Supply Chain Execution Delivers the Digital Supply Chain

Situation Overview

The supply chain, whether you are a manufacturer, retailer, wholesaler, or something else, is now a critical function for companies to realize their business aspirations. It is a competitive weapon in the modern digital economy. Advanced supply chain capabilities can enable more efficient and effective business approaches and support new business models that translate directly to business performance that is tangible and measurable. More importantly, these capabilities transition the supply chain from one that is a “cost center” to one that is an “opportunity center.”

Key takeaways from this IDC Industry Brief, Sponsored by SAP include:

  • Customer centricity means delivery excellence, which is a requirement for the intelligent supply chain.
  • Supply chain execution must be both integrated and connected — warehouse, transportation, and track and trace — across the full logistics network.
  • As the pace of business change accelerates, digital business execution drives differentiating value.
  • There is an opportunity for a step change in supply chain execution performance.

Challenges and Opportunities in Supply Chain Execution

As organizations consider the realignment of the supply chain execution network to one characterized by multiple regional fulfillment centers (micro-logistics networks) or invest in modern service robotics, the business impact will be significant in the following ways:

  • Improved execution speed and accuracy
  • Balance of scale and direct fulfillment models
  • Less vulnerable to labor limitations and scaling
  • Benefit from an agile, modern, digital execution suite connected to both planning and manufacturing

The short-term challenge implicit here is the need for a fulfillment capability that is designed for and capable of growing both consumer/customer personalization needs the legacy mass market. According to Supply Chain Survey fielded by IDC in mid-2018, the primary goal for supply chain transformation was to meet customer needs. Over 60% of respondents indicated this goal to be their top priority; not surprising perhaps, but why wasn’t it 100%? While personalization is clearly the way of the future, there is a huge mass market business that will persist at material scale for the foreseeable future. While the exact supply chain mechanisms for servicing these different customer needs are, as yet, unclear, what is clear is that an integrated and connected fulfillment capability must be part of that answer.

For supply chain execution, an intelligent digital supply chain is a bit more intuitively obvious, using technologies like mobile, robotics, 3D printing, and cloud to better understand and balance inventory, delivery obligations, and smart postponement to better align to customer and consumer needs. Indeed, persistent gaps in fulfillment capabilities are likely to become a significant drag on the growth and profitability aspirations of any business. In IDC’s Supply Chain Survey, respondents were asked that when they think about the future of the supply chain, what current gaps are likely to be the most problematic if not addressed. Figure 1 summarizes those responses.

All the top responses are either directly or indirectly related to the ability to manage fulfillment and deliver on the promise to consumers or customers. The lack of connected and integrated supply chain execution will, we believe, distinguish well-performing supply chains from poorly performing supply chains.

Figure 1 - Key Supply Chain Areas for Improvement

Essential Guidance

The supply chain, whether manufacturer, retailer, wholesaler, or something else, is now a critical function for companies to realize their business aspirations. The role of deliver, or supply chain execution, is ultimately the “face” of the shipper within the overall design-to-operate continuum — get that wrong and nothing else counts.

Although aspirational in the past, technologies like IoT and machine learning now enable automation of repetitive/operational tasks, which leads to less logistician intervention or even “touchless execution.” This frees resources within the logistics department to become much more proactive in their roles, with a focus on value-added work such as what-if simulations/scenarios, strategic engagement with customers (or even consumers), and significantly reduce the time spent on fire drills. Evolving supply chain execution from a tactical focus to a strategic focus drives significant value for the overall supply chain and an improved experience for the customer.

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