Future-proofing the supply chain – the role of digital transformation

In the first article in this short series, we looked at the impact that COVID-19 has made on standard approaches to supply chain management. In the second, I outlined the steps organizations can take to future-proof their supply chains, and at how they can build in resilience and agility.

This time, I want to summarize the importance of digital transformation in this context, and to suggest ways in which external service providers can make a contribution.

Tools and strategies

Given the increase of pressure placed on supply chains by COVID-19, it’s no surprise that the adoption rate of digital transformation is accelerating. In an Everest Group study, research by Statista indicated that worldwide spending on digital transformation technologies was set to increase by 10.4% in 2020 to $1.3 trillion – and who’s to say how much the pace may have changed since that number was captured?

As we noted in the previous article, digital tools help provide more accurate and timely information about inventory and demand levels. They can also automate regular tasks, and predict potential disruptions to transportation, all of which can improve both margins and performance.

But those tools need to be introduced as part of a coordinated strategy. Integration amplifies the benefits they bring, which is why it’s worth bearing the following factors in mind on the path to digital transformation:

Factor #1 – digital enablement

Digital levers can help to integrate processes and increase operational transparency. For instance:

• Control tower – for centralized information gathering, process integration, and cross-geography collaboration
• Automation – in areas such as sales order processing and customer self-service
• The Internet of Things (IoT) – for asset monitoring and machine quality assessment
• Blockchain – for smart contracting, supplier management, and handling direct peer-to-peer payments
• AI and analytics – for analyzing market demand, simplifying language and location complexities, and optimizing stock levels.

Factor #2 – operational revamp

As we’ve noted, future-proofing the supply chain isn’t just about introducing digital tools. At the same time, the various elements of the operating model need to be rethought.

This includes assessing and extending team capabilities and talents, streamlining process workflows, restructuring organizational elements, and assessing and incorporating appropriate industry best practices.

Factor #3 – organizational alignment

Digital transformation is particularly well suited to breaking down siloes, so the organization can act as a cohesive whole – so it can seamlessly and intelligently connect its processes and people as required.

At Capgemini, we call it the Frictionless Enterprise. It comprises five key fundamentals: hyperscale automation, cloud agility, data fluidity, sustainable planet, and secure business.

When business leaders and key stakeholders see the benefits of this, they can bring the rest of the workforce, and also of the external supply chain ecosystem, along with them. Success is easier to achieve when everyone shares a picture of it.

Factor #4 – continuous innovation

In the previous article, I argued that addressing legacy process issues could be difficult, but that it is a necessary preparatory step. I also said that, if it’s done thoroughly, it could be a single fix.

That’s true. But it doesn’t mean that digital transformation is itself a one-off exercise. The whole point of the groundwork, and of the integration that follows it, is to create room for maneuver – to establish a platform that provides the flexibility the organization will need to address as-yet-unforeseeable events.

External perspectives

Before the pandemic, organizations were working towards the digital transformation of their supply chains by pooling knowledge between their internal teams, by working with their partners, and in some cases by collaborating with external service providers.

COVID-19 raised the stakes. It increased the unpredictability in demand, disrupted supply, and shortened timeframes. In these circumstances, there are even more reasons to seek the knowledge and advice of those external service providers. Some of them may have experience of individual tools, and of their integration in comprehensive digital models. Some of them may bring their own generic or bespoke solutions into this mix.

Some of them may have a track record, too, in the needs of given sectors, and given geographies, and others again may have detailed insights into specific parts of the supply chain. Some of them may have all these things.

Whatever the case, organizations need to identify the best match, not just in these respects, but also in terms of culture, and of project management approach. And it goes without saying that the potential partner needs, too, to be financially stable, and technologically mature.

Taking stock

On a human level, COVID-19 has affected societies and families to an unimaginable degree. Business, too, has been shaken to an extent no one could have predicted.

It’s that very unknowability, though, that is key to the theme of the articles in this series. We may not have been able to foretell the impact of the pandemic, and we may not be able to know what might come next, or when – but we can, at least, ensure that supply chains are digitally equipped to provide the robustness and flexibility the world needs.

Read the Everest Group Research’s “Future-proofing Supply Chain Management: Building Resilience and Agility through Digital Transformation” report to learn more about how organizations can future-proofing their supply chain.

To learn more about how Capgemini’s Digital Supply Chain practice  can help your organization leverage digital transformation to build a resilient, agile, and frictionless supply chain, contact: dharmendra.patwardhan@capgemini.com

Read other blogs in this series:

• Future-proofing the supply chain – the impact of COVID-19
• Future-proofing the supply chain – building resilience and agility

Dharmendra Patwardhan is responsible for developing offers and capabilities for transforming supply chain operations that drive tangible business outcomes for Capgemini’s clients.