Digital Supply Chain: Catalyst to Increase Revenue and Exceed Customer Expectations

Delighting customers might not be the first thing that comes to mind when thinking about successful supply chain management, which historically has focused on high efficiency and lower costs.

But in a digital world — where everything is happening in real time and ideally with high transparency in all process steps — the supply chain has the power to drive innovation and differentiation to your company, and in turn increase revenue and customer satisfaction.

Deliver the Intelligent Enterprise

For SAP Executive Board Member Bernd Leukert, it is clear that demanding consumers are driving companies to rethink their own strategy on how they best deliver unique products and services with high speed of fulfillment. This leads to a need for re-engineering existing processes to meet expectations in a timely manner — from innovative design, responsive planning, flexible manufacturing, and real-time fulfillment through the predictive maintenance and service of products throughout their life cycle.

It also requires a combination of software and supporting technologies that drives the entire digital supply chain. Leukert describes SAP’s efforts to enable a digital transformation to the Intelligent Enterprise as not only to increase efficiency but to intelligently manage the entire company with the help of the intelligent suite and technologies, such as the Internet of Thing (IoT), artificial intelligence (AI), machine learning, and blockchain.

According to Leukert, “The opportunity is tremendous. It is time to shape the future, now.”

Digital Supply Chain Can Lead the Way

“No matter which type of company you are — traditional or digital native — you need to get active in digitalizing the supply chain to enable customer happiness,” stated  George Bailey, managing director of DSC, during a session focusing on trends and challenges at the fifth Digital Supply Chain Institute Executive Leadership Forum in Walldorf earlier this month.

Hala Zeine, president of Digital Supply Chain at SAP, continued the thoughts of customer happiness, stating that “customers are more demanding than ever before and therefore companies need to change their business processes and then the tools.” Zeine emphasized leading with processes and choosing the right technology afterwards, stating: “No technology can solve business problems without the adaptive change and optimized products and services for consumers. In the end, customer experience is based on a great product or service experience. Figure out what the customer wants to become a happy customer and then rethink business processes accordingly.”

Creating a Happy Digital Supply Chain Workforce

Some would argue that happy employees are the base to create products and services that make customers happy. Zeine pointed out that we face a fundamental challenge as we hire modern people but expect them to run outdated business processes. She explained that “top floor executives want a connected and collaborative supply chain, but companies — and even departments within them — continue to act and operate in silos.”

Digital transformation is influencing and changing the skills needed within companies as well. There is a huge fear of losing jobs to robots and this fear needs to be addressed. The question is how to deal with this change. How do you enable the digital data model and what is the people aspect? You need to find new ways for attracting and retaining talent, and to develop and integrate this talent into your workforce.

According to Bailey, “In the digital world, you need people that make sense of all the data that is shaping your supply chain or product. These data scientists are not simply analyzing existing data, they are able to model data and run hypothesis around this data. They build new opportunities that can create business benefits.”

Revenue Growth in the Modern World of Digital Supply Chain

Along with happy employees, you need happy customers, because happy customers create more revenue. DSCI research shows that “consensus view of 25 top supply chain leaders from major global companies confirmed that the DSC will grow revenue by 10 percent, on average.” Key factors are delivering superior value in terms of convenience and/or price, supply chain insights to create better products and services, developing new business models that drive revenue from sources not existent before, and expanding sales by offering products or services based on customer profiles.

Examples of creating and using these insights is integrating connected health solutions into a usual consumer product, offering gamification aspects to deliver superior value, and enhancing the customer experience coming along with the product. By offering an app along with a product, you create a new customer experience while being able to collect data and build customer profiles that can be used to address the right target audience. These insights can also be used to provide them to research studies to further fight health-related issues.

Applying and Managing Intelligent Technologies With Algorithms

“Data is useful if it is the basis for decision making across the supply chain, and if the algorithms are fact-based formulas that leverage this data and get smarter with every transaction,” says Bailey.

It creates a need for algorithms in a world of digital disruption, where “consumers have the power, they demand a digital experience, and barriers to entry into a market have lowered,” the CIO of a leading apparel brand says, explaining that his brand is not only about gear, it in fact provides tools and data to track performance, nutrition, and personalized content, and engage with the community online. This offering leads to personalization and a knowledge base that can be build up around the consumer. With this knowledge, they can optimize the engagement and amplify the brand.

Opportunities and Risks of Blockchain

“Blockchain is everywhere — but where are the results?” Shawn Muma from DSCI asked. Currently, most implementations are pilot projects and most companies are still in the process of gaining knowledge and observing. “You need to identify use cases that solve a business problem and deliver value,” Muma says.

While blockchain opens up a new area of growth, it also brings some implications, one of which is GDPR. David Kappos, a partner at Cravath, Swaine & Moore, explained that “the characteristics of blockchain and GDPR are highly diverging. Whereas blockchain is immutable, global, an innovative technology, and highly distributed, GDPR ensures that everyone has the right to be forgotten, forbids data to be transferred without permission, and requires technology that builds in privacy by design to ensure fair processing of personal data.”

Transform or Fade Away

Either you are a disruptor or you will be disrupted. It all comes back to happy people — customers and employees. Organizations have the power to influence this happiness with technology, processes, and the right people strategy. Using the data you have, set up processes that have the objective to answer customer needs, be aware of risks, and invest in skills for your workforce.

Investing in these strategies will help you become the disruptor, building a strong cross-functional digital supply chain and, in the end, happy people.

Digitization of supply chains is one of the main focuses of the Center of Global Enterprise (CGE), a private, nonprofit, nonpartisan research institution focused on various initiatives that are striving for a better future — globally, economically, and for society. With SAP’s vision to make the world a better place and improve people’s lives, along with its commitment to the UN Sustainable Development Goals, there is a strong fit for combining synergies and pushing for the same future state of the globe and economy. Earlier this month, SAP was proud to host the fifth Digital Supply Chain Institute Executive Leadership Forum in Walldorf, Germany. The CGE’s Digital Supply Chain Institute (DSCI) is a leading-edge research institute focused on the evolution of enterprise supply chains in the digital economy and the creation and practical application of supply chain management best practices.