The Shift to Digitizing Supply Chain Operations

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The majority of supply chain organizations are increasingly focused on digitizing their supply chains — and know doing so will give them a competitive advantage, according to a recent report by JDA Software Group. However, most organizations are without a comprehensive digitization strategy, the survey also found, and will have to overcome certain barriers to achieve a higher level of supply chain visibility and improve overall operations.

Of the more than 200 supply chain professionals surveyed for the JDA report, titled “The future is now: the power of supply chain digitization,” 78% said their organization was either putting some emphasis on digitizing their supply chains or making it a major initiative. Specifically, 41% pointed to putting some emphasis on digitization while 37% said it was a main focus of the organization. Another finding was that 66% of respondents believe making supply chain operations “highly digital” would give them a significant competitive advantage in the next five years.

JDA Software defines “digitizing” a supply chain as “the process of using technology advancements linked with physical and digital assets to redefine and reimagine current business practices to create a significant competitive advantage.” Companies today have access to huge amounts of digital information, and more organizations are stepping back and thinking about how to leverage the data to drive a higher level of service to customers at a lower cost, said Fred Baumann, vice president of global manufacturing industry strategy at JDA Software.

Despite the high levels of interest in applying digital technologies to the supply chain, the report showed only 10% of organizations surveyed have a “holistic digitization strategy” in place. The process of digitizing the supply chain is still a fairly new concept, Bauman said, which is perhaps the main barrier to more widespread adoption of digital strategies. Many companies are in the process of figuring out how they need to tackle the issue and how to leverage available technologies to drive the most value for their organization.

“Data is almost becoming this new currency — it’s a resource that people are trying to leverage more effectively,” Bauman said.

The good news, he added, is most organizations realize there is a need to develop a more comprehensive digital supply chain strategy that includes not just internal supply chain operations by external collaboration with trading partners. Nearly 30% of supply chain professional surveyed by JDA said their organizations were electronically integrated with 10% or less of their suppliers today. By 2020, however, nearly 40% said they anticipate electronic integration with more than 80% of their suppliers. This goal was a “big aha” from this study, Bauman said.

Other key findings of the survey Bauman pointed to were the specific aspects of digitization organizations believe will provide the most value. For instance, 59% of respondents identified supply chain visibility technology as being able to drive the most value for their organization. Fifty-two percent said advanced analytics had the greatest potential of driving significant value for the organization and 44% identified supply chain system integration with trading partners. Internal supply chain digitization technologies, the Internet of Things and mobile applications were also identified as valuable technologies by around 30% of survey participants.

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