Posted On January 31, 2022
Gone are the days when Excel sheets (or even a pencil and paper) could provide companies with everything they needed for their supply chain.
Modern technology can work wonders on supply chains, helping companies increase efficiency, decrease costs and boost profits. But even with the countless options available, many companies (shippers and carriers alike) are slow to adopt new technologies and make the switch. (A 2017 study found that almost half of supply chain professionals still used Excel to track shipments.)
We’re nearing the point of no return—companies that refuse to accept the supply chain digital transformation soon will be left behind and lose any competitive advantage they once had. The longer they wait, the more difficult the transition will be, and losing customers and partners along the way will become increasingly more likely. But it’s not too late to adopt a digital supply chain that’s both agile and resilient, and this blog post will tell you how.
But first, what is supply chain digitization?
In the broadest terms, supply chain digitization is the process of turning analog processes into digital ones, incorporating data and automating what was once manual labor. For shippers, a transportation management system, or TMS, checks many of these boxes, pulling data from internal and external sources to aid companies in their supply chain decision-making.
Keep reading to learn more about the future of supply chains and how to start digitizing yours.
2020’s effect on the digital supply chain
The transportation industry has been slow to change.
While industries from healthcare to manufacturing have prioritized digital transformation, shipping has largely remained the same, and for several reasons.
First is the sheer nature of global supply chains. With so many dynamic elements across the globe, creating systems that can fit various infrastructures, cultures, regulations and languages has been cost-prohibitive. But 2020 changed that.
Carriers have reported record profits during the pandemic. Big players now have the capital needed to invest in digital supply chain tools and systems, and smaller companies need to be prepared to catch up.
The effect of digitization on supply chain management
A digital supply chain doesn’t just help companies keep up, it helps them get ahead. Digitization brings significant benefits to everything from supply chain strategy and supply planning to overall revenue growth.
-Automated manual processes. According to an article in Supply Chain Management Review, companies spend more than $1 million every year on manually entering data into ERPs and other back-end systems. Automation of those processes reduces that wasted spend.
–End-to-end visibility. Visibility is key to a high-functioning supply chain—more than 90% of chief supply chain officers and other supply chain executives reported it was important to success, according to Forbes. End-to-end transparency throughout the entire supply chain equates to advanced analytics, allowing companies to spot trends in their business operations, lower supply chain costs, and automatically identify risks and prevent issues from popping up.
–Streamlined supply chain operations. Supply chain digitization means a central source (or sometimes a couple of central sources) of information. That wealth of information can lead companies to make better decisions. For example, a TMS can help shippers identify numerous orders heading to the same city. From there, they could consolidate the items and ship them as one multi-stop TL shipment instead of four LTL shipments, to lower costs and potentially save on transit time at the same time.
–Increased capacity. Supply chain digitization typically requires a financial investment, which can neutralize the cost savings caused by new operational efficiency. But a digital supply chain can still have a significant impact on a company’s bottom line—the time employees would have spent entering data into the system can now be spent on other, more important supply chain functions.
-Real-time planning. The global nature of the supply chain can make things tricky. Without automation tools in place, communicating with other companies on the opposite side of the globe can be a slow process. If it’s daytime in the U.S., getting a quote from a partner in China, where it’s the middle of the night, can mean a lot of sitting around and waiting. But a system that pulls in quotes instantly speeds up the process drastically. Even domestically, instant quotes are important. Factors like demand, the weather and geopolitical events can cause pricing and availability to fluctuate daily—meaning relying on a quote from a few weeks ago isn’t always a solid strategy.
–Stronger customer experience. Modern customer demand is all about 2-day delivery and free shipping. Supply chain technology helps companies achieve that without breaking the bank, while also adding the ability to give customers updates on where their shipments are.
Digitizing your supply chains: where to start and avoiding common pitfalls
Step one in digitizing a supply chain: adopting a TMS.
A TMS can automate processes and collect all of the data mentioned in the business benefits above. Things that had been done via best guesses can be fueled by data to make informed decisions. But the transition from analog to digital isn’t always swift.
When making the switch, first consider the various integrations needed to streamline the supply chain. If a dock worker needs to use five different technology platforms to execute a shipment, was any efficiency really gained? Finding technology that seamlessly integrates with current systems and either pulls in external data or exports data into those other platforms will have a major impact on time savings.
Looking at existing supply chain parameters, as well as potential needs in the near future, is also important. Getting an entire organization set up to use a TMS, just to have to switch systems a year or two later, will only add to the overall cost, not to mention the headaches. For more tips on integrating a TMS into your supply chain, check out our recent blog post.
If you’re curious about digitizing your supply chain to lower operating costs or grow your business, Flat World can perform an audit to find the biggest areas of opportunity. Contact us to learn more!