The general concept of the term digital supply chain (DSC) has shifted in the past years. It was originally coined to describe the systems by which physical goods, such as music recordings and books, became deliverable in digital form, in particular, over the Internet.
But this technology has disrupted the traditional market a lot – by stripping the time, distance and cost of bringing products to market.
It is generally accepted that DSC applies to a broader range of supply chain models, including B2B production and distribution of products and services. The fact that companies are already using digital technology to their advantage in managing supply chain activities suggests that modern supply chains warrant a DSC description.
The digital supply chain is the key to the effective and successful operation of every company that manufactures or distributes products. For many companies, the supply chain is responsible for shaping the business itself.
It connects business management to the chain participants – suppliers of raw materials and parts, the production process itself, warehousing suppliers and distributors of finished products, and finally, the customer.
The combination of converging technologies and customer pressure is giving rise to a completely new and different supply chain that requires new terminology – the supply network, through a fully digital ecosystem, with 3G networks being digital at their core.
Managing the Digital Supply Chain
Supply Chain Management defined according to The Council of Supply Chain Management Professionals as:
Supply chain management includes the planning and management of all activities related to supply, procurement, transfer and all activities of logistics management.
Importantly, it also includes coordination and cooperation with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. One of the functions of supply chain management is to integrate supply and demand management within and across companies.
Supply Chain Management is an integrative function with the primary responsibility to link key business functions and business processes within and across companies into a coherent, high-performance business model. It includes all of the logistics management activities we mentioned above, in addition to manufacturing operations, it leads the coordination of operations and activities with and through marketing, sales, product design, finance and information technology.
The fundamentals of Supply Chain Management (SCM) lie in managing the interdependence of all business elements in the chain. Key business processes are integrated in a way that adds value to both customers and other stakeholders in terms of products, services and information. Under a strong supply chain business in place, there is data sharing both upstream (with suppliers) and downstream (with customers) providing benefits including:
- Improving time to market for products.
- Cost reductions across different business functions.
- Allowing all parties in the supply chain to planning & managing resources Better for future needs.
- A better customer retention record.
When a robust supply chain model is supported by the best technology, it makes companies resilient to change in the supply chain. This contributes to overall organizational flexibility, which is vital especially in uncertain economic conditions, such as the one we are currently facing.
It also enables companies to be flexible and adaptable quickly to respond to different market conditions, supporting growth potential and opportunities for both manufacturers and the supply chain as a whole.
Eight key Business Processes
Looking at some of the business processes configured within the supply chain, we can see how best-in-class ERP systems offer a platform in digital supply chain integration:
- CRM (Customer relationship) management creates a structure for developing and maintaining relationships with clients. Individual customers or groups are identified, based on their value over time, and their loyalty can be enhanced by providing them with customized products and services.
- Client teams cater to key accounts and other client segments. They also work with key customers to improve operations and eliminate demand volatility and non-value-added activities.
- Supplier Relationship Management determines how a company interacts with its suppliers. The company also has to form close relationships with some of its suppliers. Good management of relationships with suppliers includes setting up and managing the right PSAs, so that the company and its suppliers continue to benefit from the most favorable business arrangements.
- The Customer Service Department provides the primary point of contact for the PSA Department and can provide information to the customer on orders, shipping dates, and product availability. The Manufacturing and Logistics ERP modules provide the data required by the Customer Service Department
- Demand management allows the company to be proactive in matching supply with demand. This process involves forecasting and synchronizing supply and demand, in order to increase flexibility and reduce volatility of demand. The process must use customer intelligence, historical sales information, and planned marketing efforts to forecast and influence demand.
- The order fulfillment process includes all activities that are necessary to identify customer requirements and design a process that allows the company to meet customer orders, while minimizing the total cost delivered. The clear objective here is to develop a seamless process from supplier to organization and to different customer segments.
- Manufacturing flow management includes all the activities necessary to move goods through production and obtain, implement, and manage manufacturing flexibility in the supply chain. Manufacturing flexibility reflects the ability to manufacture a variety of products at a proper rate and at the lowest possible cost.
- Managing manufacturing flow management clearly requires the element of manpower planning, so some software providers have developed human resource modules that integrate with the ERP system to facilitate this planning, and the identification of detailed and non-detailed customer needs; Selection of materials and suppliers in conjunction with the supplier relationship management process; and development of production technology that seamlessly integrates with the end-to-end supply chain.
- Returns Management is the SCM process by which activities associated with product returns, reverse logistics, gate keeping and avoidance are managed within the company/business and across key members of the supply chain, and should be taken care of as it is an opportunity to gain a competitive advantage.
Now, you can get your Supply Chain Management Program from Optimus Institute which is ideal for those who seek a simple and efficient way to enhance their key leadership skills.
This Program is designed for designed for all Supply Chain Employees who is holding or seeking a managerial position and wants to transform his relationship with his team, ready to stand out as a top leader in their industry.
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