Supply Chain Digital Transformation: What, Why, and How

by Vector | Nov 1, 2021 10:51:58 PM


We keep hearing about the digital transformation of the supply chain. What exactly does that mean? Can we see it? Can we hold it in our hands? Will it hurt? Does my neighbor have one? How do we get there? And how will we know when our supply chain has been digitally transformed?

We'll tackle all these questions below. But first, here's what it is: A digital supply chain is one that uses digitalization technology to improve efficiency, visibility, and productivity in a way that benefits all parties up and down the supply chain.

In reality, like most things, the digital supply chain transformation is both simple and complex. Thus, I like to simplify the scope of this broad subject into three categories:

  1. Digital Supply Chain Today
  2. Digital Supply Chain Tomorrow
  3. How the Digital Supply Chain will Transform the Future

The digital transformation of the supply chain is—or should be—the elephant in the boardroom. If your company is involved in any way in logistics, this topic should be on your radar. So let's apply the old saying, and "eat the elephant one bite at a time." But before we dig in, let me start with a quick story.

An Anecdote About "Magic Eye" Posters From the 1990s

If you happened to visit my childhood home sometime in the mid-1990s, you'd have encountered at least one "Magic Eye" poster. These posters were a legit, perhaps forgotten, craze of the '90s. They all featured the same magic trick.

What looked merely like a colorful, computer-generated pattern would transform. Suddenly a secret, underlying 3-D image would magically appear before your eyes! It was pretty rad. One second you would be staring at nothing, and in an instant you'd be like, "Oh, hey! There's an elephant!" Talk about cutting-edge, futuristic stuff! That's where I think we're at today when it comes to the supply chain digital transformation.

Where's the Digital Supply Chain at Today?

To put it another way, we've just seen the digital elephant. And yet, the whole supply chain industry is still toggling between the old patterns and the new, dynamic picture that's coming into focus.

In truth, the logistics industry has traditionally been a paperwork-dense, touch-heavy, physical work environment. Paper, paper, paper. The same paperwork reality is true of essentially every job role up and down the supply chain, from driver to warehouse to back office. Why? Because despite those phones, faxes, and computers we adopted along the way to get the job done, we still need that signature on that bill of lading (BOL).

BOLs: The Backbone of the Supply Chain Industry

There are reams and reams of additional paperwork inside the load file next to those BOLs. But BOLs are special. They're vital because of the information they contain regarding the specifics of a shipment.

But beyond that, don't forget that BOLs also act as legal contracts. The signature on a BOL legally documents the chain of custody at every stage along the supply chain.

Thus, the elephant—the future digital supply chain—will be paperless and contactless. But here's the kicker: we already have contactless capabilities today! The digitalization technology application developed by Vector is already here.

Companies working with Vector love it already. But looking forward, the important thing to recognize about Vector's technology is that much of the technological advancements of the future will rely on digital documents.

The Digital Supply Chain of Tomorrow

A host of benefits will follow a digital supply chain transformation. Early adopters are already getting returns on their investments. The first, immediate benefit organizations are seeing from digital contactless logistics technology is it solves a major issue we witnessed during the COVID-19 pandemic. When measures such as social distancing became common on a global scale, then chatting at the check in window and getting a signature on the BOL become a risk threat.

In other words, a digital transformation to contactless software can help your organization avoid the spread of germs. This will improve the health, safety, and morale of your warehouse, dock, and driver personnel.

For business owners and decision makers, the risk mitigation term to consider is business continuity. Have you considered the financial impact of a slowdown? When key personnel miss work, it can affect the flow of your business. And that says nothing of sick pay cost or the impact of underperformance on your chances of getting future business.

Productivity Gains and the Digital Supply Chain

The risk mitigation benefits are real. But the true promise of the supply chain digital transformation is in productivity gains. And again, it starts with a shift away from paperwork to contactless technology.

For example, digitized document software can immediately streamline a company’s transactions—and thus its cash flow. The key is automatic invoicing. Imagine being able to invoice a customer immediately, effortlessly, on delivery. When the supply chain is fully digitized, contactless software will perform this function efficiently.

And because all data will be digitized, audits are going to hurt a lot less. Imagine being able to search for all required documents as easily as searching the internet. Your data will be secure and in the cloud. And that sure beats kicking over banker's boxes and rifling through file cabinets.

How Will the Supply Chain Digital Transformation Usher in the Future?

So far, we've seen benefits of the supply chain digital transformation that apply to individual companies. But how will the supply chain as a whole benefit from a digital transformation?

The first benefit will be seen through greater collaboration. Right now, companies who are going digital are considered innovative. But as more partners in the same supply chain adopt the same technology, that will increase visibility. This visibility will help the supply chain's weakest links. Here's what you'll see.

  • Improved shipping and receiving efficiency through faster driver turnarounds and reduced dwell times
  • Stock, pick, and pack efficiencies and inventory management within warehouses 
  • Real-time updates and advanced shipping notices (ASNs)
  • Many other supply chain best practices

Individual businesses can reap the benefits of adopting digital supply chain technologies. But widespread, mainstream adoption of digital technologies holds even more promise. Indeed, the possibilities harbored in these simple tools are huge.

How the Digitization of the Supply Chain Will Help Blockchain Go Mainstream

In many ways, the digital transformation has already occurred. If you're you're reading this on a phone, you're already being transformed. How long did it take the telephone to become the smartphone (our best friend)? Let's face it—we can't live without smartphones anymore.

All technology follows a similar innovation in its adoption cycle. Blockchain is right on the cusp of gaining mainstream traction. The final push could come from the simple tools of the digital supply chain.

Think about what we've just discussed. Real-time tracking of shipments and ASNs promise to reduce dwell times and improve efficiency of interfacing. This visibility can lead to automatic invoicing. What ties it all together? A universal currency? Perhaps someday soon.

In fact, right now the supply chain is all tied together by the contractual backbone of the eBOL. And it's only a matter of time before the contracts of the BOL merge with the immutable smart contracts of blockchain. Imagine a supply chain with greater transparency, data sharing, and partnership. It's possible.

As the supply chain adopts digital tools that lead to blockchain, those tools will usher in mainstream adoption. We must put blockchain technology in the hands of the 13 million Americans who work in the logistics industry. Further innovation will follow as we wrestle blockchain away from the technologists and get it into the hands of the end users.

Leave it to the logistics industry. We'll figure it out!

The Digital Supply Chain Transformation Will Benefit Us All

In summary, the world is defined by e-commerce, a global supply chain, and a global pandemic. The time has clearly come for digital transformation. The elephant is a sight to behold, isn't it? Now let's eat, one bite at a time, no magic tricks required.

This post was written by Brian Deines. Brian believes that every day is a referendum on a brand’s relevance, and he’s excited to bring that kind of thinking to the world of modern manufacturing and logistics. He deploys a full-stack of business development, sales, and marketing tools built through years of work in the logistics, packaging, and tier-1 part supply industries serving a customer base comprised of Fortune 1000 OEMs.

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