Digitising the supply chain

November 06, 2020 5:30 AM

From deploying AI/ML solutions to setting standards, manufacturing must tackle many focus areas

Logistics has now become an extremely customer-centric function with stringent requirements on turnaround time and schedule adherence.Brands can leverage modern delivery tools to optimize their logistics operations.

By Ashish Nanda & Nishit Bhatia

Customer expectations have transformed from seeking mere ‘satisfaction’ to ‘delight’, availability at the nearest store to omnichannel availability, on-time delivery to scheduled delivery. While organisations have leveraged technologies such as data, IoT, robotics and analytics to drive manufacturing efficiency, the use of digital solutions in supply-chain planning for handling uncertainty, managing complexity, enabling agility and resilience, enhancing visibility and driving optimisation across the rest of the supply chain has largely lagged behind.

Traditional forecasting models based on time series and historical trends work no more. The pandemic has been the wake-up call in this regard. Predictive capability enabled by artificial intelligence (AI) and machine learning (ML) algorithms needs to be an integral part of demand planning capabilities. Digital collaborative platforms involving the last mile channel partner closest to the customer are needed to augment predictive capabilities.

Cutting supply chain complexity often starts with narrowing the focus to fewer core products with a strong consumer value proposition, while retaining a bulk share of the revenue. Existing transactional data can be leveraged to build analytical models that help in simplifying the product portfolio, identifying must sell SKUs by markets, channels and micro markets, and streamlining inventory norms and distribution flow paths for the retained portfolio. Organisations must deploy digital technology solutions that provide end-to-end visibility and collaboration across the extended value chain, linking critical first to third-tier suppliers with the last level channel / retailer base. A few FMCG companies have turned this ongoing crisis into an opportunity by strengthening e-commerce, enabling a digital, contactless salesforce powered through deep-learning analytics, virtual order taking, and near real-time delivery tracking.

To enhance visibility, it is also imperative for organisations to be aligned to a singular definition of supply-chain performance across the chain through key supply-chain KPIs, which can be tracked in real-time. These KPIs must then generate predictive triggers to address stress points in the extended supply chain. A digitally-enabled control tower for existing organisation ERPs must have these essential capabilities.

Organisations need to establish a scenario-based planning capability to synchronise supply fulfilment in a highly dynamic and evolving demand environment. Daily and weekly planning, instead of monthly, is necessary, with tighter feedback loops between execution and planning cycles. This requires digitally-enabled decision-making platforms.

Logistics has now become an extremely customer-centric function with stringent requirements on turnaround time and schedule adherence. In this respect, the traditional CFA model has largely remained archaic. Efficient asset utilisation through optimisation and IoT-enabled track-and-trace systems are digital elements where the industry adoption has been slow. With connected devices in the supply chain and intelligent asset tracking tools, a digitally enabled smart logistics solution can bring end-to-end visibility and improve the way companies transport goods, control inventory and assets, and manage the customer experience.

The road to a future-ready digital supply chain is not easy. Organisations already behind the digital curve, in trying to deal with these complexities at once, are struggling to measure demand, attain visibility, and create more flexibility by trying to update their antiquated systems. The need of the hour is an end-to-end digital suite which is customisable and easy to bolt on to the existing technology landscape in an economical and agile manner. This agile technology implementation needs to happen hand-in-hand with the process transformation so that the entire organisation is geared up for this digital change.

The pandemic has increased the pace of adoption of digital supply-chain solutions, unlocking significant top- & bottom-line value. A digitally-enabled supply chain need no longer restricted to large organisations. It is the need of the hour.

Nanda is partner & leader, and Bhatia is partner, Business Consulting, EY India

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