Industry 4.0 has ushered in a new era of technology that is revolutionizing the factory floor with the use of automation and sophisticated robotics, which are quickly becoming standard across the manufacturing sector. Beyond the physical manifestations of innovation, these developments are also creating an entirely new, disruptive technological ecosystem known as the digital supply network (DSN).
Essentially, DSN is the next step in the evolution of supply chain operations. Departing from traditional analog models, DSN involves the integration of high-tech digital technologies, such as artificial intelligence (AI), cloud computing, predictive analytics, the Internet of Things (IoT), and robotic process automation. These innovations transform conventional linear supply chains into dynamic, interconnected systems that promote and sustain growth.
When used efficiently, DSNs form a supply chain system that is greater than the sum of its parts, empowering companies to react nimbly to developing situations and make better decisions by:
- Improving connectivity
- Establishing the movement of materials or information
- Increasing visibility, traceability, and transparency
- Fostering collaborative relationships with suppliers
- Reducing the number of uncertainties at play
By removing the limitations of the linear structure and replacing it with modern, agile technologies, companies can exert greater control over the many links in their vast supply chain. DSNs can serve as strategic tools for informed planning, generating revenue, and cultivating new business ventures.
However, according to a recent report published by Deloitte, while many companies are aware of the advantages of DSNs, few have fully incorporated them into their business models. This is not unusual in the early stages of an emerging disruptive technology; uprooting established universal systems is not as simple as, say, upgrading hardware or utilizing more advanced software. A change this extreme requires a great deal of consideration. And for many, the specific mechanics behind DSNs are still somewhat of a mystery.
Peeking Behind the Curtain: How DSNs Work
In another report, Deloitte outlines the main characteristics of a digital supply network:
- “Always-on” agility — Because DSN systems use sensors, analytics, and other advanced technologies, the networks are able to generate real-time insights into the entire chain, allowing for quick responses to sudden fluctuations and unanticipated scenarios.
- Connected community — Through the use of connective technologies, all parties within a supply chain system can communicate freely and easily, helping to ensure everyone is on the same page and working with the same information.
- Intelligent optimization — Machines have the ability to aggregate huge amounts of data and perform complex analytical operations, while humans have the ability to pick up on nuances and think creatively. By bringing these skills together, humans and machines are able to optimize the decision-making process.
- End-to-end transparency — The use of high-tech innovations such as sensors and robotics allows all supply chain parties to keep their fingers on the pulse of the entire network, at all times. From checking on the status of materials to exploring supply and demand trends, DSN technology helps to remove blind spots from the network so that all actors have a clear picture of the present situation.
- Holistic decision-making — When all of the above components come together and synchronize, companies are able to make better decisions — not just for themselves, but for the entire network. DSN technology provides companies with both macro and micro views, allowing businesses to make smarter big-picture decisions that can be adapted and tweaked at a moment’s notice if needed.
Tips for Incorporating a DSN Into Your Core Business
Once you’ve decided to implement DSN technology into your business operations, keep in mind the following guidelines.
- First, it’s absolutely crucial to thoroughly assess your company’s current situation and establish clear-cut goals. Use this in conjunction with your core business values and supplier relationship expectations as your compass and sextant, and develop a plan that maps out a gradual transitional path.
- Create a strategy that can be rolled out in stages so that you have room to reevaluate and pivot as you find the best way for your company to integrate a DSN. Be prepared to start with small changes while still holding the big picture in mind.
- Don’t focus on getting it all right, all at once. This is a marathon, not a sprint, and aiming for perfection will only prohibit you from making strategic moves and experimenting.
- The skills gap is still a pressing issue within the manufacturing industry, and acquiring talent for something as cutting-edge as DSN is pretty much guaranteed to be difficult. However, instead of rigidly focusing on finding new candidates with an established repertoire of desired skills, concentrate more on hiring or upskilling workers who demonstrate critical thinking skills and adaptability.
- Be sure to bulk up your cybersecurity measures. Like any other gargantuan network, DSNs can pose serious cyber risks to companies not properly protected.
Harnessing the Power of Digital Supply Networks
As the manufacturing sphere becomes more and more automated, it’s likely that digital supply networks will be playing a prominent role in the supply chains of tomorrow. While initiating such a major shift in process will always pose certain challenges and risks, the numerous benefits afforded by DSNs can provide a major strategic advantage.
Resources:
- The rise of the digital supply network – Deloitte
- Embracing a digital future – Deloitte
- Introducing the Digital Supply Network – CIO Journal – WSJ
- At A Glance – Digital Supply Network – Disruption Hub
- The digital supply network and the future of work – Technology, Supply Chain Quarterly
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