Digital is no longer a thing of the future – it is very much the present. Supply chains are no different in terms of adopting digital levers and transforming into Digital Supply Chains. This article attempts to define and demystify Digital Supply Chains for consumer goods companies.
Consumer goods businesses have been trying to improve supply chains to deliver the right product, at the right place, at the right time and at the right cost. While businesses try to improvise the conventional parameters and its derivatives for centuries now, the focus on few other parameters that are an imperative from the perspective of digital consumers are getting missed out on. For example, digital consumers are more informed, less tolerant, leverage multiple channels for transactions and hence brand loyalty that many consumer goods companies used to take for granted is questionable now.
Digital Supply Chains address these focus areas. Digitalizing supply chains imply improvising supply chains on the parameters of Visibility, Collaboration, Agility, Experience and Simplicity. Visibility implies having a granular real time visibility of data across supply chain nodes while Collaboration looks at the level of coordination between these nodes and beyond. Smart shelf digital solutions – that gather certain basic information about the in-store shopper – are a good example of getting visibility at the individual consumer preference level, and then tightly collaborating across functions of consumer goods business to align offers and drive incremental sales.
Once there is visibility and collaboration, how quickly a supply chain can change its strategy is defined by Agility. The breadth and quality of service to its stakeholders along the supply chain is defined by Experience parameter. While a supply chain achieves all these parameters, Simplicity monitors the level of ease in the processes and activities. Clearly, an increased level of digital engagement with their customers and with end consumers drives these three parameters. Towards this end, consumer goods companies have created mobile platforms to allow individual consumers to share product and packaging design advice and usage experiences and then rapidly and continuously embed these in their product and service strategies.
The question arises as to what is the impact of digitalization on supply chain by way of improving the parameters of visibility, collaboration, agility, experience and simplicity. The impact from the perspective of supply chain manager would be a shift in the approach to operating the supply chain. The approach would become more insightful, quantified, collaborative, transparent and customer experience centric. Below are some of the ways to drive impact:
Move from Loose promises to solid commitment:
Taking a typical scenario where order commitments are done ad hoc and the lead time calculations are based on past experience than precise data. By leveraging digital technologies, the precise position of orders in process or in transit could be tracked real time and made available, and could be mashed up with multi-information sources enabled by Big Data platforms powered by analytical tools to give precise expected Turnaround times. This will help companies give a solid commitment to its customers. Typical example is while handling a hot order or a demand spike which are fairly common in the consumer goods business.
Move from Generic to Specifics:
Each consumer has a specific demand but the way the businesses operate it can do a customization of goods but not of services. One of the reasons is the lack of shear amount of data and methodologies. With greater information on the customer mashed up with experiential design methods, mass-customization of service and experience for individual customers could be made possible. This is very relevant in the apparel and fashion business, where seamless execution of wholesale as well as retail demands across company owned stores can really cement partnerships with both retailers and end consumers alike.
Move from ‘Thumb rules to Analytical Calculations:
Most of the calculations on planning are done using few inputs available to the supply chain practitioners. The rest of the data points from different entities and partners are generally assumed based on some thumb rules. Large consumer goods companies have generally developed independent and segmented data sources representing different aggregation levels, and as it gets across different product category lines, will inject even more thumb rules. As digital enables collaboration platforms for supply chain managers, providing more real time data inputs which can be analyzed using integrated data models to precisely calculate the activities, makes planning more effective and reliable.
The impact of digitalization is clearly in the way the supply chain is operated and experienced by the end consumer. This way, the processes of plan, source, make, deliver and return will be more transparent, extremely agile in nature, data insight oriented, stakeholder experience centered and very intuitive. More importantly it drives a fine calculated balance between the conflicting objectives of cost, service and working capital for the consumer goods companies and further enhances the consumer experience.