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What is a Digital Supply Chain? And How to Manage It?

The term digital supply chain is very prevalent in current logistics and supply chain news, but it is a term that many people are still unfamiliar with. It is important to understand what a digital supply chain consists of and how it could potentially save your company money, time and even your environmental footprint. In order to decide if it could be right for your company, we will break down what it means to have a digital supply chain management.

What is a digital supply chain management?

A digital supply chain is similar to a typical supply chain, but the foundation is built on web-enabled abilities. Many supply chains use a combination of paper-based and IT-enabled processes. A truly digital supply chain goes further than this hybrid model to entirely capitalize on system integration, connectivity and the information-producing capabilities of “smart” components.

digital supply chain management

Ultimately, the goal of a digital supply chain is to create insights for greater efficiencies, getting rid of waste and facilitating more profits. Companies that have adopted a digital supply chain are better equipped to move resources, assets, people and inventory from point A to B at any time. They also have the potential to generate a reduction in costs by responding early to transportation and manufacturing risks before they even happen. The potential payoffs of a digital supply chain include savings in many areas, including resources, time, money, and even a smaller environmental footprint.

How to provide a good digital supply chain management?

A successful digital supply chain management has processes that continuously analyze inventory levels, customer interactions with products, carrier locations, and equipment. A digital supply chain then uses this information to help plan and execute at improved levels of performance. Technologies such as GPS tracking, radio frequency identification (RFID), barcodes, smart labels, location-based data, and wireless sensor networks are all part of a digital supply chain.

Building a digital supply chain requires a complete and extensive strategy that is a fundamental part of the business plan and one that weaves in organizational structure, operations, systems, physical assets and processes such as procurement and payment. Additional efforts, on the other hand, can possibly result in organizational silos, data duplication, and inefficiencies.

Is it right for you?

Digital supply chain technologies are truly helping some companies achieve a step-change in performance in more complex areas. Consider the potential of automated replenishment to transform the manual processes of your business.

 

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Mistakes Small Businesses Make in Supply Chain Management

Small businesses often have limited human resources and have employees in charge of a wide array of different tasks. If the business has the need to ship certain products occasionally or on a regular basis, one of these tasks is managing its supply chain. It’s quite easy to make supply chain management mistakes.

Well, how hard can it be to get the product from point A to point B, you may ask? Honest answer: if you want it to be efficient and successful, it may not be that easy! Employees do their best to keep customers happy and costs under control.

At the same time, there are certain common supply chain management mistakes small businesses often make in managing their supply chain which may end up negatively affecting their customer satisfaction rate as well and their bottom line.

Let’s look at a few supply chain management mistakes that might be hurting your business:

A Non-Logistics Logistics Manager

Sounds a little confusing, right? It’s pretty simple. As mentioned before, small businesses often operate with limited resources, and it’s common for a person without any supply chain background (for example, a salesperson) to be in charge of arranging the whole shipping process to the end customer. The lack of industry-specific expertise is quite a disadvantage and may cause shipping disruptions and financial losses.

Missing the Details

This, as well as all other mistakes, often stem from the one main issue mentioned above – not having anyone with solid experience and understanding of logistics processes and details. Logistics professionals are aware of the pitfalls and tricky parts and possess the expertise which allows them to find cost-effective options and avoid unexpected issues/up charges.

supply chain management mistakes

It’s important to research all the details and make sure you are not going to end up facing hidden costs in the pursuit of the best “upfront” price.

Ask straightforward questions about anything which might potentially come back to harm you, and always ensure all the information you provide is accurate and extensive.

Lack of Automation

It’s common for small businesses to lack specific software and automated processes due to obvious reasons – automation is an upfront expense. However, automation software is an investment and can help the future of your business. Investing in automation will save you time and money in the future, help your business and your supply chain be more efficient which is a direct cost-saver.

With that being said, hiring a logistics professional for a small supply chain or investing in automation may not be at the top of your priority list for understandable reasons. What can you do in this case to manage your supply chain efficiently? You can reach out to a 3PL. They can offer the expertise and software that will be highly beneficial for your supply chain. A good 3PL can help you cut down your shipping costs and reduce your logistics-related stress.

Learn more about our supply chain management services and contact us for the supply chain advice!

 

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Moving Trading Partners into Digital Supply Chain

It’s 2017, technology is practically everywhere and everyone is digitally connected. Most businesses have adapted to the changes in tech, yet some are still behind.

That’s not necessarily a bad thing! Every business works how they know best and to the best of their means. Digital supply chain is the optimal solution for businesses looking to obtain a game-changing benefit.

Based upon a SCM World study, 77% of companies in early stages of B2B integration processed less than 50% of their transactions digitally.That means there is a remaining 50% or more companies that are currently using traditional methods to exchange information (i.e. email, fax, and phone) instead of utilizing automation. That separation of formats creates a barrier between two parties which will lower total returns and affect projected goals.

So how does a large, digital business connect with a smaller business that is using traditional methods? Well, it’s easier than you think

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Utilizing electronic data exchange (EDI) or extended markup language (XML) will yield the highest results by generating and receiving digital transactions between trading partners.

What is EDI? EDI is the computer-computer exchange of business documents in a standard electronic format, typically between business partners. EDI allows the ability to create an automated document process which will save time and money.

It will also improve processing speed, reduce the number of errors, and aid the relationship between partners.

Now, not all business partners have the means to utilize EDI. It may be the case of their IT department not being large enough to manage EDI, or it may be that they don’t have an IT department.

The cost and usage time of using EDI up may be too great if their larger trading partners don’t transact as frequently with them. Nevertheless, if you have a non-EDI partner, there are still options you can use to make digital transactions work effectively.

  • Web Apps. Web apps are very common in today’s solutions, they allow easy access from any computer your partner may use while providing a simple solution to digitization. Web apps can provide common data entry and the ability to review transaction history. The data entry becomes a digital transaction which can be processed automatically and converted to EDI to be processed like other digital transactions. Web apps can reduce errors and provide feedback based uon executed business rules.
  • Web Forms. Web forms are useful for creating data entry when filling out specific documents. They are simple to setup and help by automating the processing. Just like a web app, a web form can be converted into EDI and processed. There are some drawbacks in that there is no feedback given to the user (which a web app can provide).
  • Fax & PDF to EDI. Both Fax and PDF can be converted into EDI which would allow those small partners to continue their normal transaction methods. It would require you to scan the received documents and then convert them into EDI data for processing. This method should be reviewed by an individual to ensure the data is correct, we recommend indicating the required fields.
  • Spreadsheet to EDI. Using Microsoft Excel or a similar software is similar to a web form, it can check for user error and check the data field contents making sure they are filled out and complete. It’s a method that is simple to use as many businesses have access to Excel.

Once you have finalized your best form of data transaction with your trading partner, you can start enjoying the results. You will see:

  • Faster invoice time
  • More responsiveness to unforeseen events
  • Faster inventory turns
  • Reduction in cash to cash cycle time
  • Improvement in successful product launches
  • Improvement in perfect orders

 

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How to Improve Supply Chain Management Efficiency

Supply chains are multifaceted and can be a noteworthy source of competitive advantage. To improve supply chain management efficiency and effectiveness, companies have to improve predictability, optimize costs, minimize working capital, mitigate risk, and analyze data.

Companies who strategically improve even one area of the supply chain create a ripple effect of operational advantages. A resourceful, successful supply chain helps businesses save money – from faster delivery time, shorter factory processing time, better inventory management.

What is supply chain efficiency?

Supply chain efficiency is an organization’s core standard of performance. Efficiency measures the ratio of work performed in a process and whether the process is using the best practices and making the most of available resources. Therefore, supply chain efficiency doesn’t always guarantee effectiveness. A supply chain might efficiently lessen costs, but if the end consumer is unhappy with the product, it’s ineffective. So, an effective supply chain focuses on the outcome and external standards.

Well-built supply chains improve margins, support expansion, drive positive consumer experiences, and reduce operating costs. Determining the best way to move a product to its destination takes consideration of optimizing order processing, receiving procedures, outbound schedules, and reverse logistics.

The role of distribution networks in supply chain efficiency

A distribution network is a system a company uses to get products from the manufacturer to the retailer. Companies who leverage the supply chain as a strategic capability have built a durable distribution network. A fast, reliable network is a competitive advantage because customers are able to get products whenever they want them.

Today, the trend is for distribution centers to be located close to major markets in order to reduce inbound and outbound miles. “The ability to get a product to market in 1-2 days when your competition can only deliver in 3-5 days is a serious weapon,” says Wulfraat, President of MWPVL International.

How to improve supply chain management efficiency?

For an efficient supply chain, companies create reliable transportation solutions. A transportation network empowers a company to reduce shipment costs and increase service levels with little disruption to any processes. Also, an effective transportation network starts with shipment visibility. Visibility improves routing, capacity, and profitability.

Shippers work with 3PLs to explore new transportation solutions. Also, organizations have to impress customers and innovate processes. 75% of 3PL users say 3PLs provide new and innovative ways to improve logistics effectiveness. The most frequently outsourced logistics activity is domestic transportation (80%). Regardless of mode or freight volume, 3PLs can assess and tailor solutions to a company’s needs.

supply chain management best practicesThrough a 3PL, companies can gather transportation and logistics information to forecast accurate needs, influence supply chain decisions and can ultimately grow process efficiency and customer service.

So, shippers need to first analyze the existing supply chain processes, distribution network, and transportation solutions to find pain points and opportunities. Looking at current and predicted delivery lead-times, logistics expenses, and inventory assets are good data points to find a path to efficiency and effectiveness.

Partnering with a 3PL adds value and efficiency to an organization’s supply chain. The technology and resources that third-party logistics companies provide create flexibility, contain or reduce costs, increase space, enhance visibility, and most importantly, enables the organization to focus on their products and customers.

Learn more about our supply chain management services and contact us for the supply chain advice!

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