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Digitisation this, digitisation that. We’ve been talking about the potential of digitisation to transform supply chains and procurement for years – but where are we today?
The answer: not far enough along. According to a study from McKinsey, the average supply chain has a digitisation level of 43%, the lowest of five business areas that were examined. What’s the problem? As digital hype continues to grow within supply chain and procurement, executives are pushing their teams to maximise their digital impacts with technologies like artificial intelligence (AI), predictive analytics, the IoT (Internet of Things) and intelligent workflows. Although analytics and the IoT are currently being used across many supply chains, logistics networks and procurement operations, intelligent workflows, AI and blockchain are still in the early stages of adoption.
To take the next step, supply chain and procurement leaders need to reset expectations and focus on the benefits of digitisation right now – not the sweeping, futuristic possibilities that these technologies promise at some future point in time.
At the simplest level, digitisation helps companies increase collaboration to improve the way they operate. But before you can reap the benefits of next-generation AI or predictive analytics, an improvement needs to be made in how data is collected, integrated, analysed and shared. This is the spring board for every other digitisation initiative and use case – from AI and IoT to blockchain and intelligent workflows.
Success here results in more visibility across the supply chain, simplified operations, smarter decision making – and most importantly, the agility to create more value. For procurement, specifically, there’s thousands of variables to consider – from supplier selection and cost to risk, quality, shipping and more. The best procurement teams are incredibly agile and flexible – able to integrate new suppliers, change strategies and capitalise on opportunities when circumstances dictate. This type of flexibility and agility is nearly impossible without an effective digitisation strategy that makes collecting, sharing, analysing and acting on supply chain data simple, fast and easy.
Once you get the data right, realising the potential of digitisation becomes more of a reality. Centralised, multi-party data leads to greater collaboration, transparency and visibility. With a bigger bank of data and intelligence to analyse and act on, technologies like AI and predictive analytics become more useful – making it possible to uncover new opportunities and solve problems that weren’t possible previously. From there, intelligent workflows can predict problems and automatically trigger solutions before issues arise.
Another immediate benefit of digitisation is improved decision making. Let’s take the procurement of transportation as an example. From different carriers, timing and transportation modes to documentation, billing and intermediaries – the sheer amount of shipping scenarios combined with a nearly endless list of potential pain points (exceptions, delays, compliance, documentation errors, etc.), makes buying transportation one of the more complex tasks procurement has.
When supply chain data is digitised and shared, across multiple partners and networks, procurement tames this complexity. From procurement teams to shippers and carriers, every party can project and weigh future outcomes of different scenarios and mitigate issues that arise in real time – like a shipment with missing documentation. The ability to project potential outcomes and problems, identify root problems in real time, and trigger intelligent workflows to automatically solve the problem, all starts with having the right data.
The benefits of digitisation are clear and unstoppable. Five years from now, will anyone be able to survive through the digital era without truly embracing digitisation? For procurement and supply chain leaders serious about going beyond talk to capitalise on this emerging opportunity, the transformation needs to start at the very beginning – with data.
Samuel Israel is the VP of global business development at Slync, a supply chain and logistics digitization platform.
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.