Supply chain managers to embrace digital transformation

14 April 2016 5 min. read

Improvements to relationships between organisations and their suppliers has the potential to greatly improve efficiency, cost and transparency. One means of achieving improvements is through digital technologies. A new report, by Capgemini and GT Nexus, considers the digital transformation of the supply chain of large global corporates, as well as its current barriers and future prospects. 

Technology is being use to transform a range of business processes for a range of stakeholders. Digital transformation is cited to represent an important trend within a range of industries, although successful transformations remain difficult to achieve. The digital transformations landscape has a number of different areas of activity – those internal to an organisation, those that affect customers and those across the wider supply chain. Transformation of internal processes, through automation as well as ERP systems, Human Capital Management, etc., has been ongoing. Technologies that transform the types and effectiveness of relations with customers has too been on the rise, including Customer Relationship Management and Marketing Automation, among others. These two segments have garnered considerable attention in recent years, with more and more organisations investing in solutions. 

In a new study from Capgemini Consulting and GT Nexus, titled ‘The Current and Future State of Digital Supply Chain Transformation’, another area of transformation is studied that – according to the report – has seen less attention in recent years: digital transformation between organisations and all of their partners across the value chain. The study involved 337 executives from 20 different countries working across the largest global manufacturing and retail organisations.

The importance of creating a digital supply chain is not lost on the executives surveyed for the report. 75% say that supply chain transformation is important or very important. Many of the executives are also putting up, with 70% responding that they have begun formal digital supply chain transformation efforts.

The report finds, however, that considerable dissatisfaction exists surrounding the progress of their digital supply chain transformation. In total, 33% are very dissatisfied or somewhat dissatisfied, while 5% are very satisfied. The report finds that no organisation is somewhat satisfied with the transformation, while 62% are represented by a neutral stance on the matter.

The report notes that a number of obstacles stand in the path of successful digital transformation journeys. The report finds that 44% of executives report that there is a general lack of awareness within their own ranks about the transformation, and 39% say they lack the required skills to bring about a transformation. Since digital transformations in the supply chain are inter-organisational, barriers may also exist within external parties – 50% of respondents said that their supply chain partners lacked the necessary awareness, while 42% said their supply chain partners lacked the required skills, slowing the transition process.

The analysis further highlights that a number of specific technologies enable the kinds of relationships with suppliers that improve the overall supply chain across a range of metrics, including cost, transparency and efficiency. The top technology is supply chain visibility platform/tools, cited as important by 94% of respondents, followed by big data/analytics, at 90% of respondents. Simulation tools comes next at 81%, while cloud technology comes in at 80%.

To leverage many of these technologies, data from the wider supply chain is required. Yet, the research finds that, not only is there very little data sharing between supply chain partners, at 15% today, the data that is gathered is often not processed in a way that results in decision-making insights – at 23%.

The authors highlight that respondents do expect this to change in the coming four years. By 2020, 54% of organisations expect to have more information available from supply chain partners, while 68% are expect that their organisation will leverage that information by 2020 to generate insights.

According to the report, the next five years will see significant increases in collaboration within the supply chain as digital technologies create a range of ways for organisations to work together more efficiently. 5 years from now, the report suggests, organisations will share more data with suppliers than today (94% agreement), organisations will involve suppliers more closely into the planning process than today, (89% agreement), and organisations will have more real-time visibility into supplier processes than today (87% agreement).

The real-time visibility into supplier processes is particularly important, as the demand for more transparent and ethical supply chains increase: “Holding suppliers to higher standards will become more and more important, because as public pressure mounts for transparent, ethical and sustainable supply chains, the importance of collaborating tightly with suppliers goes beyond assuring supply and optimising costs. Crucially, this means that investments in Digital Transformation can’t just stop at the organisation, but needs to extend to every partner in the supply chain network.”