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What is the impact of digital transformation on the supply chain of industrial companies
Hello and thank you for your question in regards to the impact of digital transformation on the supply chain of industrial companies. The short answer is that being customer-centred, the availability of vast data, increased efficiency, reduction in costs, new technologies, and changes in employment are the direct impacts of digitalization in supply chains.
METHODOLOGY
To accurately answer the question, I have ensured to limit my research to recent and reputable sources such as Forbes, Digitalist Magazine, and various industry reports. I have first addressed some of the impacts caused by digital transformation and their benefits. Next, I have outlined the main challenge facing companies in the industry in regards to the digitalization of supply chains.
FINDINGS
There are various methods in which digital transformation has had an impact on on the supply chain of industrial companies. According to the Centre of Global Enterprise, the digital transformation can have great benefits for industrial companies as it aids in reducing procurement costs by 20%, lowering supply chain process by 50%, and overall, increasing revenues by 10%.
One impact of the digital transformation of supply chains is that it aids in putting customers at the forefront of the company's operations. Thus, allowing the buyers' needs to better met. According to the CEO of SAP, Bill McDermott, a digital supply chain has the ability to to provide real-time data, examine demand, reduce costs, drive innovation, and deliver customers the products they seek for the right prices. Digitalization allows for better customer interaction and understanding through e-commerce, digital marketing, and social media. Furthermore, digital supply chains allow for vast information availability that is easily accessible. It helps in increasing the efficiency and reliability of overall operations. Furthermore, process automation aids in increasing personnel productivity.
Additionally, another impact of digital transformation is the introduction of new technologies. For example, using 3D printing to create products has largely reduced the cost and time of production. Furthermore, digital transformations has allowed for other technologies such as robotics and drones. Experts predict that these new technologies will become the norm by 2020.
Digital manufacturing technologies within the next decade, will provide companies with the capabilities to to connect assets by a "digital thread"; this will allow them to create a smooth flow of data across chains that connects all stages of the product life cycle. This includes the design process, sourcing, testing, production, distribution, the point of sale, and the end-use.
Digitlization of process also has the environmental benefit of making process and operations paperless. Moreover, another result of the transformation is that many companies plan to reduce employment in operational logistics areas, while increasing them in strategic supply chain planning.
CHALLENGES
A main challenge of digitalization facing many organizations that are trying to make the change is the vast amounts of data available. It on its own cannot successfully transform the supply chain into a digital one as it can be confusing and overwhelming when deciding what data is relevant. As such, data analytics and understanding data relationships play an important role in decoding the available information. For example, organizations are utilizing data analytics to to improve manufacturing operations, to boost equipment functioning, and the overall finished product quality. Furthermore, they are using data analytics to do all these things while also helping them in reducing their energy consumption.
CONCLUSION
To summarize, the impact of digital transformation on the supply chain of industrial companies is being customer-centred, the availability of vast data, increased efficiency, reduction in costs, new technologies, and changes in employment. Moreover, the availability of such vast data presents a main challenge for companies, which is where data analytics prove to be essential.
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