What impact does the Digital Revolution of the Supply Chain have on businesses and consumers?

When we use either of these terms, we are referring, basically, to a radical change in the supply chain and in the way companies work, since the foundations of supply chain management are becoming obsolete due to advances in technology and new forms...

Published:

21-11-2018

What exactly does the digital revolution of the supply chain or Industry 4.0 mean?

When we use either of these terms, we are referring, basically, to a radical change in the supply chain and in the way companies work, since the foundations of supply chain management are becoming obsolete due to advances in technology and the new forms of consumers behaviour.

Now, thanks to the advances we have made, we are able to know what is happening from one end of the value chain to the other. This information enables planning, inventory and the level of customer service to be optimised. But it also gives us the possibility to offer completely different products and logistical solutions with a lower environmental impact. We are living in a time that is totally new and fascinating.

How does industry 4.0 affect companies?

The digital revolution is forging changes in the configuration of the supply chain through the use of data. Margins are reduced, functions are intertwined and, where before only costs were seen, now income is being produced, in addition to other benefits.

Just a few years ago, the supply chain occupied a

marginal role in companies; today, however, it is a strategic asset.

The global and digital supply chain has to prioritise supplier management in its strategy. By integrating all its data together with that of the customers, distributors and production in real time, it is possible to optimise the performance of the supply chain, thereby reducing lead times and shipment costs. In this way, the customer experience and even the supplier performance will improve.

According to Gartner, companies that align the principles of this technology to their supply chain can increase their productivity by up to 5% and their earnings by up to 3%.

New devices, new tools and new talents are needed. The incorporation of all the elements that have generated this new scenario for the supply chain forces organisations to define a strategy for the development of digital skills. There would be no point having the latest software if nobody in the company knows how to use it.

The most important thing to change is not to be afraid of failure.

In the past we have seen how companies used to try to transform themselves by getting behind huge projects worth millions of euros, which, in the end, were too large to succeed. To innovate, another mentality is needed. The project has to be small, one that allows us to ask ourselves: “Is it working?”, and if the answer is no, then change it fast. This calls for a cultural support at the company that does not penalise those who fail and does not involve the executive team in every decision.

 

How does the consumer experience change?

Well, enough to ask ourselves the following question as the digital consumers that we are: How have we changed?
Personally, when I’m asked this question, I illustrate my answer with music (which is my great passion). In 1989, the British group Queen released their single, “I Want It All”, representing the ambition of that generation to have it all. Last year, in 2017, Arcade Fire, a very influential Canadian group, released a song that was a hit in the charts all over the world, entitled “Everything Now”. 

In my opinion, it is clear that we have evolved as consumers of this global society toward a more demanding level of consumption. We want it all and we want it now.

Equally, we no longer only appreciate the quality of the product, but we also require it to be innovative, to transmit values to us which make us feel unique. We also want to acquire it with a few swipes of our finger on our smart device and at the best possible price, having total traceability of the shipment in real time and being able to receive it whenever and wherever we want.

This new context means that companies have to optimise their operations to have a more flexible supply chain and to be more competitive.

 That is why at Ágora, as a consultant with more than 18 years of experience in supply chains, we are helping our customers (retailers, manufacturers and logistics operators) to improve their processes and optimise their supply chain thanks to the advances provided by new technologies.