New study finds digitization a top priority to drive supply chain performance

JDA Software Group, Inc. has announced the results of a new research study of more than 200 supply chain professionals conducted with SCDigest on companies’ plans to embrace and apply advanced supply chain technologies. The study, entitled “2016 SCDigest Supply Chain Digitization Benchmark survey,” and accompanying whitepaper entitled “The Future Is Now: Harnessing the Power of Digitization to Drive Greater Supply Chain Performance,” reveals that supply chain digitization is a key focus for nearly 80 percent of the 203 organizations surveyed.

What exactly is supply chain digitization? “At JDA, we refer to digitization as the process of using technology advancements linked with physical and digital assets to redefine and reimagine current business practices to create a significant competitive advantage,” said Fred Baumann, group vice president, Global Manufacturing Industry Strategy at JDA. “For companies challenged by today’s fast-paced, hyper-competitive, omni-channel environment, most view supply chain technology as a key enabler of the speed, agility, resilience and customer responsiveness they need to remain competitive, drive greater revenue, profit and efficiencies across their operations.”

The big pivot towards digitization: A world of benefits

Of the 78 percent of respondents who report they are aggressively pursuing strategies for digitization specifically in the area of supply chain, 37 percent consider this a major initiative. And over 65 percent of those surveyed believe that becoming highly digitally engaged will provide them with a significant competitive advantage.

Respondents believe they can drive the greatest value from digitization by leveraging technology for:

· Improved supply chain visibility (named by 59 percent of respondents; multiple answers were possible) 

· Advanced analytics (52 percent)

· Systems integration with trading partners (44 percent)

· Internal systems integration (35 percent) 

In terms of visibility — the top benefit expected — respondents clearly believe they have room for improvement. Only 5 percent believe their business has near-complete visibility into customer demand today, and just 6 percent believe they have near-complete visibility into those constraints that impact their supply chain execution.

“We are truly entering a new supply chain era driven by digitization that will have huge implications for technology strategies and company competitiveness,” noted Dan Gilmore, president, SCDigest. “It makes sense that companies are placing such a high priority on visibility — and are planning to leverage technology to increase that capability.”

Advanced analytics are obviously a priority as companies struggle to understand and manage Big Data and apply it to their key challenges. And tighter integration of systems, both internally and with trading partners, will increase the responsiveness, profitability, and agility of the entire end-to-end supply chain.

Leveraging the Internet of Things

There’s an incredible amount of attention being paid to the Internet of Things (IoT), defined as the network of physical objects that contain embedded technology for communication and sensing. In the JDA/SCDigest study, 30 percent of respondents named IoT as a driver of value.

When considering the application and benefits of IoT, 70 percent view IoT as an opportunity to drive product innovation, with 35 percent seeing it as a major opportunity. Eighty-four percent view IoT as an opportunity to improve supply chain performance and reduce costs. Of those, 44 percent view it as a major opportunity.

Other areas where respondents believe the IoT represents a major opportunity include:

·       Real-time inventory visibility (55 percent)

·       Understanding product flows (45 percent)

·       Machine/production monitoring (40 percent)

Overcoming Common Obstacles

While the respondents in the JDA/SCDigest study place great importance in supply chain digitization as a future capability, most admit that their company could improve in its current focus. Only 10 percent of those surveyed report that their business has a holistic digitization strategy in place today.

While 41 percent are working to develop a holistic digitization strategy, they face significant obstacles. Respondents named the following as significant barriers to digitization (with most popular answers listed first):

·       Lack of internal systems integration

·       Lack of clarity about what to do

·       Having available IT resources and budget

·       Understanding the return on investment

·       Lack of prioritization by executives 

Enabling faster response via technology

“It’s clear that companies need to overcome these obstacles and act now,” Baumann pointed out. “In today’s fast-changing world, agility and responsiveness are a competitive requirement — and supply chain digitization is a key enabler of the ability to react in real-time. As events happen, they need to immediately be recognized, and acted upon, by all parts of the end-to-end supply chain.”

The JDA/SCDigest study highlighted the lack of supply chain agility among most businesses. When asked about their current responsiveness to unplanned supply chain events, a full 46 percent of respondents say their business does not have a systematic way to respond. Another 18 percent said that it would take at least a week for their supply chain to respond. Only 23 percent report that their planning and execution systems are connected in real-time, enabling an immediate response.

“In a journey to digitize the supply chain, often the simplest way to get started is by adopting in-memory adaptable manufacturing planning seamlessly linked with integrated business planning (IBP) capabilities,” Baumann said. “Supported by good processes and organizational structure, these capabilities will break down silos, enable profitable response to disruptions, and provide stakeholders with end-to-end visibility into one cohesive strategy.”