Digital transformation

From the April 2021 print issue

Why would supply chain want to leverage technology more? Aside from moving away from outdated legacy technology, there are some statistics to support digital transformation. For example, 79 per cent of companies admit COVID-19 increased their budgets but 47 per cent have not yet started to implement technology (State of Digital Business Report). As well, 93 per cent of supply and procurement executives are seeing negative business impacts from misinformation and poor supplier data.

Negative impacts include financial loss, delayed timelines, unhappy stakeholders and termination of supplier relations. Look to see if presenting a business case makes sense before gaining stakeholder buy in and ensure that your company is not stagnant and is protected while continuing to gain market share. The scope of your technology needs should be defined. State what problem you want to solve. Can you determine and define metrics and KPIs? Will employees and users accept and be able to use the technology or need additional training?

Supplier intelligence platforms
A supplier intelligence platform can help you diversify your supplier mix, reduce risks, help with environmental and social corporate governance (ESG), facilitate quick change, provide reliable data and enable upstream decision making. Tools to optimize technology include the Internet of Things (IoT), artificial intelligence (AI), machine learning and blockchain. But like any technology, manual processes must be in place first along with an understanding of the impact of these processes. Leadership support and cross-functional development are also key.

Here are some key questions:

  • How much must we order, create, ship and sell?
  • How can we use data to drive our supply chains?
  • How can we keep track of all the information?
  • How many orders have been entered for any good or service?
  • How much is in production and where are the goods?
  • Is demand being matched to customer demand?
  • Can cognitive technology help pull together information and combine big data and AI to crunch data? What key lessons will be derived?
  • Can cognitive technology enable quicker decisions and allow for real-time strategy adjustments?
  • Do we have a work culture that can support change and embraces new technology?

The right systems can help anticipate future behaviour by providing analytics with a big-picture view. IoT can help to enable visibility and facilitate the exchange of real-time information, thereby mitigating disruption. One example is the use of devices like GPS monitors, which help to track a ship’s location and temperature. This is useful for high-value and temperature-sensitive goods.

Such data will be needed to power automated systems in warehouses. Smart logistics solutions that manage paperwork will accommodate cumbersome paperwork tasks, for example verifying a trucker’s bond or processing a bill of lading. An IoT system can improve data accuracy and provide better data
to create demand forecasts. It can allow data to be collected continuously, or at specified intervals, thus preventing human error and hours of manual processing. Leveraging advanced IoT sensors that track and monitor inventory levels can create an up-to-the minute inventory tracking system.

Adding AI and machine learning will enable a better response to demand and supply changes. This allows for faster and more efficient supply chains by shipping product faster, decreasing inventory and increasing supply chain flexibility. AI uses a programmed rule that instructs the machine to behave
in a certain way in a certain situation. Machine learning uses algorithms that are trained on data to minimize error between predictions and ground truth rules (error function). The more data points it has, the better it gets. This is helping to eliminate delays and issues tied to disruptions. AI and machine learning take time-consuming analysis and compile it within seconds. Solutions are enacted in real time.

An integrated, intelligent technology will be a challenge for most, as companies will likely have to partner with a digital specialist for advice on how processes and practices will work for current and future challenges. A software-as-a-service (SaaS) provider can help to provide an intelligent portal to capture, create and expand your supplier master.

In theory, blockchain could replace slow, manual processes, strengthen traceability and possibly reduce IT spend. There are concerns with blockchain, such as permission and privacy, and it may be more valuable to manage databases and analytics better with your trusted partners than explore unproven technology.

Supply chain professionals can also use technology to uncover materials, regions and suppliers most likely to use forced labour by mapping bills of materials of products and services to raw materials, then cross referencing where there is a high risk of forced labour.

IoT can foster safer supply chains by leveraging machines and predictive analysis to monitor equipment and prevent accidents. Organizations can also ensure fair labour practices and create opportunities for minority suppliers.

The future of supply chain will still include people. Those people will work to change, evaluate and redirect the overall strategy in an autonomous environment that leverages AI, machine learning and other technological advancements.

Lisa Fenton is supply chain manager at Rapala VMC Corporation.