The Key Drivers of Digital Supply Chain Disruption

The explosion of digital technology has had a tremendous impact on most aspects of day-to-day life. As consumers embrace digital media for everything from consuming news to socialization, businesses are reimagining their approach to traditional business processes.

In part, this trend is driven by the need to accommodate consumer habits in the B2C sector, but B2B entities are also embracing digital trends to capitalize on gains in efficiency offered by automation, greater visibility, the ability to break down data silos, and reduce operational costs.

Organizations in the supply chain are riding the wave known as digital supply chain disruption, a shift driven by a few key factors.

Digital Transformation is Underway, But Progress is Slow

According to Supply Chain Digital, 70 percent of executives have already begun digital supply chain transformation, yet progress is slow. Capgemini Consulting and GT Nexus (an Infor company) studied 337 executives from major global manufacturing and retail organizations across 20 countries throughout Europe and North America.

Exploring the relationship between organizations and their partners throughout the supply chain, this study marks the first to examine both the current and future states of digital disruption across the supply chain. The survey found that half of the executives responding view digital transformation as very important (75 percent agree that digital transformation is at least 'important'), but more than 30 percent are dissatisfied with their progress to date.

The primary factor contributing to dissatisfaction with digital transformation efforts is that while key technology drivers have been identified, most remain largely unused. Most expect to see tremendous growth within the next five years. Executives seeking to accelerate adoption and embrace digital transformation should begin by cultivating utilization in these key areas. The survey revealed a few noteworthy trends regarding the adoption of digital technology and executives' predictions and expectations for growth in five years, including:

Making data from the extended supply chain accessible to the organization. Just 15 percent of respondents to the survey indicate that data from the extended supply chain is readily available to their organizations, yet 54 percent expect improvements in availability within the next five years.
Conducting better analysis of extended supply chain data. It's one thing to make data from the extended supply chain more available to individual organizations, but if those organizations fail to utilize it in meaningful ways, the impact is substantially less. Less than one-fourth (23 percent) of respondents report analyzing extended supply chain data today, though 68 percent expect to be doing so in five years.
Automating processes with suppliers. Automation is a trend that impacts practically every industry and vertical in the global economy, yet executives recognize room for improvement in this area as well. In fact, 95 percent of respondents say that they anticipate more processes with suppliers will be automated within five years.
Getting real-time status updates from suppliers. Another area expected to impact nearly all organizations throughout the supply chain, real-time status updates from suppliers is an area in which 94 percent of respondents expect to see gains within the next five years.

Key Drivers of Digital Disruption in the Supply Chain

With these shifts underway, it's clear that organizations are increasingly recognizing the value of technology in improving business processes and desire to move forward. The following key factors will drive successful digital transformation in the supply chain within the next five years, and likely beyond.

Adoption of cloud-based software

Two-thirds (two out of three) survey respondents say that less than 25 percent of their software is cloud-based, and just six percent say that the majority of their software is cloud-based. This is surprising in light of the fact that cloud-based software is largely viewed as a key driver of digital business transformation, not merely in the supply chain, but for organizations overall. Even more surprising, nearly half (48 percent) of respondents admit that their primary means of communicating with supply chain partners is through traditional methods such as phone, fax, and email.

Driving decision-making with data

Data is traditionally inaccessible within silos, within systems maintained by partners, vendors, suppliers, and other entities throughout the value chain. Breaking down data silos will enable greater availability of data across the extended supply chain, allowing organizations who choose to utilize it to drive smarter decision-making.

Technologies like asset tracking and automatic data collection provide unprecedented visibility into both assets and business processes that can be shared across the value chain for mutual benefit. One of the main ways data will become useful to organizations in the next few years is by offering greater visibility, enabling companies to respond readily to demand and achieve leaner operations by creating just enough product to meet demands and avoiding over-production.

Re-thinking business processes

One of the primary pain points for executives is new-comers to the market that completely disrupt existing business models. Think Airbnb, Uber, TaskRabbit, and similar disruptors. "Because these models can disrupt an entire industry, all players in the industry need to respond. They need to rethink their processes and even their business.

And nowhere is this need acuter than in the extended supply chain," explains Hans Thalbauer, in an interview with Celia Brown for Digitalist Magazine. "These forces are driving what we refer to as the four pillars of the extended supply chain: individualized products, the sharing economy, resource scarcity, and customer-centricity."

Gaining agility and flexibility

Organizations today have to meet demands across channels, forcing omnichannel commerce which makes the supply chain increasingly complex. Companies tapping into technology to run simulations, those that iterate, fail, and adapt readily by making use of the technology and tools available to them will be best-equipped to thrive in the customer-centric climate.

Digital disruption is happening across every vertical and around the globe. It's no longer just a trend impacting the B2C sector or industry-specific B2B organizations. With the global supply chain poised to make dramatic shifts in the coming years to accommodate trends and gain deeper visibility into business processes in order to stay ahead of the competitive curve, every company throughout the value chain stands to benefit by adopting new technologies early and rethinking traditional, outdated processes to combat industry disruptors.

Transformation via Technology: The Key Drivers of Digital Supply Chain Disruption