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Supply Chains Have Entered the Age of Digitization

by Aristides Smith  2/26/2019

Digitization is coming to industries big and small. As technologies get smarter and leaner, yet more robust, they’re put to work to make complicated tasks easier. More than that, digitization is bringing bigger, better capabilities to everything it touches. For supply chain managers, the age of digitization is both a blessing and a curse. It has the power to inform better supply chain logistics, but it requires a leap in technology to make everything work smoothly.

Digitalization is sweeping

Buzzwords such as “Industry 4.0” and “Supply Chain 4.0” go beyond being trendy — they’re indicative of a new age of possibilities. That’s how encompassing digitization is: These technologies are strong enough to usher in a completely new age of commerce!

What makes supply chain digitization such a marvel is how digitization is taking form. Instead of forcing new technologies such as automation and predictive analytics into legacy processes, these advancements are being used to rebuild the entire supply chain from the ground up. For example:

  • Machine learning enables dynamic pricing for things like freight logistics and customer-facing variables. Feeding variables into a smarter transportation management system (TMS) such as Next Generation Logistics’ Dynamics TMS® ensures the smartest solution, as a complex machine learning system runs the numbers.
  • Technologies such as predictive shipping factor in automation, removing countless costly and time-intensive manual steps from the traditional supply chain. These same technologies support greater digital trends, such as intelligent forecasting for expedited, efficient supply chain operations.
  • Warehouse-to-office real-time communication promotes smarter cohesive function across the supply chain, linking previously siloed segments. Powered by the cloud, digital actions link to physical distribution centers, facilitating everything from shipping to restocking, reordering, freight planning, payment processing, and beyond.

Like other Industry 4.0 and other digitization revolutions, Supply Chain 4.0 is reaping the benefits of smarter, more connected technologies that solve problems people simply can’t. In an age with more stringent supply chain demands, it’s a revolution that’s come not a moment too soon.

The obstacles of adoption

According to Forbes, “While 94% of supply chain leaders say that digital transformation will fundamentally change supply chains in 2018, only 44% have a strategy ready.”

This simple statistic sheds light on a huge problem. While there’s near-universal recognition that a new age of supply chain management is upon us, less than half of companies appear equipped to embrace it. Issues range from the mere capital cost to adopt and integrate smart technologies to a lack of true understanding about how to properly leverage these technologies. For many, it’s a combination of both.

For most logistics operations and third-party logistics providers (3PLs), adopting Supply Chain 4.0 comes down to creating the infrastructure for it. Most are hesitant to rebuild and update core components across the supply chain, such as a more robust TMS or smarter freight transport technologies, because it’s disruptive. Unfortunately, companies failing to embrace temporary disruption on their terms will quickly find themselves embroiled in it as they’re forced to keep up in a competitive new environment.

The 44% of logistics providers with a strategy for Supply Chain 4.0 stand poised for success in the coming years. The 56% without may find themselves in a crunch — sooner rather than later.

Making the transition

Supply Chain 4.0 isn’t coming; it’s here now. Companies are already deploying technologies to give them the edge in supply chain efficiency. For those without a strategy or not sure where to start, there’s still tremendous opportunity.

Systems such as Microsoft Dynamics 365 and the TMSs utilizing it provide a clean, familiar, robust introduction to the possibilities of supply chain digitization. They’re a core starting point that enables a slow ramp-up to integrations such as sensors, algorithms, applications, robots, and more. Becoming familiar with the environment of a newly digitized industry gives companies foresight into how they can continue to streamline their own efforts and remain competitive.

Digitization of the supply chain didn’t happen overnight. Adoption of its technologies doesn’t have to either.