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What’s the Real Difference Between Traditional and Digital Supply Networks?

by Wendy Buxton | Jan 10, 2019

At times, the trend toward digital supply networks can feel so extreme and inescapable that your automatic reaction might be to dig in your heels and keep doing things “the old way.” And while there have been a lot of major successes with traditional supply chains, especially without modern technological advantages, finding ways to improve old systems isn’t just about keeping up with trends — it’s also a way to survive in highly competitive markets.

 

It’s not about transferring processes to a computer or smartphone

Your supply chain doesn’t automatically become digital when you move from paperwork to computer-based forms or from phone calls to emails. Unlike traditional supply chains, digital supply chains are more seamless, transparent, and data-focused. More analog networks have more opportunities for data to be lost or mistranslated during transfer, plus they tend to struggle in the face of extreme market volatility.

 

For example, companies relying on single routes or warehouses for specific order types end up spending more of their logistics budget trying to manage in-store, eCommerce, and returns out of multiple locations rather than an all-inclusive warehouse. Multiple warehouses that can handle any type of issue are much more effective than several single-focus warehouses that increase response time and shipping costs. Advancements in logistics technologies allow companies to operate within an integrated digital supply chain system rather than playing phone or email tag.

 

The benefits of a digital supply network

When you look at successful digital supply networks, they’re not just a digital upgrade from a traditional process. They make use of modern applications including artificial intelligence, the lowering prices of cloud computing, predictive analytics, and sensors to integrate data all the way from the manufacturer until the product is in a consumer’s hands. They offer the unprecedented ability to not only know when a shipment left but also to get the actual GPS location of the truck en route.

 

Digital supply networks also offer a level of flexibility that traditional chains can’t replicate. Interconnected systems reduce and even eliminate communication delays — and, even better, outright miscommunications. They offer the ability to make last-minute changes in response to extreme weather events or trade disputes. Plus, reducing errors that are common in a traditional supply chain can give a business strategic advantage over competitors in terms of sales effectiveness and new development opportunities.

 

Transitioning to a digital supply network before it becomes the norm

In 2018, Deloitte found that 65% of manufacturers were either prioritizing digital supply networks or planning an implementation in the next year. Another 28% were currently undergoing digital transformation initiatives, while only 7% had not considered doing so. Executive confidence in progress toward a digital supply network was high, but with less than a third of manufacturers actually implementing any kind of change, there’s still time to get ahead of competitors on this new trend.

 

Hiring and retaining employees with the technology skills needed for new digital supply networks is a major challenge. By investing early in training talented data engineers and programmers in logistics and training your current workforce in new technology, you can start getting an edge on the hiring competition.

 

As we’ve learned in traditional supply chains, your employees drive the effectiveness of your chain. The success of implementing a digital supply network depends not only on adoption within your business but also on the cultivation of a talented, dedicated workforce looking to shape the new face of logistics.