Six Surprising Benefits of Digital Transformation in the Supply Chain

The Blume Global Team | October 14, 2019

International supply chains are some of the most interdependent and complex processes that happen between businesses. Even small, incremental technology changes can have a big impact when magnified across the entire supply chain. It’s no surprise then that major new technologies can revolutionize how suppliers, manufacturers, logistics companies, retailers and others work together. Organizations can better manage their operations, enhance their profit margins, and ensure the streamlined, efficient transfer of goods and information between supply chain nodes.

We think it’s worth highlighting just how significant technology is in enabling supply chains, and we’ve dug into the research to bring you some eye-opening facts.

 

60 % of supply chain businesses say digital transformation has a big impact, and that percentage is rising

Research from The Hackett Group investigated world-class procurement and supply chain businesses to understand the impact of digital transformation. Almost half said digital transformation is affecting their operating model today, while six in ten say it’s having a big or very big impact on the industry as a whole. That number is expected to grow to more than 70 percent over the next two or three years.

An Accenture report said that over three-quarters of companies are missing out on growth opportunities in the supply chain, “[the report] reveals that more than three-quarters (78%) of executives and their companies — named the ’Laggards’— are missing opportunities to leverage the power of the supply chain as a driver of revenue growth. The remaining 22% of companies, referred to as ‘Leaders,’ are making smart moves in three areas — digital investments, customer-centricity and ecosystems.”

The takeaway here is that any supply chain business that wants to continue competing needs to start strategizing, building, and funding for digital transformation now.

 

The average supply chain has a digitization level below 50 %

Despite the impact of investing in digital technology, most businesses have not unlocked the transformation prospects in their supply chains. A study by management consultants McKinsey found that the average business had supply chains that only digitized 43 percent of its operations—the lowest of five business functions they examined which were products and services, marketing and distribution, ecosystems, processes and supply chains. The research also showed that digitizing supply chains can boost annual growth by more than three percent, the highest of each of the five areas examined.

The takeaway here is that any supply chain business that wants to continue competing needs to start strategizing, building, and funding for digital transformation now.

 

Digital transformation can drive efficiency savings of more than 50 %

World-class procurement organizations enhance their efficiencies by 55 percent compared to businesses that haven’t taken full advantage of digital transformation. These savings aren’t just limited to technology and infrastructure — they’re also realized through structured work, knowledge work and interactions.

The takeaway here is that digital transformation has far-reaching implications besides installing, updating or renewing your supply chain technologies. There are several common areas where you’ll definitely see your investments achieve more success across technologies and it can revolutionize your business as a whole.

 

World-class supply chain organizations can save up to 75 % through digital transformation

The Hackett Group found that digital transformation helps procurement organizations to optimize their processes, integrate with other systems and minimize error rates. Combined with smart automation and other technologies, these businesses can streamline their operations and achieve savings of up to three quarters. Even regular procurement businesses can reduce their costs by 45 percent.

These savings are across all areas of the business. A strict focus on technology changes alone, for example, robotic process automation, machine learning, AI and smart data capture can reduce costs by up to 20 percent by itself.

The takeaway here is that procurement and supply chain organizations can realize their return on investment in digital transformation.

 

Analytics is extremely important to effective supply chain management

According to the report from The Hackett Group, “Advances in technology that make it possible to harness data on a global scale are today considered essential in the procurement function. New tools for data aggregation and data mining can provide insight about the past, helping to deliver savings from cost reduction and cost avoidance by anticipating future behavior. Advanced business intelligence tools designed for self-service use by procurement staff can be leveraged to identify new opportunities and track savings opportunities. Today, a majority of procurement organizations have access to a significant amount of global, regional and divisional supply information company-wide.”

Accenture’s research into the supply chain found that 80 percent of leading procurement businesses have invested in big data and analytics. Research from McKinsey revealed that after investing in a data engine, one supply chain business saw some big improvements, “the data engine has enabled the company to reduce its inventory by 20 percent and improve the productivity of its planners by 20 to 30 percent.”

The takeaway here is that it’s not just about internal or local data, it’s about leveraging information from elsewhere in the supply chain and the external environment to remain competitive and effective.

There’s still huge potential for growth in the supply chain, and digital transformation is the main enabler. Learn more by viewing our webinar “How New Technologies are Reshaping and Influencing Supply Chains” <link> and find out how digital transformation can revolutionize your supply chain business.

 

 

The Blume Digital Platform is data-driven and connects trading partners in a collaborative supply chain ecosystem to drive real value and growth for our customers worldwide. Our cloud-based platform is open and neutral, and its extensible architecture enables continuous innovation to forge the future of the global supply chain.

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