The rise of complexity in digital supply networks

By Stephen Laaper

The move to digital supply networks can be daunting, especially when organizations consider how exactly to implement these solutions into their existing supply chain. With so much information and hype about digital, it can be hard for organizations to know what works for them and what might be a hidden roadblock. However, when the digital transformation is implemented correctly, it can also seamlessly enable an organization’s digital operations.

While manufacturing and supply chain-focused professionals consider how they’re going to excel in this age of increased digital complexity, they should also recognize that many of the same supply chain challenges faced over the past decade will likely remain. These include: speed of innovation and development; velocity of the supply chain; the cost of network; excess inventories; and supply risk. In many cases, the expectations behind the speed and magnitude of what must be achieved is also increasing, which can provide further perceived challenges.

To meet these existing challenges, the shift to digital has given way to a new digital tool box–an assortment of digital capabilities to help us possibly get there faster and better tackle these issues. These include innovations like the digital twin, digital thread, cognitive automation and the digital core (Industrial Internet of Things, predictive analytics, etc.), and they’re right at the fingertips of the modern enterprise. This toolbox also allows organizations the freedom to choose what solutions fit with their business. With the right strategy in place, it may become difficult to imagine the supply chain without digital operations.

Understanding the Journey to Digital Supply Networks

With the growing need for these new digital capabilities to help bring the supply chain to the future, how can companies ensure they are in the best position to succeed, or win?

Digital in the enterprise is less mature than digital in the consumer world. While consumer digital integration can be as simple as a new smartphone app or a single connected device, “enterprise digital” typically requires a systematic approach and often means strategic investments in infrastructure, teams and functions. Delivering digital capabilities goes beyond a technical process, and often has a strong focus on people and how they leverage these new capabilities to increase their own performance. Looking beyond digital solutions as standalone technologies, leaders should consider how the new processes can be aligned with existing physical operations.

Additionally, delivering digital capabilities requires an experimentation period that can occur in sprints. By going through an experimentation phase, organizations can rapidly explore multiple solution options in a 4-6 week period to see which capabilities succeed and which fail. Initial trials likely won’t work out perfectly, so preparation is key. This period allows organizations to avoid “going digital” for the sake of going digital–instead, they can think big, start small, and scale fast to reflect what works best for their business.

Hitting a Roadblock–Where Do We Go from Here?

Many companies today are seeing diminishing returns on productivity investments and languishing continuous improvement programs. Manufacturers are typically looking for the next method that will drive greater efficiency, while also increasing the agility and velocity of their supply network.

As integration of digital capabilities becomes increasingly prominent in today’s landscape, some may struggle to adapt due to inflexible or entirely absent strategic roadmaps. As a result, companies that maintain an agile plan and a relatively short refresh rate are often significantly ahead of the curve when identifying and integrating new capabilities into the digital supply network.

With these concerns in mind, how can companies “win” the race with complex digital operations? There are often several factors in play, including cost, velocity, service and innovation of the supply chain. Companies can get ahead of these challenges in the digital world by adhering to three principles:

  1. Digital is not just about technologyWhen adopting digital operations, aligning with the Physical to Digital to Physical (PDP) framework is key. It is important to assess how each capability can fit into that framework. Today’s solutions often only address one component of the PDP framework; the entire framework and reference architecture is likely needed to prove results.
  2. Be aggressive on cyber securityIn a world where more and more manufacturing and supply chain processes are being connected every day, ensuring the security of the operational technology network and equipment may be paramount. A proactive and aggressive approach is often needed to ensure robust cyber security in operational technology.
  3. Look ahead to the talent challengeThere seems to be a real talent gap for supply chain professionals who can enable the digital supply network. Most organizations need employees who can look holistically across the entire supply network, bring analytics and visualization skills and have experience interfacing with cognitive solutions. These skills are highly sought-after and can be hard to find in the workforce. Regardless of where a company is on their digital journey, they should develop and execute a plan to attract and retain talent for the current and forthcoming digital supply network.

Conclusion

Enterprise digital solutions can be complex, and answers can be difficult to find. Preparing ahead of time–through assessing the PDP framework, reviewing cyber security best practices and preparing recruitment efforts to address the talent gap–can help ease uncertainty.

This infusion of rapidly advancing technologies does not seem to be going away–and it’s likely critical for the modern enterprise to see beyond areas of technological hype and build a strong, well-articulated value case for digital adoption. In fact, the pace of change is likely only going to accelerate going forward. By moving the conversation on how to get started to center stage, companies may find themselves wondering, “how did we operate without this in the first place?”


Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. Please see www.deloitte.com/about for a detailed description of DTTL and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

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