Supply Chains for the Digital Age

Blog /Supply-Chains-for-the-Digital-Age

According to a new McKinsey Global Institute (MGI) report, “Digital America: A tale of the haves and have-mores,” the financial gains of digitization are enormous. In fact, measuring just three aspects of the digital world -- online talent platforms, big-data analytics, and Internet of Things -- MGI estimates digitization could add up to $2.2 trillion to the U.S. annual GDP by 2025.

Across industries, the effects of digitization are marked and profound, creating competitive advantage, giving rise to new intermediaries, breaking apart value chains, blurring industry boundaries, and generating winner-takes-all dynamics, according to MGI.

Moreover, MGI reports that there is a pronounced and persistent gap between the digital "haves" and "have-mores." Digitization is happening unevenly, according to MGI, and users with advanced digital capabilities are capturing disproportionate benefits.

The biggest risk?  Being disrupted while sitting on the sidelines.

According to research presented in an INFOGRAPHIC created by The Economist Intelligence Unit, digitization enables supply chains to become more data driven and operate faster, better, stronger, and leaner:

  • Today, 22% of manufacturing executives have “complete visibility” into their supply chains, up from 9% in 2013.
  • 44% of senior executives say their supply-chain function uses sophisticated tools that leverage big data to help with day-to-day decision making.

Analytics and IoT are key to supply-chain excellence

Analytics provide vital types of intelligence that dramatically improve supply-chain performance. Among these are true visibility and accurate estimated time of arrivals, risk identification and avoidance, predictive modeling to anticipate supply chain changes, and insight into improved operational processes.

Gone are the days when backward-looking scorecards sufficed for reporting, and current descriptive analytics solutions no longer pass muster.

As globalization, unpredictability, volatility, complexity and speed continue to increase, predictive analytics, machine learning technologies, demand-sensing and short-term response planning technologies are emerging as supply-chain staples.

As reported by Forbes, recent research conducted by GTNexus in partnership with global research firm, YouGov, underscores the importance of predictive analytics for today’s manufacturers.

A few key takeaways:

  • 24% of global manufacturers ($500M+) predict advanced analytics will make the greatest impact to their supply chain’s performance this year.
  • 27% of all manufacturers say keeping up with ever-changing customer demands is their biggest supply chain challenge.
  • 64% of manufacturers are using Inventory Management today, making it the most-used technology. Factory Management (35%) and Transportation Management (34%) round out the top three most-used technologies by all manufacturers.

With product cycles getting shorter and more fluid, and customers pressing for meaningful innovation and quicker product development and delivery, integrating and automating supply-chain processes is essential for survival.

Internet of Things (IoT)-enabled strategies enable global organizations to connect their products and processes to ensure real-time, end-to-end reporting and advanced predictive analytics.

Industry experts agree that IoT will be huge:

  • As reported in MBT Magazine, IDC anticipates that IoT technologies will be materially affecting the way that all companies manage their supply chains by 2020 — with estimations that the IoT market will reach $1.7 trillion.
  • Business Insider reports that 82% of businesses are planning to implement IoT solutions by 2017.
  • Gartner predicts that 6.4 billion connected things will be in use worldwide in 2016, up 30 percent from 2015, and will reach 20.8 billion by 2020.1

Collaboration via business networks is a must

The inability to synchronize end-to-end business processes within an enterprise as well as across extended supplier and partner networks is a foremost supply-chain challenge.

Cloud-based supply-chain solutions and business networks present great options for strategically tackling this problem by providing a robust, unified platform that enables close collaboration.

As reported in Supply Chain Digest, Gartner predicts that by 2020, over 90% of spending on supply chain execution systems will be for cloud-based solutions.

Collaboration among partners and suppliers is vital to mitigating risk, gaining visibility, and achieving optimal performance.

According to research presented in an INFOGRAPHIC prepared by SAP Ariba, collaborative supply networks deliver quantifiable business value, including:

  • 60% improvement in order accuracy
  • 50% - 70% faster transaction cycles
  • 90% “touchless” transaction processes

According to a survey conducted in 2014 by Ardent Partners, business leaders across industries are bullish on future of business networks:

  • 55% agree that B2B networks will eventually become the main platform for trading partners to conduct business.
  • 73% believe that B2B networks enhance collaboration between buyers and suppliers.
  • 75% agree that B2B networks are beneficial to buyers and suppliers.
  • 54% agree that B2B networks are an increasing source of new business for suppliers.

(For more on business networks, read NTT DATA SAP Advisor post: Business Networks a Must in a Digital Economy.)

SAP takes the supply chain digital

SAP’s Supply Chain Management (SCM) strategy centers on leveraging the SAP HANA platform to support more global, complex and volatile supply chains. By merging cloud, mobility, analytics and the Ariba Network, SAP leads the way in the digital transformation of global supply chains.

SAP’s solutions cover everything from demand planning to inventory management – and use technologies such as the Internet of Things, RFID, and advanced analytics to help you run a real-time supply chain.

Announced in 2014, SAP Supply Chain Orchestration, cloud edition, is an overarching solution that integrates the SAP Supply Network Collaboration application and Ariba Collaborative Supply Chain.

This combined solution provides companies with complete visibility into supply side trading partners and a single interface for managing the advanced supply chain needs of critical, high-value partners. It also facilitates the automation required for all supplier categories.

Benefits include:

  • Reduced inventory and increased revenue with advanced collaborative supply chain initiatives
  • Improved process efficiency
  • Greater compliance and risk management
  • Optimized cash flow across the supply chain

At NTT DATA, we understand the importance of software solutions and business networks in today’s dynamic supply chains. We also understand the need for an over-arching strategy that ensures full optimization and integration of all cloud-based and on-premise technology investments.

NTT DATA is trusted to manage some of the world’s largest and most complex supply chains, including global Ariba implementations. We have been recognized by both SAP and Ariba for our excellence.

Contact us today to learn more about our experience and success in creating and optimizing supply chains for the digital age or to schedule a meeting at SAP Ariba Live.

1 Gartner, Gartner Says 6.4 Billion Connected "Things" Will Be in Use in 2016, Up 30 Percent From 2015, http://www.gartner.com/newsroom/id/3165317

Post Date: 3/18/2016

Tim Clark - NTT DATA Tim Clark

About the author

Tim is a Vice-President with NTT DATA with responsibility for SAP Consulting and the global HANA COE. He has 20+ years of experience in the SAP space with a focus on leading large scale global transformation programs and outsourcing engagements. He has worked across 30+ countries and a variety of industries, including Wholesale Distribution, Semiconductors, Building Materials, Consumer Products and Oil Field Services. Previously, Tim was a Vice-President at Neoris/CEMEX and a Partner at Accenture.

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