6 key principles for the use of digital technologies in the supply chain

6 key principles for the use of digital technologies in the supply chain

Digitalisation is taking over almost the entire logistics industry, and traditional supply chains are increasingly linked to digital ones. This process will intensify in the coming years, and COVID has only accelerated it.

By choosing a digital direction of business development, the heads of companies open new doors for themselves. They are able to anticipate future supply chain needs more easily and make the right strategic choices. The internet has a clear impact on the management of supply chains, with tools facilitating transport and storage.

Digital management can also cover both supply and stock control, reducing the increasingly costly employment of staff. However, the software is more than a system for recording and providing risk analysis and simulation. It enables manufacturers and logistics operators to become aware of the challenges and to prepare for possible disruptions in the supply chain.

Analysts have compiled a list of key assumptions about the use of digital technologies in the supply chain. These are, in their opinion, the basic elements of management, and by far the best results are achieved when they are all applied at the same time.

1. Integrated planning

Digital tools are used for seemingly different elements of the supply chain such as the purchase or transport planning, but also for distribution, carriage planning and information on delivery times. The point is to concentrate all these solutions in one system, establishing an integrated platform. Only then can the specific possibilities of each of these solutions be fully exploited and the activities be optimally planned in order to deliver the right product to the end customer at the right time.

2. Networked supply chain platform

The relevance of combining planning solutions is only verified during functioning of the chain itself.

Incorrect demand forecasts or missing parts jeopardise the supply chain process, because as a rule, many activities are based on each other.

In order to quickly solve emerging problems and reduce their consequences to a minimum, the exchange of information is of great importance. By incorporating internal and external data, the digital platforms provide the main control and monitoring instance for all actors in the supply chain. From receipt at the supplier to delivery to the customer, Lila Logistik analysts emphasise that communication, tracking and control can take place, for example, via a cloud platform.

It combines several systems, which gives a continuous (real time) view of the processes, and in case of possible irregularities, e.g. when delivery phases are exceeded, it enables a quick reaction. In their view, it is only when the integrated platform becomes operational that all planning effort will be reduced and added value generated.

3. Predictive market and supplier analyses

Proper anticipation is key to rational management. To ensure optimal prediction of events, close cooperation with suppliers and the use of their potential are necessary. According to the logistics experts, it is the suppliers who should be involved in the supply chain design process, and it is also they who should discover the value of digital management. The promotion of electronic documentation, especially the conclusion of contracts in this form, can be seen as a supporting element.

4. Smart warehouses

Smart warehouses are a prerequisite for reasonable supply chain management. Basically, this involves automation of supply chain management. As the number of SKUs and the demand for just-in-time orders increases, order picking based on the Person-to-Goods principle, which has been used for decades, no longer works, and the warehouse (also in the eCommerce sector) where handling is done manually is in a lost position.

Automation is expected to improve productivity and management efficiency and at the same time reduce the need for personnel. Automation of warehouse operations also drastically reduces the risk of errors, which also affects the supply chain. For example, after receiving an order from the customer, the picking robot picks the ordered products and passes them on to dispatch. There, another robot packs the goods and loads them into the previously booked vehicle… Operators confirm that companies with automated warehouses definitely deliver faster and the order picking accuracy is higher in this case. At the same time, their labour intensity is reduced.

5. Fast response

There is no effective digital management if we cannot guarantee flexibility and quick response. This is particularly important in situations where demand is irregular and difficult to predict, and as a result, excessive stocks may be generated.

Using traditional methods, companies are spending more and more time on handling returns or eliminating bottlenecks. The cost of investing in systems to speed up emergency response is quickly recovered thanks to faster response to orders.

Sensors and smart devices can provide enormous amounts of data to track and monitor the supply chain, manufacturing, stock movements (anywhere), the status and performance of installed equipment, transport and inventory.

The data enables Advanced Planning Systems (APS) to quickly identify and respond to the changing reality faster and more accurately than before. Analysts refer quite often to an operational scenario for transport, which has already been successfully implemented, being a clear example of digital supply chain management:

– trucks automatically transmit their current location and expected time of arrival at their destination to the smart warehouse system while driving,

– automatic booking of a loading ramp ensures a fast unloading process,

– further operations are carried out directly in the warehouse and all resources are updated in real time using sensors,

– driverless transport systems distribute the goods without any further intermediate steps; at the same time all data is automatically recorded in the system.

6. Autonomous distribution

The shortage of skilled workers and the increasing volume of transport are making order fulfilment ever more difficult. As a result, the use of autonomous means of transport continues to grow in importance. For the time being, this concerns mainly internal transport in warehouses, namely unmanned vehicles that are able to streamline deliveries and speed up individual operations.

In many cases, logistic trains (Mizusumashi) are already proving their worth today. In the very near future, similar autonomous means of road transport will certainly also emerge. There is no doubt that solutions such as self-driving vehicles in warehouses will soon become a reality.

Photo credit @ DHL DPD

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