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CXO Today > 2017-28-11

Digital Transformation Lessons For Supply Chain Leaders

In the era of globalization no company can survive on its own, it’s connected to other companies at various levels. Every industry whether big or small needs to procure materials to manufacture their products, as well as have a robust customer network to sell its products or services.

Traditionally, the supply chain has been conceptualized as a chain of interconnected functions where each function is managed by individual business owner. As a result, each function is locally optimized. However, that does not necessarily provide end-to-end optimization of the supply chain.

The premise of the “connected” supply chain is to break the silos between the functions and interconnect them in order to improve visibility of the product as it moves in the supply chain from sourcing of raw materials to consumption of the final product.

"Digital transformation is the most talked about topic in today’s business world. A lot of companies are already on their path of transformation, as this is the need of the hour. Successful digital transformation needs a holistic view of the entire supply chain ecosystem, from procuring raw materials to distributing goods to customers. Digital transformation of a supply chain process requires transformation and connected flow of information and visibility for each and every partner who are involved in the process, and not just for one unit.

But Gaps remain…

Many companies in India are still relying on traditional methods of managing supply chains like phone calls, emails, workbook maintenance, and such methods are still dominant in most of the industries. This practice needs a change in order to survive today’s digital landscape.

Transforming an organisation with operations in multi locations or geographies is challenging supply chain transformation. There are large technological and infrastructure gaps within the supply chain partners, and to bring every partner on the same page and bring in transformation would require technological improvements. Reliance on manual processes will not only make the process slow but also invites manual errors and more time is spent on troubleshooting these errors. A growing business will always choose digitisation of supply chain, as it will involve more supply chain partners in its growing stage.

The road ahead

Due to various initiatives taken by the industries as well as Indian government, we can foresee that the digital transformation is happening and change is already visible in business models. Typically, one can break the silos and capture events in real-time for the functions under the control of an enterprise. Improved visibility across functions of an Enterprise leads to significant improvement in the overall performance of the supply chain. However, there are functions not directly under the control of an enterprise. For example, the status of suppliers’ suppliers or customers’ customers are typically outside the realm of an enterprise.

The status of those entities can be obtained by an enterprise by collaborating with these outside entities. Once these additional information is obtained, demand and supply can be estimated far more accurately than before. Note that the demand planning function of the supply chain becomes far more efficient compared to the traditional case where such detailed and objective information from customers’ customers is not available.

About the author

This article is authored by Mr. Sundeep Mohindru, Founder & CEO, M1xchange. A chartered accountant by profession, Sundeep is also the Founder Director of Mynd Solutions. He has more than 18 years of experience in consulting, audit, finance and accounts outsourcing and human resource (HR) outsourcing for manufacturing, retail, engineering, telecommunications, service and information technology (IT) industries.