Agile, collaborative supply chain partnerships rely on digital supply chain solutions designed to create a common operational picture.
Enterprises throughout today’s supply chain are dealing with a challenging ecosystem. Disruptions and demands throw processes and workflows off course — and sometimes present opportunities that go untapped. Only businesses that foster agility can adapt, adjust, and remain flexible enough to succeed — which more often than not requires digital technology.
And yet, even those businesses may find themselves coming up against reluctant business partners who haven’t made the same digital investments. Agility isn’t as useful when the rest of the supply chain is dragging its feet. But by investing in digital platforms that provide a common operational picture across business partners, forward-thinking companies can help create the collaboration necessary for overall success.
Why Agility Matters in the Supply Chain
Agility is a crucial differentiator throughout the industry, from manufacturing and logistics to transportation and delivery. Businesses may claim they are agile, but not all of them are prepared to follow through on what that means. For true agility, an enterprise must be able to adjust their operations according to shifts in supply and demand. Businesses should also be able to take advantage of last-minute opportunities, proactively making strategic pivots, or taking calculated risks based on current data.
Today’s supply chain firms face multiple challenges, such as high consumer expectations, complex global markets, evolving industry regulations, and volatile weather events. In this ecosystem, there are endless situations where agility is crucial for ensuring successful business outcomes. For instance, if a vendor’s output comes in lower than expected based on historical data, an agile supply chain partner has to be able to respond and fast. A business should be able to rapidly source supplemental products to make up for this unplanned shortage, preferably with minimal disruptions to service.
How Digital Solutions Enable Supply Chain Agility
In this demanding ecosystem, it’s digital solutions that hold the most performance-boosting potential for forward-thinking companies. A recent McKinsey study suggests that digitization could boost supply chain earnings by 3.2% — impressive growth in a market where profit margins tend to be razor thin. The same study shows that the digitization level for most supply chains is at 43% — a low among major business types.
Some of that hesitancy among supply chain firms may be due to the inadequacy of previous digital solutions. It has taken some time for technology to advance to the point where it can address the needs of manufacturers, shippers, suppliers, and customers. But prices are coming down, deployment is on the rise, and digital solutions are finally offering real supply chain agility, through the following capabilities:
- Data Standardization: If supply chain agility relies on faulty data, it’s just a faster way to make mistakes. Only digitization can help ensure accuracy by transforming multiple modes of information — whether from manufacturers, suppliers, shippers, or foreign entities — into a standard and quickly scannable form.
- Centralized Visibility: Digital tools can help aggregate data from all relevant sources, including cargo and transit sensor arrays, GIS location tools, and even legacy management software. With all that data in a single place, managers get a clear, unified, and more accurate overview of the situation at hand, so that they can make better decisions in response.
- Flexibility: Digital tools can provide the flexibility supply chain companies need for true agility. With flexible tools that respond to data inputs, it’s easier to adjust your decision-making to changing conditions.
Supply Chain Agility Requires Strong Collaboration
Supply chain agility is a powerful capability. But too many businesses forget that making decisions for their operations can clash with the processes and objectives of their many other supply chain partners. Many of the benefits of internal agility won’t matter if other stakeholders refuse to update or adjust their workflow based on your evolving needs.
The key to real agility is collaboration. Essentially, this means two or more companies working in coordination, to strategize for mutual success and deliver on their objectives. The advantages of effective collaboration are manifold. Companies working for mutual benefit can improve efficiency and effectiveness, potentially innovating to meet demand and grow markets. Ideally, it means the supply chain can create real value rather than indulging in price wars.
Of course, collaboration requires seamless communication. Business must have clear channels of communication, with specific processes to that all parties have access to the information they need. Enterprises must be able to share relevant and accurate information, whether data, plans, ideas, or procedures. And it requires some level of trust and transparency to ensure that stakeholders are making decisions that will benefit both parties.
Ensuring that kind of communication can be a challenge — it doesn’t just happen automatically. A 2010 Customer and Channel Management survey noted that only 20% of the industry’s collaboration efforts delivered significant results, reflecting the difficulty of aligning company objectives and processes. To create a win-win solution, companies can’t rely on manual or bureaucratic methods. They must deploy the right digital technologies that deliver visibility across the supply chain, with a common operational picture of a shared domain. Only powerful digital technologies can prepare partners to make decisions together, to understand one another’s capabilities and needs, and to successfully and quickly implement agile solutions.
Connecting The Dots
Effective supply chain agility relies on partnership and collaboration. Collaboration relies on effective, streamlined communication. And both rely on robust digital solutions that replace outdated, bureaucratic, and siloed workflows. For operational success, suppliers, transportation carriers, and brokers all need access to a platform that offers the right capabilities.
An effective digital platform allows for real-time visibility and response. This represents a significant component of agility — that information and critical alerts are generated and delivered in time for effective action. That starts from day one, with efficient onboarding of partners to the system and workflow. Additionally, if your company is the one that owns the digital platform, it’s much faster to choose partners that work for you, and replace the ones that don’t.
The right tool also integrates data from across the spectrum, from legacy systems and IoT technologies to data sources belonging to business partners. You can incorporate information from transportation management software, SCMS, ERPs, and asset management solutions, but the right platform goes above and beyond what any one of these programs can do alone.
With the right digital tools, it’s easier than ever to replace the inefficient, labor-intensive, and error-prone processes of yesterday’s supply chain. With tools that enable a connected, aligned supply chain partnership, it’s easier to respond to disruptions, make proactive decisions, ensure win-win scenarios, and ultimately deliver better service to customers.