All businesses need to adapt to the future to avoid becoming obsolete. This is especially relevant to supply chain management, which is in the process of changing to take advantage of new technology that can make things more efficient. We sometimes refer to this process as supply chain transformation.
What is Supply Chain Transformation?
Supply chain transformation is a term that we use to talk about the evolution of your supply chain, and particularly how digital technologies can help to improve your logistics operations — think AI, data analytics and the Internet of Things (IoT).
In reality, that goes far beyond just digitising your operations — though that’s certainly a big part of it. What we’re really talking about here is a fundamental reimagining of how businesses operate, covering three key dimensions:
- Mindset and Culture: A big part of the supply chain transformation process is changing how we think about our supply chains altogether. We’re moving away from viewing supply chains as just a series of operations to seeing them as dynamic, adaptable systems that need to evolve with changing times.
- Process Innovation: Whether you’re handling physical goods or managing information flow, it’s about revolutionising how you do things. If you watched the accompanying video, think about Maria’s example of Coca-Cola’s tethered bottle caps — that’s a perfect illustration of how even a seemingly small process change can have massive implications across the entire supply chain.
- Digital Evolution: While it’s not just about technology, there’s no denying that digital tools play a crucial role and will continue to be integral to your supply chain processes. We’re talking about moving away from those old-school Excel sheets and paper-based systems to more sophisticated data-driven approaches that give you real-time visibility into your operations.
What makes this particularly interesting is that it’s not just the big players like Coca-Cola who need to think about this. Whether you’re running a multinational corporation or a mid-sized business, supply chain transformation has become essential, especially with new regulations coming into play worldwide.
Any Supply Chain Transformation Examples?
Most companies have had to undergo some form of digital supply chain transformation over the past decade or two, no matter what sector or target market. One that’s been pretty open about undergoing transformation is Pepsi, with COO Gregg Roden saying that he’d seen more change over the past three years than in the 31 years he’d worked in the snacking industry beforehand.
The company are open about how they’re using robotics, and specifically artificial intelligence, to help make predictions for the future (something referred to as predictive analytics). There are various uses of digital technologies being introduced all through their supply chain, with automation allowing them to reduce the physical burden on their employees.
Supply Chain Transformation Goals
So, you’re on board with committing to updating your existing supply chain processes, but what’s the end goal? Well, there’s a plethora of advantages to transforming your supply chain, some of the most common being:
- Supply Chain Resilience — This is about building robustness and agility into your operations, and having the systems and processes in place to handle supply chain disruptions. This can be something relatively straightforward like labour shortages, or more complex like a pandemic or political turbulence.
- Supply Chain Visibility — Visibility or transparency involves getting a real-time view of what’s happening across your entire supply chain network, being able to see into every aspect of your operations clearly. This often starts with tracking raw materials as they leave your suppliers, through to monitoring finished products arriving at your customer’s doorstep. Modern supply chain visibility solutions typically use a combination of technologies to increase visibility, like advanced analytics that help make sense of your supply chain.
- Sustainability — This refers to reducing environmental impact whilst maintaining operational excellence, and it’s something more and more companies are taking into account. A good example of a company taking sustainability seriously is IKEA, who have been open about using technology to make their supply chain more sustainable.
- Operational Efficiency — Your operational efficiency is the day-to-day of how your supply chain actually works. We’re talking about processes that eliminate waste, reduce cost, and increase speed. This might mean AI-driven demand forecasting to manage inventory, automated warehouse systems to speed up order fulfilment, or route optimisation software to reduce transport costs. It’s about making your supply chain leaner and more responsive whilst maintaining — or improving — service levels.
A successful supply chain transformation will allow you to adapt to whatever challenges come your way — whether that’s shifting consumer preferences, sustainability requirements, or the need for greater transparency and visibility across your operations.
Remember, this isn’t just about keeping up with technology — it’s about fundamentally transforming how we think about and manage supply chains in a modern business environment.
How to Get Started with Supply Chain Transformation
We work with companies of all sizes, and no matter whether the company is small or large, it’s important to set specific goals instead of broad targets.
Instead of saying “we need better visibility”, look at setting SMART targets that are more specific, like “we want to track all shipments in real-time within the next 12 months”. It’s really important that you’re clear about your goals, and making them concrete will help you measure your progress and stay on track.
You don’t have to change everything overnight — in fact, trying to do too much at once is often a recipe for disaster. You can start with simple improvements, like implementing a basic tracking system or digitising your documentation.
Also, remember what we said about mindset and culture? Your team needs to understand why changes are happening, and how they’ll benefit from them. For example, if you’re introducing a supply chain technology that will make their workday easier — like barcode scanners in a warehouse — explain why you’re doing this so they get the full picture.
That said, it’s important that you choose your technology wisely. The right warehouse management software is an integral part of your supply chain operations, and you need the right supply chain system for you — this is where speaking to a warehouse consultant like ourselves can help, as we’ll be able to tell you what changes you need to make, whether that’s small adaptations to your current processes or an overhaul of your entire supply chain ecosystem.
Supply chain management is evolving with the rest of the world, and transforming your supply chain into something that’s more resilient, efficient, and sustainable is key to the long-term success of your business.
