How to Transform your Supply Chain Operating Model For a Digital World

How to Transform your Supply Chain Operating Model For a Digital World

Supply-chain digitalization has undoubtedly become successful with highly coordinated operations, data-based decision-making strategies, cost optimization, improved efficiency, and proactive customer experience. Supply chain transformation has brought about greater visibility into the supply chain network.

According to the Statista report of 2019, the global Supply Chain Management (SCM) software services are predicted to reach a revenue of $8.5 billion by the year 2022 . With better technology solutions that have evolved, businesses can make improvements in supply-chain performance.

Supply Chain Trends: Overcoming Challenges for the Next-Generation Operating Model

Digital Transformation can help businesses overcome challenges that their supply chain faces. The current set of challenges faced are as follows:

  • Siloed systems and processes leading to duplication of various crucial functions across business operations and geographies.
  • Increased difficulty in managing constantly changing market demands.
  • Inability to handle large volumes of data being generated.
  • Lack of effective communication between partners and consumers spread across geographies.

In this digital era, businesses must focus on implementing a new model for operations. The operating model must shed light on the following three key areas:

  • Customer preferences - An increase in the number of digital channels has influenced customer preferences significantly in recent years. Due to increased consumer preferences, it is important to reshape the structure of the supply chain, considering the added layers of complexity. It is thus important to keep inefficiencies and failures along the value chain at bay without it affecting the overall workflow.
  • Cost and productivity factors - Cost and productivity are serious factors that impact supply chain functions. The latest market environments require an increase in products, warehouses, new personnel resources, logistic service providers, etc.
  • New digital technologies and advanced analytics - With advanced analytics comes better planning, accuracy, efficiency and workforce productivity as they are freed from performing redundant tasks and can focus on core competency tasks.

It is thus important for businesses to respond to these challenges and improve on the capabilities of three major elements—workforce, management, and the IT infrastructure. This is crucial to reshape the business structure and bring in the next-generation model for digitally transforming the supply chain.

Transforming Your Supply-Chain: A Step-by-Step Guide

Successful leaders can show how to realign your current supply chain operating model through effective guidelines. They are as follows:

  • Include Only The Steps/ Processes That Add Value
Digitalization involves integrating planning as well as management steps. For instance, joint optimization for production planning and scheduling of operations makes it easier to automate these processes. Remove steps that individually do not add any value.

  • Centralize Your Business Efforts

The process of centralization helps in optimizing and streamlining the flow of volumes across geographies. Businesses can now bundle their resources and build centers of excellence by introducing advanced analytics.

  • Deploy Cross-Functional Teams

Specialization of supply-chain processes, be it inventory management or requirement analysis, overspecialization is not the perfect solution to optimize workflows and operations. Instead, it is efficient to bundle responsibility of all processes involved in the supply chain throughout, in cross-functional teams. This ensures an end-to-end responsibility among the entire supply chain and results in optimized costs, inventories, and services.

  • Apply Zero-based Principles

Applying a zero-based approach helps to accurately assess the required structures and competencies for the business. Consistent business effectiveness requires minimized organizational components initially, which can further be expanded to add value that will add more value to the company.

  • Speed\ Up The Decision-Making Process

Digital supply chain innovations are subjected to flexibility testing in pilot projects. This requires faster decisions and release processes made. Considering the business cases and associated risks assessments, it is crucial to implement agile principles for progress as well as decision making for whether to continue with the project or abort it.

  • Decide On Dynamic Roles And Capabilities

Capabilities and various roles should be aligned to new technology requirements and processes. Businesses can take up partnerships to create best-suited solutions, thereby allowing internal resources to focus on their core competencies, such as development and deployment of software for products and services, etc.

The above guidelines will help businesses transform into an efficient next-generation operating model, to obtain a competitive edge of digital transformation. To learn more about how the next-generation operating model increases ROI and productivity, stay tuned to our latest blogs.

Read More:Robots and Humans Working Together in Supply Chain: Exploring the Possibilities

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