Supply Chain Digital Transformation: The What, Why & How

Much ink has been spilled regarding the future of manufacturing, but pandemic-related supply chain disruptions drastically altered these discussions. In what seemed like only a few months, the future that manufacturers had been planning for was rendered obsolete, replaced by uncertainty and confusion.

For many, the solution has been to rethink modernization by shifting the focus to supply chain management. To make this possible, manufacturers must understand three key things about supply chain digital transformation: why it matters, what it looks like and how to make it possible.

Here’s what you need to know.

The Importance of Supply Chain Management

With so many elements to consider, manufacturers may wonder whether supply chain planning is the best and most effective approach to buyer/supplier relationship management. Should you focus on other aspects of the relationship for better results?

Often, the answer is no. That’s because the supply chain is, in many ways, the backbone of the manufacturing industry and all affiliations within it. Supply chain management keeps this backbone strong and healthy, helping each individual organization play its vital role in delivering finished products to consumers.

The Five Parts of Supply Chain Management

To better understand the need for such a process, traditional supply chain management systems can be broken down into five key components:

• Planning: Through historical data and analytics, manufacturers create estimates and set aside necessary resources.

• Sourcing: Manufacturers choose suppliers and manage key tasks like ordering, receiving, and authorizing payments.

• Manufacturing: The product is created, tested for quality, packaged, and prepared for delivery.

• Delivery and Logistics: Deliveries are completed and invoices and payments are processed.

• Returning: Returns are sent through the appropriate channels to minimize waste.
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Benefits of Supply Chain Planning

Each stage of the supply chain comes with its own considerations and involved parties, which is why supply chain planning for each part is crucial to the success of the entire operation. Other benefits include:

• Cost-effectiveness: No organization within the supply chain, from raw material suppliers to end customers, can afford to waste money on guesswork. Supply chain management 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 supply chain planning is 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. Supply chain management simplifies an otherwise-burdensome process to empower each individual player.

• 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, minimized delays, and reliably excellent products are just a few ways consumers can see the value of a well-managed supply chain.

What is Supply Chain Digital Transformation?

It’s clear that the supply chain — and, by extension, supply chain management — deserves a significant role in any manufacturer’s digitization efforts. In fact, digital transformation that neglects supply chain planning could potentially lead to even more problems, like declining supplier relationships or increased production costs.

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.

The Key to Digital Supply Chain Transformation

To become one of the industry’s true supply chain leaders, your company can’t simply acquire tech and call it digital transformation. Instead, you need to create and manage a digital supply chain — and to do that, you must focus on identifying and overcoming specific challenges. Here are a few examples:

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

• Relationship management: Everything from time zone shifts to differing priorities can complicate the various relationships found 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.

• 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, informing your analytics processes and turning raw information into actionable insights. 

• 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.

How Digital Transformation Enables Supply Chain Resilience

When supply chains are digitized, they’re 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.

Simply put, supply chain resilience is enabled by digital technology like supplier portals because these tools help minimize confusion and uncertainty. Even when your business is up against risks like those introduced by the COVID-19 pandemic, a digital supply chain empowers you to make better, faster decisions. You may not be able to completely eliminate delays, but with digitized supply chain management, you’ll know how to plan around them.

Other Digital Transformation Considerations

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

Although supply chain management deserves a front-row seat in any digital transformation project, it’s clear that 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.

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 its 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 MacDon’s sales.

Self-Service Solution

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

Take the First Step Toward Digital Transformation 

Supply chain management is an absolute necessity in today’s complex manufacturing environment. As pandemic-related shifts create 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.

However, while supply chain planning demands a key role in digital transformation, 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.