A "well-crafted digital transformation strategy" is key to fighting increasing supply chain complexity, report says

The only effective way to manage the complexity that is increasingly plaguing today's supply chains is to develop "a well-crafted digital transformation strategy," according to a recent report from the information technology consulting firm PointSource. Under such a strategy, companies would invest in digital technologies—such as the Internet of Things, artificial intelligence, machine learning, and cloud computing—that support their business strategies and goals, according to Supply Chain Digital Transformation Report 2017: Digital-Ready Solutions and Insider Tips for 21st-Century Supply Chain Organizations."

Supply chains typically stretch across the globe and are dependent on a high volume of information. Accordingly, the PointSource report describes today's supply chain environment as "increasingly dispersed and diverse," involving a wide variety of actors with different information needs, digital fluency levels, work styles, and communication preferences.

Digital technologies can help manage that complexity in a number of ways. These may include aggregating data from diverse sources, recording product and shipment hand-offs, identifying recurring issues, providing the right information to the right people, and initiating the most appropriate actions. These technologies can provide companies with insights that would be impossible, or nearly impossible, for human beings to quickly discover on their own. For example, artificial intelligence and machine learning could help a clothing retailer that is having problems with product defects quickly identify the source of the defects, communicate the problem to the responsible party, place an order with a more reliable source, and follow up with better quality-assurance standards.

Achieving digital transformation, however, will not be easy. One major obstacle is companies' continued reliance on outdated information systems, communication, and transaction recording practices. According to a recent PointSource survey, 88 percent of respondents with supply chain responsibilities still rely on disparate legacy systems that are not connected and are slow to produce the needed information. Only 44 percent said they could access the information they need whenever or wherever they wanted regardless of what platform or device they were using. This issue is often compounded by a lack of understanding of what specific information a particular party needs. For example, even though fleet managers and truck drivers are involved in the same supply chain activity (transporting goods), they have very different information needs.

To get started on a digital transformation strategy, PointSource recommends that companies ask their employees where they lack visibility, and what processes do they think are outdated. By starting with these questions, the consulting firm says, companies will engage employees in the project and be sure to implement technology that solves real problems.

The paper also warns against "change fatigue." PointSource cites the example of aerospace giant Boeing Co., which tried to make too many supply chain changes at once; this put production of a new aircraft model three years behind schedule. While the ultimate goal may be total digital transformation, PointSource says, any such project should start with "microinnovations" that focus on a specific pressing need and improve employees' day-to-day interactions and work activities. If employees believe that the technology is improving their daily lives, they are more likely to fully embrace it, the report says.