What’s New and Different About The Digital Supply Chain?

There’s a lot of buzz and hype today about enabling the digital supply chain. But companies have been using technology, such as the internet and software, to enable their supply chain processes for many years. So, what is new and different today as it relates to “digitizing” the supply chain?

“The real new thing is the new role and importance of IT,” said Frauke Heistermann, Member of the Management Board at AXIT- A Siemens Company in a recent episode of Talking Logistics. “IT is no longer just a tool where I type in data and a process is automated; IT in the age of digitalization becomes a major part of a company’s strategy, an enabler of success, which helps companies to differentiate themselves from the competition.”

Ms. Heistermann also pointed to how mobility and the Internet of Things (IoT) are rapidly maturing and playing a much bigger role in supply chains today, and how technology is also more accessible and affordable for everyone, thanks in part to cloud solutions.

Another important difference or change is the move toward taking a broader, network-based perspective. “Years ago, companies started to improve their internal processes with technology,” explained Heistermann. “The next step is for companies to look [beyond their four walls] and find opportunities to improve the processes across their trading partner network. Therefore, it’s really important to take a broad look at your supply chain, not just have [an internal perspective].”

With IT becoming a critical component of a company’s strategy, IT and supply chain need to collaborate better, but it requires some work by both sides. “IT people have their own special vocabulary and language that is difficult for business people to understand,” said Ms. Heistermann. “But business people need to get close to IT and understand it in order to create new, smart, and innovative solutions, and IT people [need to better understand supply chain management too].” Simply put, IT and supply chain need to stop working in silos and they need to break down the barriers to more effective communication and collaboration.

So, what are the biggest challenges or barriers that companies face in transitioning to a digital supply chain? Watch the short clip below for Ms. Heistermann’s response.

“The first hurdle is overcoming a ‘wait and see’ mentality,” said Ms. Heistermann. “Waiting to see what other companies are doing is not an option in the digital age because things are developing so fast. We have this saying that ‘Rome wasn’t built in a day’ but it doesn’t really fit well in the digital age. Companies cannot afford to stand still — they have to do something, try something…they need to get a start-up mentality into their culture again.”

I encourage you to watch the rest of my conversation with Ms. Heistermann for additional insights and advice on this topic, including the key capabilities companies should look for in a digital supply chain platform and some of the benefits companies are achieving today. You can also join a live webcast with Ms. Heistermann on January 24, 2017 from 11:00 – 11:30 am ET where she will discuss “Supply Chain Digitalization: Challenges, Opportunities and Recommendations.”