Harnessing Digital Technologies for Supply Chain Optimization

Are you ready to navigate the digital landscape of the supply chain world with us? It's time to decode the complexities of digital transformation and how it reshapes the supply chain landscape. Our host, Tony Hines, sets the stage by analyzing the backbone of this shift - technologies such as cloud computing and their impact when compared to other sectors like advertising. As we journey through this transformation, we uncover the potential roadblocks businesses might face, like fragmented data and budget hurdles. However, with a dedicated team and sturdy management skills, the digital transformation journey is not only feasible but also rewarding.

But there’s more! We also delve into the intriguing world of big data, artificial intelligence, predictive analytics, and machine learning. Tony reveals how these pivotal technologies can improve decision-making and predict future outcomes. Furthermore, he provides a roadmap for businesses keen on integrating digital supply chain technologies. Whether it's creating a unified platform, automating processes, or fostering collaborations with third-parties, we got it all covered. So, get ready to revolutionize your supply chain operations with us on the Chain Reaction Podcast.

Catch Up and Listen to Recent Episodes
Tracing the Evolution of Advertising: Past, Present and Future Trends   07/11/2023
Navigating the Future: The Phasing Out of Third-Party Cookies in Digital Advertising  14/11/2023
Redefining Consumption Habits for a Sustainable Future   21/11/2023
Enhancing Supply Chain Success Through Customer Focus 28/11/2023
Navigating the Realm of Resilient Supply Chains and Risk Management   05/12/2023
Harnessing Digital Tec

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Transcript

Speaker 1: 0:13

Hi, tony Hines here and you're listening to the Chain Reaction Podcast, all about supply chain advantage. Thanks for dropping by today. Well, some good things coming up in this episode. Today we're going to think about digitizing the supply chain and what that means for our supply chains. We're going to take a look briefly at the technologies that underpin the modern supply chain and we'll take a look also briefly at how digital technologies are affecting other industries, for example, such as advertising, as well as what happens in supply chains. So I'm just going to summarize those similarities and differences that occur, so stay tuned. Chain Reaction.

Speaker 1: 1:00

Now I know that there isn't a meeting that I attend, either online or in person, where I see other supply chain professionals and I talk to them about developments in the supply chain, and the standing joke quite often is about how we used to do everything with pencils and paper and then we brought in technology, and usually what they mean by bringing in technology is that we moved everything from calculators, pencils, pens and paper to spreadsheets, and they often joke that, yeah, we still manage our supply chain with a spreadsheet. Now, there's nothing wrong with spreadsheets. Spreadsheets are a tool, and I like everything else and I use spreadsheets all the time I'm sure you do for all kinds of things. You can do some quite complicated statistics on spreadsheets. Even so, we shouldn't be ashamed of saying we use spreadsheets. But there are better systems in the modern world to actually digitize the supply chain which might be a little bit more effective, and we're going to discuss what they are and why you might need them. Well, I mentioned programmatic advertising, and that's a process of automating the purchase, sale and delivery, as well as the measurement of digital advertising campaigns, and it uses what's known as ad tech advertising technology platforms to do that.

Speaker 1: 2:19

Digital supply chains refers to the use of digital technologies to manage and optimize the flow of goods and services from suppliers to customers, and while there are some similarities between the two technologies that we're talking about here, they're certainly not identical but obviously the things that are similar. We're talking about digital technologies, and it uses a range of technologies that will come to in a second that are fairly similar. A digital supply chain is a supply chain that leverages value through the application of digital technologies and data analytics and that guides our decision making to optimize performance and quickly respond to any changes in conditions. The main idea behind digital supply chains is to empower businesses to get real time information so that they can ensure that the most efficient planning is taking place and you can react to changes that occur fast and that's important, isn't it, as we know, in supply chains. Some examples of the digital technology we employ in the supply chains are cloud computing, blockchains, big data, artificial intelligence, predictive analytics and machine learning and, as well as those things, the Internet of Things, and we'll explain each of those in a little more detail as we progress through the episode.

Speaker 1: 3:38

Businesses can implement digital supply chain technologies by integrating what's known as a digital transformation, and we might be doing this over a number of years and we might be on a journey. So we need a roadmap to do that and we might look at both short-term improvements, mid-term and the strategic long-term vision that we have for moving from A to B and that's from where we are now to a full digital transformation. Now, these things very seldom have beginnings and ends in the way we think about many projects, because there'll always be something to improve in the digital transformation, because it's a never-ending process. Things get better all the time, the technology gets better and we're able to do different things with that technology that we couldn't do maybe a year or two back in the past. So when you want to implement a digital supply chain technology, yes, you can have a project to do that. It can go over a two to three year period. But don't think it's ended there, because you'll probably want to start again on an update to what you've done already, because by that point, because of the way technology does change so fast, other things will be available. So we unify data processes, we automate all the planning processes, we collaborate with third parties to build support in a network that creates our digital supply chain processes and systems.

Speaker 1: 5:08

There are many challenges, of course, faced by businesses when implementing digital supply chain technologies, and these challenges include fragmented data across network nodes, limited visibility in some areas. A multitude of internal and external risk comes into play. There's constantly changing buying behavior and high expectations of what's going to happen, employees and supplier. A version to change becomes a problem sometimes and there might be a lack of skills in your organization to actually make the transformation. You might need different people. You might need to bring in different talent, different people with different skills that can actually push forward with the transformation, and that pushing forward might actually happen faster once you've got the right people in place. So you might have to shed some labor and you might have to acquire some new skills by hiring new labor.

Speaker 1: 6:01

On willingness to turn over supply chain control to digital systems, complexity of the logistics network and lack of resources, as well as lack of management skills to affect the change, come into play, and there might be security concerns. And, of course, the biggest constraint is probably the budget, because these things will cost money. Having said that, some of the transformations can be done a lot easier nowadays than they could a few years back, because we may not have to invest in the big fix, the big bang technology to change everything all at once, but rather we can bring people in as partners to assist us with our project to transform from state A to state B. So overcoming the challenges is our task, isn't it? We've got challenges. Do we need a dedicated team on this? I'd say we do. It's clear. Most organisations that have made digital transformations happen, and happen fast, have had dedicated teams to push ahead with the transformation and to carry people with them in that process, and they need the right management skillset to actually do that.

Speaker 1: 7:15

Change management is no easy feat, as if you're a manager, you will know. So you have to have those skills well honed, well developed, and you have to use them to the max to carry the people in the organisation along with you, and you need a few good results on the way. It's a bit like a ball game or a football match, soccer match, where you have a couple of wins and everybody gets excited and motivated by those wins. Well, that's what you need in an organisation you need to demonstrate that this is going to bring clear benefits to the team when it gets introduced. So if they can see a few early benefits and they can get onside with it, that will carry the momentum forward to make the change. So keep that in mind. And, of course, you do need a strategic long term vision. You need to know where you're headed, what you want to achieve with your transformation process.

Speaker 1: 8:10

In addition, the organisation can leverage technology to minimise supply chain disruptions by developing models to anticipate those disruptions and examining first party retail data. Sharing retail data with suppliers, connecting business functions with real time updates, bakes in that supply chain resilience that we talked about in another episode. It bakes it into the product design, because we're designing everything in from the start, so it gives us a great opportunity to push forward and it provides end to end visibility with supply chain control, and we might even align and integrate an internet of things strategy with the manufacturing and logistics. So integration is the key. We're on an integration project. We're integrating processes, systems and people, and that's what digital transformation is about. It's about having the right people, the right processes and the right systems.

Speaker 1: 9:19

Having real time data and better quality information on which to base decisions is at the heart of wanting to digitise the supply chain, and that's the major benefit that it brings to your organisation. You'll get real time data. It will probably be better quality and you won't be guessing. You won't be just guessing in the dark or taking something for granted that something did happen when it actually didn't. You'll be able to see that. It opens up the total supply chain to become visible, and that's very important in fast moving, rapidly changing conditions impacting supply chains.

Speaker 1: 10:05

Traditionally, supply chains relied on the linear progress of goods and services from the sourcing of materials to manufacturing, distribution and then on to the point of sale, and it relied on people at each stage passing on that information so that we knew what was happening, and that might have been done in a variety of ways. It might have been done by telephone, might have been done face to face, it might have been an email, it could have been in a variety of different communication channels. But nowadays we need that access inside a total system so that we can just log on through our device and see what's happening immediately. And that might be we see it visually, or we see the numbers, or we see exactly the messages, the signals of what's happening. Unfortunately, as each step of the supply chain relies on the step before, delays at one point create costly delays in another. In effect, each step requires assessment and planning processes that can easily be thrown off.

Speaker 1: 11:11

Schedule and digital supply chains use data produced every step in the supply chain to plan effectively and create dynamic responses when unforeseen delays arise. So the system itself might be able to alert somebody or it might be able to correct something. It might have links to other parts of the supply chain where it can take action without the intervention of a human, and that can be good. If it works efficiently, it will ensure that an action is taken. It won't rely on that human intervention, and so it can head off any disruption before it begins. Digital supply chains are powered by the data that they produce, and that data needs to be stored and analyzed, and it will give information about actionable insights, what steps we can take to make improvements.

Speaker 1: 12:03

Cloud computing connects everything. The Internet of Things might connect other machines which can take action without intervention, and artificial intelligence can gather and act in its own right. So the benefits of digital supply chains improve efficiency, reduce cost, provide better customer service and give increased transparency across the total supply chain. The global digital supply chain market is actually projected to reach just under 14 billion by 2030. That's according to Allied Market Research. Now, that's interesting because that's an enormous sum of money to be invested in the system. Let's just clear up a few things about some of the terminologies here.

Speaker 1: 12:50

The Internet of Things what is it? It's a network of physical devices vehicles, home appliances, other items embedded with sensors, software, and they connect to each other and to other things that enable them to exchange data and so that data exchange can move machines, move trucks, switch on, switch off appliances and do all sorts of clever things without a human ever being involved in the process. It's often abbreviated to IoT. Cloud computing is the delivery of computing services, including servers, storage, databases, networking, software, analytics and intelligence over the Internet and it's connected through communication technologies. So if you've got a 4G network, it will hook up to the 4G network and you can instantly access those servers and databases and storage and all sorts of software through the cloud. It's faster, it allows for innovation, it provides you with flexible resources on the go and it gives economies of scale. Economies of scale means the more you use, the lower the cost. So if you produce things at scale, it becomes lower in the unit cost. And the blockchain you'll hear that word used many times when people talk about digital transformations and it's effectively a decentralized ledger that records transactions on multiple computer systems in a secure and transparent way. So you connect all the partners in the supply chain and they can see what's happening in other parts of the supply chain where they're given access to do so, and that makes things tighter or secure.

Speaker 1: 14:29

Big data been around for some time, but it's basically large volumes of structured and unstructured data that can be analyzed to reveal patterns, trends and associations so you can see what's happening. It's useful to understand the patterns. So, for example, during the COVID-19 pandemic, big data was used to assess where COVID was breaking out. You could see very quickly patterns of infection in a supply chain. You could use it to see trends with your movements of goods or with what your customers are doing or what your suppliers are doing. So big data is a very useful asset if you can process it, and that's the key. You need digital transformation to process the volumes of big data. It's only now that we've got computing capacity to do so that we're able to use that data, and that will give better quality in the decision-making processes.

Speaker 1: 15:23

Artificial intelligence is the simulation of human intelligent processes by machines and especially computer systems, and you'll hear things like the two-ring test. What does that mean? That means can the computer do what a human does? And that was the question asked by Alan Turing. It includes learning, the acquisition of information, rules for using that information, can it reason and can it reach definite conclusions through similar process to humans, rationalization, etc. And working out what's happening to make that decision and does it self-correct? Well, artificial intelligence does all of those things, and you'll have heard about examples of the use of artificial intelligence. That was used in chess games, for example, where you had the top human players in the chess world competing against a machine. And, yes, did a machine actually beat them. Well, it happened. So AI is here to stay. It's about how we control it and how we use it ethically to do good.

Speaker 1: 16:22

And then we've got predictive and analytics that we talk about quite a lot, and that's the use of data, statistics, algorithms and machine learning techniques to assess the likelihood of future outcomes based on that historical data. And now we have to be careful here, because assumptions and historical data don't necessarily lead to decisions that are better, because the past may not be an extension into the future precisely, but it's perhaps in most cases going to be useful to see what's going to happen, unless there's a discontinuity that takes place. So the past has no reflection on what's happening now and in the future. So it can improve our decision-making process. Predictive analytics, providing we're careful to use it appropriately. So we make relevant assumptions and we understand that we have made assumptions, so it's not fixed. We can change them and we use past data, but only that past data that we think is likely to continue into the future. And that's always been a problem with forecasting that we sometimes forecast into the future but don't recognize that the future's actually changed and it's not a reflection necessarily of the past. And finally, machine learning, and that's the application of artificial intelligence that provides systems with the capability and ability to learn and improve from their experience without being programmed to do so. So they don't need humans to program they learn by themselves in the process you've set them up to learn. So I hope that helps you understand some of the terminologies around digital transformations and you'll be able to engage in those conversations much better. And I'd advise you to go and read a little more about those things, and I'll put some links in the notes to this episode that might help.

Speaker 1: 18:14

Now let's look at some clear steps that can be taken. We need a clear vision. That's been mentioned a couple of times as we've moved through this episode. So the first step in any digital transformation, in fact, in any strategic change program, is to have a vision of how you'd like things to turn out. Do you know what you want and have you aligned that vision with the reality that surrounds you, with the resources you have, with the budget you have, with the partners you have, or are you planning to get new partners to help you do so? And you need to communicate with all the stakeholders that are affected by your digital transformation, and it makes a lot of sense to talk to others about their experiences so that you can learn from their mistakes and avoid them and avoid the cost of them. It also makes sense to see how and what people are doing elsewhere that's improved their processes, their systems and, of course, the skills of their workforce.

Speaker 1: 19:11

The second thing is you need a unified platform that can give you end-to-end supply chain visibility. Platforms are important. Platforms are the technology on which everything else is built, and so to have the right platform for your digital transformation is essential, and the platform is usually the tech providers that build a system that's suitable to host your plans. What you want to do? Will it work? Well, they've probably done it elsewhere, so they know it works, but there have been, of course, many failures, and you don't want to be one of those. So you want to look around and do your homework and your research before you begin this process, but unifying data and processes will help businesses to identify inefficiencies, bottlenecks and delays in the supply chain processes that they have, and it will give you the information on which to make changes to that system to improve it. Automating processes, including planning processes, will help you to ensure that those processes are carried out without your involvement.

Speaker 1: 20:18

Automation is the key, it's a driving force for this change. You need to collaborate with third parties. There might be vendors to implement digital supply chain technologies and there might be, of course, other providers, other suppliers, people in your network with the necessary expertise that you want to learn from to reduce the risk of failure. And finally, the final step is to build support for that digital supply chain across your organization. That helps overcome any resistance to change and it means that everyone's working toward the same goal the success of the project to implement your digital transformation, and that will make life better for everyone. So, over to you. What will you do next? Well, there's the question. I'm going to leave it there and I hope you've enjoyed this episode and I hope you've learned something new and I hope you'll be able to develop digital transformation in your supply chain to achieve that supply chain advantage.

Speaker 1: 21:25

Well, there's been some interesting episodes in the past couple of weeks, and the sun done ahead in your way too. So if you haven't picked up recent episodes, you might want to stop by and have a look at those. There was one on the far reaching impacts of infrastructure projects, and that was just made prior to the cancellation of HS2 and the United Kingdom, and it discusses the factors that surround major infrastructure projects, including HS2. And then we've got sustainable food systems. It's very important for the world economy that, with a population of 8 billion people in the world, were able to be efficient and, of course, non-polluting when it comes to producing food, and we don't want food waste. So if you want to find out more about sustainable food systems, drop by and take a listen to that. Then, if you haven't caught up with the front end of the supply chain, looking at advertising, there are a couple of episodes out on that, one tracing the evolution of advertising past, present and future trends and the other one looking at third party cookies. And there's one on programmatic advertising. So you might want to stop by and have a listen to those.

Speaker 1: 22:39

And then we have an episode coming up which is about redefining consumption habits for a sustainable future. So, again, sustainability top of the agenda at the moment and, of course, we need to think about how we can be more sustainable. So it might be worth your while taking a listen. And then we've got an episode coming up shortly on how to build resilient supply chains, called navigating the realm of resilient supply chains and risk management. So if you want to know how to build a resilient supply chain, have a listen to that one. And, in addition to those, don't forget the Saturday news random, which will be out at 12 noon on Saturday. So have a listen to that too. Chaining reaction reaction, reaction reaction. I'm Tony Hines and I'm Simon O, and I'll see you next time in the Chain Reaction Podcast. Bye for now. You've been listening to the Chain Reaction Podcast, written, presented and produced by Tony Hines.