Transitioning to Digital Supply Networks

By APICS CEO Abe Eshkenazi, CSCP, CPA, CAEThis article was originally published on apics.org, and is republished with permission.

With the advent of the fourth industrial revolution, or Industry 4.0, supply chain professionals are expected to embrace many new technologies – from artificial intelligence and robotics to predictive analytics and cloud computing.

To best integrate these technologies and share information among buyers, suppliers and partners, supply chain professionals also need to reshape their supply chains into digital supply networks (DSNs).

New insights from Deloitte reveal that, although companies are aware of this necessary shift, not all of them are ready for it. According to article authors Stephen Laaper, Glenn Yauch, Paul Wellener and Ryan Robinson, a DSN enables the integration of data from various sources to better inform production and distribution.

A traditional supply chain often is visualized as a rigid, linear arrangement of supply chain partners that handle the different primary management processes of plan, source, make, deliver, return and enable.

Each member of the traditional supply chain might share data with one other member, but that's the extent of the integration. A DSN, the authors explain, has a flexible, matrix-like structure that allows the different players and processes of a supply chain to all share data with each other.

There are several benefits to a DSN. For example, a DSN can be used to help reduce operating costs, improve product quality and increase visibility upstream. Downstream benefits include increasing sales effectiveness, generating new business development opportunities and creating strategic advantages.

In addition, the connected nature of DSNs helps companies speed up the decision-making process and better keep up with changing market needs, reduce risk, increase internal and external transparency, and boost profitability by increasing top and bottom lines.

Research by Deloitte and the Manufacturers Alliance for Productivity and Innovation (MAPI) shows that many companies are aware of these benefits and the value they can provide. However, the survey of 200 manufacturing executives also reveals a disconnect between participants' actual DSN implementation efforts and how mature they think their DSN strategies are. Specifically, only 28 percent of respondents had actually begun implementing a DSN, but 51 percent rated their DSN maturity as above average.

The researchers recommend that companies big and small implement a “think big, start small, scale fast” approach to building a DSN. Company leaders can choose one element of technology and then screen it and pilot it in a small area of the business to determine the benefits and pitfalls of the technology. If all goes well, the company can move on to full-scale implementation. This approach not only reduces risks by incorporating strategic expertise, governance, agile delivery methods and innovative thinking, but also allows a company to keep pace with the evolving market.

Training for the DSN world

Participants in the study also expressed concerns about not having enough talent to support these DSNs once they are established. Deloitte research suggests that nearly two-thirds of manufacturing employees do not have the technical, computing, math and problem-solving skills needed for advanced manufacturing jobs.

In addition, research conducted by APICS, Deloitte and The Manufacturing Institute predicts that 3.5 million manufacturing jobs will need to be filled in the next decade.

Approximately 2 million of those will go unfulfilled because of the current skills gap. APICS can help you prepare yourself and your team for the DSN roles of tomorrow.

One resource for new ideas and implementation strategies is the APICS Annual Conference, September 30-October 2, in Chicago. You can find out more by visiting apics.org/conference.