Discover new opportunities in the next-generation digital supply chain – Supply Chain 4.0
artificial intelligence and online retail have imposed a new and unimaginable reality a few years ago as our needs are one click away, and today there is the digital supply chain, on-demand consumption has shaped the nature of our lives for a long time, but the outbreak of the Corona virus has turned the nature of consumption upside down Getting food, medicine and even tissue paper the traditional way has become difficult, and in this article we will talk about the digital supply chain and its concept, as well as how the transition to digital supply chain can help you, and what is the impact of supply chain 4.0.
What is the Digital Supply Chain?
The concept of digital supply chain has become one of the most important and popular concepts at the moment. By combining traditional supply chains with new technology, digital supply chain has emerged.
We can define the digital supply chain as the key to the successful operation of all companies or organizations that manufacture or distribute products.
The introduction of new technology into supply chains helps to connect the business with all those involved, from suppliers of raw materials, to distributors of finished products, as well as storage suppliers themselves, and ultimately to the customer.
The digital supply chain can provide many advantages to users, the most important of which are:
- Understand all network connections, suppliers, inventory control, complex relationships, and potential impacts.
- Identify opportunities to enhance performance, to be more flexible, and to improve communications with customers or suppliers.
- Gain a clear vision to ensure sustainable sources of supply.
- Access and analyze Internet of Things (IoT) data for continuous improvement.
- Receive alerts when disruptions occur or when service level agreements are at risk.
Impact of Supply Chain 4.0
Speaking about the impact of Supply Chain 4.0, we will find that the introduction of digitization has helped significantly in increasing the operational efficiency of supply chains, and it is expected that this effect will increase to:
- Increased operational efficiency by approximately 30%.
- Operating costs reduced by up to 40%.
- Reduce lost sales by up to 75%.
- Visibly increased agility in supply chains.
- Inventories decreased by up to 75%.
We can clarify each of the points that we presented in the previous part in some detail, as:
Lost sales
This problem occurs when customer service is low and poor, giving customers false promises, or providing customers with false information about the availability of the desired product.
This makes customers very annoyed with this poor service, and they avoid that brand and turn to other companies that offer the same product.
But through Supply Chain 4.0, this problem can be avoided, and the ways of interacting and communicating with customers are improved, as all market information is collected and thus better forecasting.
And all of this will work effectively and help increase the level of service significantly and clearly, and thus reduce the problem of lost sales.
Supply chain costs
Supply chain costs include many elements, primarily transportation, warehousing, and network setup, but with Supply Chain 4.0, supply chain costs can be reduced by up to 30%.
This can be done by applying the latest methods for calculating transportation and storage costs, while trying to meet the required level of service for the customer.
Combined with trying to pair up with the implementation of smart automation and improving productivity in warehousing, all of this will eventually pay off and lower supply chain costs.
Supply chain planning
With the use of Supply Chain 4.0, 90% of supply chain planning tasks can be automated, ensuring better quality compared to tasks performed manually, thus accurately discovering and identifying what the planner needs and thus making appropriate decisions.
Inventory
Keeping track of your inventory is essential to knowing the difference between your supply and demand, and with Supply Chain 4.0 you will be able to reduce the uncertainty about your supply or demand, thus reducing the proportion of unnecessary inventory, and focus on the required inventory. Through inventory management system.
Transformation into a digital supply chain
A large number of people wonder about the possibility of switching into the digital supply chain, and in fact the transformation into the digital supply chain requires the availability of two main factors, namely:
- Capacity, as you must build all the capabilities related to digitalization in your organization.
- Right environment, as you need to provide an innovative environment that matches the new technology.
Therefore, you need to provide a high degree of organization and flexibility, along with one of the technologies and technological systems, based on information technology, which must have a two-speed architecture independent of the old and current systems.
All with the goal of facilitating the transition to the digital supply chain, and thus the ability to work with Supply Chain 4.0 in your organization.
Increasing operational efficiency leveraging Supply Chain 4.0
Supply Chain 4.0 will effectively help increase operational efficiency, through its apparent impact on all areas of supply chain management, as Supply Chain 4.0 has been developed to help make improvements in services provided as well as cost and capital along with greater agility.
