8 key elements of supply chain digitization

around the world are embracing Industry 4.0, and that means supply chains must
as well. The third industrial revolution saw the introduction of computers and
automation. 4.0 takes that a step further by connecting a myriad of data points
and using machine learning to take automation to new levels.

“If the vision of Industry 4.0 is
to be realized, most enterprise processes must become more digitized,” wrote
Stefan Schrauf, a partner with PwC Strategy in Germany, and Philipp Berttram, a
principal with PwC Strategy, in a recent white paper outlining the digitization
of the supply chain. “A critical element will be the evolution of traditional
supply chains toward a connected, smart, and highly efficient supply chain

The authors noted that today’s
supply chain is a “series of largely discrete, siloed steps taken through
marketing, product development, manufacturing, and distribution, and finally
into the hands of the customer. Digitization brings down those walls, and the
chain becomes a completely integrated ecosystem that is fully transparent to
all the players involved — from the suppliers of raw materials, components, and
parts, to the transporters of those supplies and finished goods, and finally to
the customers demanding fulfillment.”

To realize the potential of Industry 4.0, though, companies need to understand that the digital supply chain is more than a collection of technologies — it involves finding skilled labor, managing culture shifts and transforming the way businesses think, Schrauf and Berttram said.

“The digital supply chain, as we
envision it, consists of eight key elements: integrated planning and execution,
logistics visibility, Procurement 4.0, smart warehousing, efficient spare parts
management, autonomous and B2C logistics, prescriptive supply chain analytics,
and digital supply chain enablers,” they wrote. “Companies that can put
together these pieces into a coherent and fully transparent whole will gain
huge advantages in customer service, flexibility, efficiency, and cost
reduction; those that delay will be left further and further behind.”

Two seismic shifts are influencing
the digitization of the supply chain: One is the introduction of big data,
analytics and the internet of things, and the other is growing customer demand
for quicker shipment deliveries with more transparency into that process.

For businesses in the supply chain, especially brokers, carriers and shippers, these demands are leading to increased costs and more complexity to move freight. But that isn’t inevitable. In fact, smart stakeholders are able to find greater efficiencies and cost reductions the more they adopt digitization, and managed transportation service (MTS) providers are helping them achieve this.

One of the key benefits of a
digital supply chain is unparalleled levels of transparency. Connected
digitally, brokers, carriers and shippers are able to efficiently and quickly
conduct transactions, schedule shipment pickups, route those goods, and trace
the progress of those goods from source to end customer.

“Companies with highly digitized
supply chains and operations can expect efficiency gains of 4.1 percent
annually, while boosting revenue by 2.9 percent a year,” the PwC whitepaper

Taking advantage of this, however, requires an added level of expertise and technology investment. For brokers, carriers and shippers, digitizing the supply chain results in streamlined operations, more collaboration among parties and increased cost efficiency.

Streamlined operations

A digital supply chain allows all
parties involved in transactions to interact on a near real-time basis. Managed
transportation services (MTS) which incorporate a best-in-class transportation
management system (TMS) are essential for driving supply chain digitization .
An MTS is able to utilize advanced technology to connect the disparate systems
of all parties, enhancing communication and speed to decision making.

Digital tools are eliminating many
of the manual processes that bog down freight transactions, cause unnecessary
delays and add cost. For instance, shippers and/or brokers are able to automate
the bid and selection process; carriers can access loads and see relevant
details — including price — and accept those loads with a single click of a
button. No longer does a sales representative have to wait for someone to get
to the office before pushing out a bid request or wait for a callback to
confirm a deal. This transaction now takes place seamlessly and at any hour of
the day. Digitization creates additional value by facilitating optimization,
consolidation and digital freight matching (DFM), with the potential to further
reduce costs and improve efficiency.

Additionally, the vast amount of
data and information available allows shippers, brokers and carriers to make
more informed decisions with near real-time data and market pricing. Shippers
can use data to streamline loading and unloading processes, which cuts down on
detention time — a major plus for most carriers.

Increased collaboration

As PwC noted, the siloed approach
of previous supply chains will not work in an Industry 4.0 environment. All
parties need to communicate and interact with one another, and more of that
relationship is moving to the cloud. MTS providers enable this fast, efficient
method of collaboration with robust technology offerings that dig through
siloed approaches and create a more transparent environment. Data around
product demand, supplies, even on-road congestion, is communicated
automatically and electronically among parties, allowing each to adjust their
individual business needs accordingly.

“By integrating data across the
entire supply chain, in real time and often without human intervention,
delivery lead times can be significantly reduced and freight and inventory
management optimized,” Schrauf and Berttram wrote. “The rapid exchange of
information also boosts the agility of the entire chain, while enabling much
closer integration with customers — always a good thing when the goal is to
effectively ‘lock in’ those customers through an efficient supply chain
platform, excellent service, and a compelling customer experience.”

Increased cost efficiency

Whether it is the redeployment of
resources, the elimination of paper processes or the standardization of processes
across the business, digitization is leading to reduced cost. MTS providers are
adding to these levels of efficiency with their access to the latest technology
that can be configured and scaled according to each customer’s unique needs.
Shippers that work with managed transportation providers gain an added benefit
of not having to make large upfront investments in technology. According to
some estimates, the digitization of the supply chain has led to savings of 30%
in administrative costs and 20% in freight rates.

The supply chain is evolving at
speeds never seen before. For any business to keep pace with this evolution, it
takes resources in terms of time, money and, most importantly, skilled
professionals. Managed transportation service providers have made many of these
investments and are now helping businesses transition their operations into the
supply chain’s digital future.