Earlier this decade, manufacturing executives were skeptical about the benefits of digitizing their operations.
According to various studies, only 37% believed digital business could drive revenue growth; 25% thought the sector would be highly impacted by digital transformation within the following five years; and fewer than 10% were implementing digital technologies to transform their businesses end to end.
That was then. The future is arriving fast.
Now every manufacturing C-suite in the world is on the path to digital transformation, with the supply chain at its heart. A transformed supply chain is the enabler for companies to deploy technology for personalizing products, accelerating delivery, and meeting rising customer expectations—all while constantly probing the boundaries of their existing business models.
Researchers at IDC have identified a clear turning point ahead: they predict that half of manufacturers will be benefiting from digital transformation in their supply chains by 2019.
Charging Ahead with Supply Chain Transformation
When successfully implemented, digital supply chain technologies will lead to revenue gains, boost service quality, help cut innovation costs, and speed product-to-market times. The evidence is already apparent.
Digital Power Source
The opportunities for supply chain transformation are real, although the path forward is challenging. An SAP-sponsored study by research and advisory firm Longitude notes that while many enterprises appear to be digitized, the foundations of their operations—supply chain, procurement, and logistics—are still analog. Market forces are placing these companies under great strain, making them susceptible to disruption by digital startups.
Transformation means converting analog processes into digital supply networks—now. While every company’s digitization strategy will be different, enabling these processes requires the following:
- Ask the right questions. To avoid being overtaken by a lean startup, you need to continually evaluate your operations against competitors. Some questions to ask, according to Peter Weill and Stephanie L. Woerner in the MIT Sloan Management Review: Are the products you make ordered and delivered digitally? Can you equip them with data to make them more valuable? Are there other firms serving your customers that could become competitors? Can a digital offering replace your products now or in the future?
- Have the right data systems in place. You need information from everything in your production ecosystem—including sensors, machines, factory and warehouse equipment, trucks, and even products—in forms that you can analyze to improve production processes.
- Commit to automation. Machine-learning technologies make your systems more intelligent, so you can pursue the right opportunities and produce the right outcomes. For example, blockchain technology applied to supply chain systems can configure order processes so they happen immediately.
- Include every process. The digitization effort should cover manufacturing processes from product design and configuration to supply chain planning, manufacturing, shipping, and after-sales service.
These points are where the discussion starts. Every C-suite will have its own approach to how these elements come together for their firm to succeed. Many companies are executing their strategies now. The rest need to head that way.