Supply Chain Digital Transformation: The What, Why & How
5 Min Read

Supply Chain Digital Transformation: The What, Why & How

Take an in-depth look at supply chain digital transformation to learn best practices, benefits, first steps, and more.
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Years of unprecedented supply chain disruptions have dramatically altered discussions around the future of manufacturing. Now, manufacturers are rethinking supply chain operations in ways that might have seemed impossible not too long ago.

For many, the solution has been digitization — using predictive analytics, data management, generative AI, and other updated or entirely new technology in the supply chain process. To make this possible, however, manufacturers must understand three key things about supply chain digital transformation: why it matters, what it looks like, and how to start.

Here’s what you need to know.

What is Digital Transformation?

Digital transformation, sometimes called digitization, is the process of identifying, implementing, and utilizing digital technology in an area that didn’t previously take full advantage of it. There are different methods of transformation, from taking small steps and adopting one new solution at a time to completing workflow-, department-, or company-wide overhauls. For digital transformation to be successful, it must include elements of both procedural and cultural shifts; after all, technology is only effective when it’s actually used.

Supply chain digital transformation is just one example of this process, but it’s a vital one. Such projects can impact everything from supply chain planning and operational efficiency to customer experience and longevity. When digitization is successful, the traditional supply chain may no longer be recognizable — and in a world where efficient evolution is key, that’s good news for manufacturers.

Examples of supply chain optimization through digitization include:

  • Timing: Production delays, product shortages, and shifting lead times slow the traditional supply chain. Digitization, however, can help reduce these disruptions by improving overall supply chain visibility and helping you anticipate potential issues, allowing you to take control of timing across the board.

  • Expenses: Without the right technology, it’s difficult to keep track of quickly-changing costs, let alone plan for or minimize them. Digital transformation helps elevate your supply chain management techniques to allocate resources more efficiently, identify and minimize unnecessary costs, and more.

  • Relationship management: Everything from time zone shifts to differing priorities can complicate various relationships across the supply chain. Supply chain digital transformation allows you to communicate more effectively using digital technology like manufacturing portals, helping keep all stakeholders informed in real time. Information is always available and up-to-date, so decisions can be made without delay, and priorities are always clear.

  • Big data management: The supply chain creates massive amounts of data every day. Improved digital capabilities give you the tools you need to manage that data, inform your analytics processes, and turn raw information into actionable insights. 

It’s important to note that the manufacturing industry can and does leverage digital transformation outside of supply chain management. However, if these projects aren’t completed concurrently, or if the idea of a digital supply chain is left out entirely, the resulting workflows can be disjointed — and the effects can include declining supplier relationships, increased production costs, and more.

The good news is that transforming the manufacturing industry to put the focus on the supply chain is possible with the right digital technology — and, of course, the right priorities.

Benefits of Supply Chain Digital Transformation

Despite the importance of digitization across the entire manufacturing industry, the truth is that organizations have limited budgets and must prioritize their upgrades, improvements, and evolutions. So why should digital supply chain transformation belong at the top of that list?

Here are just a few ways entire organizations and the global supply chain can benefit from meaningful digitization:

  • Cost-effectiveness: No organization within the supply chain, from raw material suppliers to end customers, can afford to waste money on guesswork. Supply chain digital transformation helps each business use key performance indicators and the proper data analytics to identify and overcome problems, optimize processes, track costs, and more. This helps create stronger, more accurate budgets.

  • Efficiency: Extra steps lead to wasted time and a higher potential for human error. When big data, advanced analytics, machine learning, and other technologies are at the forefront of a company’s approach, it’s easier to improve efficiency without cutting corners.

  • Simplicity: The more complex the supply chain becomes, the more difficult it is for manufacturers to deliver on customer expectations. Digital supply chain transformation simplifies otherwise burdensome processes to empower each individual player. This simplification extends to the onboarding process. By efficiently validating and approving suppliers, creating step-by-step journeys based on segments and user roles, and curating information and resources according to their needs, you can make onboarding less time-consuming and costly.

  • Resilience: When supply chains are digitized, they’re more resilient. That’s because digital supply chain management benefits from improved visibility, clearer communication, stronger analytics, and better relationships — all things that help manufacturers and supply chain partners do their work more effectively.

  • Confidence: Digital technology like supplier portals enables better, faster decision-making and stronger supplier relationships, minimizing confusion and uncertainty. No manufacturer can completely eliminate delays, complications, and unforeseen issues, but with increased supply chain visibility and efficiency, you’ll know how to communicate with suppliers and accurately plan around any problems that do occur. 

  • Customer satisfaction: When supply chain planning is at its best, every stakeholder can operate with the utmost efficiency — and this leads to a better experience for end customers. Accurate delivery estimates minimize delays, and reliably excellent products are just a few ways consumers can see the value of a well-managed supply chain.

While supply chain planning should be at the forefront of your digital transformation project, it’s important to remember there are other areas where digitization can benefit your manufacturing operation. In the same way that neglecting the supply chain can jeopardize the value of digital transformation, focusing too much on this single element can lead to diminishing returns.

For example, placing sensors to gather machine data can help inform and empower your factory floor analytics, giving you the information you need to simplify production procedures. This doesn’t just save time and reduce human error; it also indirectly supports the entire supply chain by helping you better understand your needs and challenges, as well as how your partner relationships can be structured to help with both.

Planning Your Digital Transformation Journey

Digitization must support the entire organization before it can support the supply chain. As such, you need to carefully consider your company’s first steps — one of which should be choosing a manufacturing portal.

Manufacturing portals act as the framework for digital transformation because they allow you to focus on large-scale supply chain considerations and day-to-day operations on the same platform. You’ll be empowered to simplify supplier relationships, perform key analytics processes, allocate resources, and more — all in one place.

As you plan this portion of supply chain digitization, keep in mind that some features may be more important than others. For example, a high-performing supplier portal should act as a single interface to support, streamline, and even automate all related interactions, including tailored workflows for purchase orders, invoice changes, and more.

Once your manufacturing portal is up and running, you can begin structuring your digital transformation project based on what has worked for other supply chain leaders. Here are just two examples:

Dealer Portal 

MacDon, a leading manufacturer of agricultural equipment, doubled site visitors across more than 1,000 dealers after upgrading their dealer portal. With the improved system, users can check inventory, submit warranty claims, and perform other tasks that help streamline the supply chain and increase sales.

Self-Service Solution

Manufacturer of building materials Mueller, Inc. chose self-service functionality to address supply chain challenges. As a result, customers can interact more smoothly with the manufacturer, creating customized quotes that make it easier for internal stakeholders to accurately allocate resources.

Take the First Step Toward Supply Chain Transformation

Supply chain optimization is an absolute necessity in today’s complex manufacturing environment. As ongoing disruption creates new challenges, it becomes increasingly important for manufacturers to digitize their approach — not just to better serve their customers but to accurately and reliably perform their role in the overall supply chain.

While supply chain planning demands a key role in digital transformation, however, it’s far from the only consideration. Solutions must include functionality that helps digitize the entire manufacturing process from beginning to end — and that’s where digital technology, like partner portals, can be utilized for maximum efficiency.

Flexible, reliable, and capable of taking different forms depending on your needs, manufacturing partner portals (which are one form of a manufacturing portal) are the perfect first step toward digital transformation. They don’t just digitize supply chain management; they help you take advantage of your strengths to perform better in a challenging environment.

If you’re ready for a digital transformation solution that puts the focus on supply chain management without jeopardizing other processes, it’s time to explore Liferay’s Digital Experience Platform. Get started today.

​​​​​​​You're already eying a supplier portal solution and would like to learn how a supplier portal with the right building blocks can take your business to the next level? Check out our blog post "11 Building Blocks for a High-Performing Supplier Portal".

Originally published
August 24, 2023
 last updated
February 1, 2024
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