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Transforming supply chains: It’s not just about the physical, but fusing in the digital too

Transforming supply chains: It’s not just about the physical, but fusing in the digital too


By James Christopher, President – Asia, TMX

The past year witnessed an onslaught of disruptions to supply chains across the globe. When the COVID-19 pandemic first hit, supply chains around the world halted and organisations had no idea where their supplies or merchandise were. Today, with global freight issues and massively blown out lead times, visibility and flexibility in supply chains remain a significant challenge.

These disruptions have seen the “just in time” lean supply chain philosophy thrown out the window for “just in case”, resilient supply chains. This has also finally forced many late adopters to transform their supply chains and embrace technologies such as autonomous mobile robotics to create flexible operations – but it does not stop there.

While some supply chains are only just starting their physical automated transformation, ongoing disruptions are also now pushing supply chains to digitalise quickly, with those that have not started either journey about to be left behind.

According to the Supply Chain Digitisation: A Shift from Driving Efficiency to Building Resilience report commissioned by TMX last year, more than 82 per cent of business leaders in Southeast Asia had plans to adopt more forms of digitisation in their supply chains[1].

A key reason for this is that they acknowledge the impact that digitalisation can have on the long-term resilience of their supply chains. Business leaders also recognised that digitalising their supply chains can enable them to better overcome challenges and changing consumer trends presented not only by the pandemic but other significant global events.

Old legacy systems not keeping up

In digitalising supply chains, existing legacy technology systems no longer cut it. Organisations need systems that interact with one another and that integrate with their physical capacities to enable real-time decision-making.

While systems such as Warehouse Management Systems, Transport Management Systems and Enterprise Resource Planning models are all well-established, they are all separate components that perform tasks in siloes.

Supply chains now require interconnected systems that all interact with one another and leverage the Internet of Things and big data to provide full visibility of operations, from planning to last-mile.

This will power real-time analytics to churn out rapid data-backed decisions that enable organisations to be flexible and responsive, especially in the midst of ongoing disruption in global supply chains.

Businesses with an interconnected physical and digital supply chain ecosystem will unlock rich insights and innovative solutions like visualisation data, dynamic fulfilment, and predictive buying that will set them up to thrive in the years to come. Such transformation is also good for the bottom line of businesses. A recent PwC study found that business leaders reported a 6.8 per cent cost savings and a 7.7 per cent increase in revenue by automating their operations in a year[2].

Integrating the physical and digital supply chain

The advancement of an organisation’s physical supply chain needs to synchronise with its digital counterpart to automate not only tasks but also complex decision making.

Integrating automated materials handling equipment and advanced digital capabilities will enable real-time optimisations and responses, building greater cost-savings efficiencies and resilience in operations.

Take for example Alibaba, which operates China’s largest automated warehouse, which is underpinned by Internet of Things technology and supported primarily by 700 robots. Through integrating their physical and digital operations, the eCommerce giant is able to fulfil 50 per cent more orders than a traditional facility in the same amount of time[3].

In addition to efficiency, some of the innovative solutions unlocked by integrating the physical and digital supply chain include:

Visualisation of data

Through integrating physical and digital capabilities, an organisation can go from old school decision making on excel spreadsheets and notes to real-time visualisations of how their operations are performing.  

Instead of having data live in excel spreadsheets for team members to periodically review, analyse then communicate out to the rest of the operations, digitalisation enables all the data across systems to be centralised on one platform.

This master blueprint of sorts would have user experience orientated dashboards providing accessible real-time data and insights to everyone, enabling greater visibility and informed decision making on physical operations.

Dynamic fulfilment

Digitalised systems synced with warehouse and fulfilment operations create the continuous real-time insights and data needed to enable dynamic fulfilment.

Visibility of inventory and how it is being impacted by seasons, weather or buying trends would inform fulfilment strategies and enable quick decision-making on dead or lagging stock and whether to move or stop production.

Predictive buying and operations

Demand is changing and customers are now dictating and demanding what they want and when.

Through digitalisation, businesses can create connected customers and gather feedback after a purchase, identifying satisfaction, loyalty and on-sell opportunities.

These insights can enable an organisation to predict what and when their customers would be buying and how they can tailor their supply chain and fulfilment operations to these predictive analytics.

Digitalisation harnesses the ability for businesses to have data at their fingertips, but the real advancements and transformations come about when these insights are integrated into physical operations. As companies look beyond the horizon of the pandemic, staying ahead of the curve by fusing the physical and digital, is one of the surest ways to remain competitive and resilient for the long haul.