Blog – Supply Chains will go digital but in what direction?

Where are we?

A challenge for many companies is a clear understanding about supply chains by the CEO and their executive group. This influences the approval of IT projects that can provide substantial improvements in understanding and planning the organisation’s Supply Chains.

What does ‘integrated’ mean and ‘end to end’ and ‘visibility’? These and other terms are often used without an understanding of their meaning and if challenged, authors would find it difficult to provide a coherent answer. Even the term supply chain(s) is a problem; too often considered as another function within the business. Instead, supply chains are not a function, but a process of Flows (of items, money, data and information) in, through and out of the organisation. The functions of Procurement, Operations Planning and Logistics use the Flows to understand the ‘extended’ and manage the ‘core’ supply chains (preferably as a cohesive group).

The digital road

For businesses of any size, data is processed via an accounting application (which could have added functionality) or an enterprise resources planning (ERP) system, provided at various levels of scope and complexity. In a typical manufacturing and distribution business, about 70 percent of all data handled has value to the organisation’s supply chains, so the management of data is a challenge.

The accounting or ERP applications provide a business with the means to move from manual data handling to digital. This is Digitisation. The applications enable data to be stored and Operational level decisions to be made. However, these decisions are not linked to Tactical level decisions, which are in turn governed by Strategic level decisions.

Digitising data at the Operational level is not sufficient. The data needs to be incorporated into a flow process such as: procure to pay, forecast to deliver and order to cash. These flows are elements of the processes through an organisation’s supply chains. Turning work processes into digital flows is Digitalisation, which assists Planning decisions in supply chains.