Why is Supply Chain Digitization Important?

Supply Chain Digitization

Supply chain digitization can bring a whole-lot difference in the traditional business processes and their supply chain operation. Newer innovation and technologies are already in the application of different business processes. Consumers worldwide are well known about the market conditions and demands, and they expect more visibility and efficiency from the companies. Even the companies also know digitizing the whole supply chain operations has become a must. In fact, many companies have already started this in different applications of their businesses. Other companies don’t have much time left to increase the visibility and digitize supply chain management.

Industry 4.0 refers to bringing revolutionary changes to the traditional business models, redesigning and transforming the operations of supply chain network, company, or process. Digitizing requires bringing a whole lot of changes to the business process as everything manual will be automated eventually. Newer technologies and innovations worldwide have made supply chain digitization a necessity. It will diminish the information gap and increase transparency from both ends, and so many more.

Digitization and Digitalization:

Though digitization and digitalization are no longer a newer term in the business world, these both play a vital role in transforming the business process digitally but has their own different functioning.

Digitalization is transforming the organization entirely digitally. It is a massive transformation for any business. Digitalization in a company or industry is only possible only when the company or business has been digitized entirely. Digitizing the whole organization is not an easy task at all, especially if the organization has been following the traditional process for a long time. However, most organizations have started different digitization applications in many of its operations and sectors.

Digitalization itself can bring radical changes in the business process. It is converting photos and products of the business digitally and making both the employees and consumers used to with the complete change of the process. These transformations later turn into resources and allow successful digitalization of the organization. It diminishes lengthy circles minimizing the need for things like paperwork, face-to-face meeting, etc.

Supply Chain & Digitization:

Supply chain management is all about ensuring meeting the needs of customers and suppliers successfully. The objective and goal of the supply chain to know about the demands of the market and consumers and ensure they get the best out of it.

As I already have mentioned earlier, with newer technology and all, consumer demands have also risen. They are well aware of the technological advancement that enables them more detailed information about the product, condition, and tracking. Supply chain digitization allows and end-to-end visibility for consumers. It ensures delivering transparency in four main components of data:

  • Timestamp
  • Location
  • Condition
  • Context

Supply chain digitization itself is a blessing for so many aspects of the organization where it has overcome the difficulties of tracking, analyzing, and planning more efficiently. It also makes the supply chain management more manageable to integrate advanced processes like demand analytical process, integrated S&OP reducing operational logistic barriers.

Newer trends are affecting supply chain operations for the growth in rural areas as well. Online trends have become a crucial factor in service expectation, development, and customization. These factors also lead to the role in the change of the demographical labor reducing and ergonomic requirements.

Enabling supply chain digitization itself is a massive challenge for the existing traditional organization. But it also opens numerous bright opportunities and possibilities for the business to grow faster, better, and more efficiently.

Video Credit – SAP TV

Capabilities of Supply Chain Digitization:

Every organization operates in its way. Digitization makes more room for providing the customers so much more with newer opportunities for the companies to satisfy the market demand as well as the consumers. SCM digitization allows the companies to know the requirements, expectations of the consumers understand better. With newer innovations and technologies, it becomes easier to address the needs considering the challenging factors as well. When you can plan, anticipate the challenging factors like risk, loss, etc. Your planning and execution become more efficient and fruitful.

Experts considered digitization supply chain as the new vision for the future supply chain management. But nowadays, to keep pace with the world market and satisfy customers, there is no choice but to digitize supply chain operations properly. The supply chain is a complex network that relies not only on linear transactions but also on so much more.

A digital supply chain can bring so many changes in the traditional SCM operations like:

  • The digital supply chain allows the management to establish faster product distribution, approaches, and transforming operations to the upgraded technology level has significant impacts on reducing time and cost.
  • New advanced forecasting technologies like predictive analysis improves operational efficiency. So, it becomes easier to make strategic decisions to improve pricing and operating costs better.
    The digital supply chain enables access to data for all. It allows for better visibility and real-time insights into the supply chain. Access to the information and data allows the management to reduce the gap between planning and execution. You can instantly bring any changes to the planning process’s feedback instead of waiting for frozen periods.
  • Along with product planning, digitization has made the supply chain expand its services more efficiently. New approaches in the delivery process allow the customers to get their products through different transportation services, tracking services, etc. The digitization supply chain enables consumers to enjoy the service to the fullest.

Establishing digital approaches to the supply chain can benefit in so many ways regarding improved speed, cost, flexibility, accuracy, efficiency, etc.

Challenges of Supply chain Digitization:

While digitizing the supply chain brings immense possibilities and benefits for the business, it can also be challenging to do that properly. Digitizing the supply chain can be very costly and time-consuming. There is so much to change for the existing companies for the right technology application. Implementing digitization becomes difficult for the operating difference between the companies. As your information and products are all digitized, you also need to ensure safety to prevent cyberattacks, security threats, etc.

The Components of Supply Chain & Digitization:

An efficient and productive supply chain consists of many components. From the beginning stage to delivering it to customers maintaining everything is a huge task. Each step is essential to handle this whole task from the beginning to the end-users. Five components of SCM in supply chain management are:


Digitizing the supply chain will enable automation of knowledge work through big data and advanced analytics.

Predictive analytics in demand planning ensures knowing internal and external demand that influence the variables. Anew technologies and advanced approaches generate improved forecasting in demand planning with more accuracy.

The automated and integrated closed-loop has made the planning process and execution quicker and flexible.

Physical flow:

Advanced robotics and technologies have brought a crucial change in logistics, manufacturing. Automation has made it easier to execute production, communication, planning, etc., without manual intervention.

Digitization in physical flow allows the management to handle the operating cost, labor cost, operating cost more conveniently than before.

Performance management:

With supply chain digitization, the standard of performance management is changing. Digitization allows the management to identify and compare data using different sets of indicators like conducting big data analysis, leverage data mining, machine learning techniques, etc. Enabling granular data from an internal and external source in real-time reduces the lengthy operational prices.

Order management:

Supply chain digitization in order management has eliminated two major drawbacks of previous order management (no-touch order processing & real-time planning). It ensures the authority to lower their costs, higher reliability, superior customer experience.

Because of no-touch order processing, no manual invention is required in the ordering and confirmation process. Integrating an ordering process with a linked ATP and other processing systems allows the consumers a hassle-free ordering service from any place in the world.

Real-time replanning approaches help the supply chain set up to be updated about the orders, and their date confirmation, etc.


Supply chain management can bring so many changes while digitizing their operations. The supply chain is connected through a joint with many parties, including customers, the company, and the suppliers. Many parties are connected to the whole supply chain process. So, it needs to maintain the information to deliver the planned products to its customers.

Many non-competitive companies have collaborated to deliver better services to the end-users to reduce costing and improved productivity.

Final Word

As you already know by now, in today’s business world, there is no alternative to a digital supply chain. But it is not a one-time task. Digitizing the supply chain means you will have to be always open to changes. You have to be updated and upgrade your systems with the newer approaches and innovations to get fruitful results.

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