automation. Digital supply chains will become crucial among companies which are aimed not to just solve internal and external problems but also to predict and prevent challenges. AMR’s report on digital supply chain market can help its customers to get information on quantitative and qualitative insights including market size and forecast information on different digital supply chain products and end-user segments and their growth rates across major regions and countries.
