Why a Digital Supply Chain is Non-negotiable for a Winning Omnichannel Strategy

Omni-channel is today a holy grail of next generation growth for enterprises and retailers. While many enterprises have omni-channel integration plans, executing the same requires due diligence of many verticals including supply chain management. Omni-channel supply chain works best in a digital supply chain environment ensuring profitability and order execution. Here is why having a digital supply chain is non-negotiable for a winning omni-channel strategy.

Understanding digital supply chain

The world of digital supply chain management is slowly making a transition from linear to a digital system. Enterprises seeking an omni-channel sales strategy are already reaping the rewards for such a transition. Unlike a linear supply chain which is based broadly on a manual or paper based processing, a digital supply chain management system is based on smart application having interconnected web functionalities. The use of IT enabled backend, and front-end processing along with the use of smart components and devices in the supply chain makes up for a truly digital supply chain management system.

For example, a digital supply chain system uses technologies, such as GPS tracking, radio frequency identification (RFID), location-based data, barcodes, smart labels, and wireless sensor networks in abundance. The use of web connectivity and cloud services offering tracking facility from any location or device makes up for a digital ecosystem in the supply chain functionality.

Why supply chain is at the center of a digital enterprise

With every aspect of business embracing digitalization, having a linear supply chain system in a digitally connected world is an absolute misfit. Distribution channels may work in a linear operational system only if the gap between demand and supply is very small. Forecasting when a shipment is likely to reach the consumer remains inconsistent leading to a lack of transparency.

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Change to a digital supply chain management system which is both resilient and responsive works not just for end product shipment but for requirements like raw material procurement and internal distribution channels. The use of big data analytics, cloud, and the Internet of Things (IoT) all can combine well only with a digital supply chain ecosystem leading to a new technological dimension in business operations and supply chain management.

Evolving supply chain management services

Just as businesses need a successful implementation of digital supply chain management, supply chain enterprises are also gearing up for the next phase of transition.  For example, DHL, one of the world’s leading logistics service providers has recently announced that it will rely increasingly on big data to minimize risk while facilitating supply chain management solutions. DHL is also conducting trials with employees using data glasses for picking processes that have helped the enterprise increase their productivity by 25 percent. Another well known SCM service provider DB Schenker has announced investment plans in a digital mobility lab with collaborations with airlines having a strong cargo business and use of paperless e-freight offerings. It is not that digitization is only for land and air cargo SCM support. Ocean carriers and forwarders are also exploiting the use of robotics for goods handling, drones for deliveries, and new apps for optimizing own asset-light delivery.

Digital supply chain and omni-channel strategy implementation

One thing that is high on the wish list of almost every retail channel is to ensure a smooth omni-channel implementation. Businesses have been selling through a multichannel approach in the past but adopting an omni-channel approach has a different dimension to it. Multi channel operations have been traditionally based on linear supply chain management solutions. An omni-channel support is intra-connected and inter-connected allowing a retailer to track everything from incoming raw materials to dispatch on the final product to the consumer and trace hidden trends for active business analytics. An omni-channel strategy implementation requires digital supply chain system since it accounts for monitoring of both the ‘push’ and ‘pull’ mechanism involved. The push component links to setting up resource channels for facilitating a digital supply chain management system. The pull aspect, on the other hand, strategizes how the supply chain system carries out delivery or orders aligned with multiple safe channels.

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Need for agile supply chain environment

Adopting an omni-channel sales system can increase business functionality but fulfilling an omni-channel promise also requires an organizational transformation. Omni-channel is not just a business decision but has to be implemented on the ground with adequate support. Enterprises transforming their supply chain management systems into a more agile system have been the ones that have implemented omni-channel sales successfully. The supply chain is no longer about procurement and delivery but is also about building robust data, chancing the analytical capabilities of supply chain management as part of a responsive and agile system.

Consumers today are ordering from multiple channels. This means both orders and returns are flowing in through various channels. Unless an organization has the capacity to check real-time visibility of inventory across the supply chain, it may become impossible to handle such magnitude of multiple sales channels.

Conclusion: Omni-channel strategy requires some due diligence, and digital supply chain management is a cohesive part of such a transformation.

Photo by World Trade Organization

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