Transparent Supply Chain Management:
Why the Digital Upgrade of Supply Chains is Long Overdue
Where is my container currently located? Are the transport conditions optimal and does my customer actually know that the delivery will arrive soon? A comprehensive overview and the greatest possible transparency are essential for efficient and targeted management in supply chains. However, many questions that entrepreneurs, stakeholders and supply chain managers are confronted with on a daily basis cannot be adequately answered using classic tracking methods. New methods are needed to ensure sustainability, efficiency and traceability of supply chains.
Transparency Within Supply Chains is Still Insufficient for Most
The global pandemic and the increased demand for online purchases show once again how much the industry is lagging behind in terms of digitalization.
According to the Market Research Institute Gartner, only 21% of respondents have a high level of transparency within the supply chain in order to have the flexibility to convert procurement, manufacturing and distribution activities relatively quickly. The rest of the market participants need to act immediately to remain competitive.
Problems Caused By Lack of Transparency
The lack of transparency is the cause of several problems within the supply chain: for one, companies have difficulty collecting and processing data, according to Forbes.
The lack of transparency also means that the execution of sub-steps within supply chains often cannot be planned with adequate quality. If companies don’t have real-time information about failures, they can’t adequately assess the risks and thus choose an effective strategy to address the issues.
So if even one link in the supply chain fails, it can cause delays in all subsequent workflows, resulting in financial and reputational losses.
The way out of the crisis is offered by technology. Digital solutions enable real-time tracking of deliveries. But why is digitalization so lacking in an industry where rapid response and global networking play such a major role? A survey conducted by the logistics service provider Hermes Germany, in November 2020 reveals the hurdles industrial companies are facing. Logistics managers in 200 German companies were surveyed.
Lack of Expertise and Fear of Innovation Can Slow Down Digitization
Another factor, according to a study by consulting firm, The Hackett Group, is a lack of expertise in working with new technologies. Companies need capable employees to operate infrastructures, such as IT systems for production, inventory adjustment and sales. In-house professionals with relevant skills are scarce. The key to success here is a balance of new talent who already have the relevant know-how and bring an innovative perspective, as well as established employees, who continue to develop in terms of data expertise and IT. In addition, simple solutions are needed that can be operated by more than just IT specialists or technicians. Providers of technology and software for more transparent supply chain management must pay particular attention to keeping the barriers to entry for digital transformation as low as possible. Continuous support and a good range of training and continuing education measures are particularly helpful.
The Most Important Lessons Learned
It can be stated that a good information exchange network is essential for industrial companies to remain competitive in the long term and give the greatest possible transparency in the supply chain. Digital transformation plays a decisive role here. To complete this successfully, time, capital, strategic planning, capable employees and an open mindset for innovative solutions are required above all.
Transparency and the associated flow of information within the supply chain enable companies to anticipate, analyze and react to transportation and storage problems in the long term. This minimizes risks and increases profits. In this way, companies can also survive global crises such as the Corona pandemic.