Digitizing the Supply Chain: What it is and how you can benefit from it
"Let's invent tomorrow instead of worrying about what happened yesterday," Steve Jobs once said. As far as the logistics industry is concerned, the "invention of tomorrow" undoubtedly involves the digitalization of supply chains. Many people see the shipping and logistics industry as a dinosaur due to its long history. That’s why companies of this industry should be even more open to modernize themselves and keep pace. A digital supply chain is one key element to achieving that. But what exactly is a digital supply chain? What are its benefits and how can it be used in practice? Find the answers in the article below.
Table of Contents
In very simple terms, the "Internet of Things" describes all kinds of devices that can be digitally linked with other devices or the internet in general. These are often objects that don't have any contact points with the digital world, such as household appliances. They are equipped with sensors, software, and other technology enabling a data exchange with each other.
A digital supply chain differs from the traditional supply chain primarily in terms of connectivity and automation. Where decisions were once made based simply on experience or sometimes outdated data from several days or weeks ago, the digital supply chain enables a data analysis in almost real-time. It also provides end-to-end visibility across all process steps, enabling a smooth flow of goods and information, shortening response times, and increasing efficiency.
How does supply chain digitalization work?
The digitalization of a supply chain usually begins with the identification of weak spots in existing processes - for example, long coordination loops which involve too many phone calls across different time zones or the usage of outdated reports. Secondly, define digital solutions and tools in order to simplify these processes and focus on those having the biggest impact possible while also being as easy as possible to implement. And the third step marks the integration of these solutions where it is also important to define KPIs in order to monitor the success of the actions.
All this might sound a little overwhelming, which is why we at Hapag-Lloyd can help you to digitalize your supply chain by offering you a set of digital tools for your daily work within our Online Business Suite. This fully featured platform helps you manage all your shipping processes smoothly online and covers many important steps from the very first quote to the tracking of your shipments. Of course, it always needs some time to get used to new processes and tools – but it’s worth the time as the following advantages illustrate.
Five benefits of a digital supply chain
1. Increased transparency: Technologies, such as GPS-based real-time tracking, allow you to track the movement and condition of goods throughout the supply chain. Furthermore, the usage of digital dashboards gives you a transparent overview of data at any time and are being updated regularly.
2. Increased efficiency: By using automation and advanced planning software, you can streamline supply chain processes, save time and increase productivity. Additionally, with more accurate delivery times and better responsiveness to your demands, you can strengthen your customer relationships.
3. Risk Management: Digital supply chains help businesses just like yours to stay alert and react swiftly to unexpected events that could disrupt your operations. For example, if there's a sudden storm forecast that could delay a shipment, you can quickly adjust your plans, for instance by rerouting the shipment or preparing alternative supplies.
4. Cost Reduction: By going digital, you can even save money in several ways. For example, you can keep just enough inventory without overstocking, produce only what is needed to meet demand, and find the most efficient ways to move goods. By using digital tools, you can analyze which shipping routes are the quickest and least expensive, thus saving on transportation costs.
5. Adaptability and Competitiveness: A digital supply chain is like being more agile in a fast-paced game: You can adjust quickly to changes in the market, like a sudden increase in demand for a product or the difficulty of getting materials from a supplier. This adaptability not only helps you to keep up but also to stay ahead of the competition.
Conclusion
As you can see, the digitalization of the supply chain and the related tasks and workflows bears a lot of potential. Not only does the digitalization of the supply chain enable your entire organization to be more efficient but also to ensure better risk-assessment and improved planning capabilities. Apart from that, the digitalization of the supply chain is one of the first steps into the digital future that awaits the shipping industry.
© Hapag-Lloyd AG