Technology is Driving Transformation to the Digital Supply Chain

The world gets more complex every day. New knowledge is being generated; politics are creating new concerns; weather patterns are changing; and emerging technologies are opening up new possibilities for businesses. According to Steve Rice, all of this complexity requires companies to “embrace a slew of new digital technologies that provide direct visibility into every aspect of their supply chain.”[1] The staff at Centric Digital notes, “While many companies are embracing digital transformation when it comes to customer-facing initiatives, a full technological transformation requires considerable changes on the back-end as well. Effective management of today’s business supply chain is progressively influenced by an organization’s ability to adopt new approaches to transparency and coordination.”[2]

Digital Supply Chain Transformation

The Centric Digital staff reports, “Peter Sondergaard, global head of research of Gartner, predicts that a full quarter of future enterprise spending will be on integrating digital assets to fulfill evolving needs, and nearly 20 percent of those funds will be apportioned to the supply chain. That big of an investment requires a solid strategy, one that focuses on how your supply chain leverages data to translate information into solid decision-making.” As organizations transform into digital enterprises, boundaries between various business departments will fade. That’s because, in a digital enterprise, all departments will have access to a platform that integrates and analyzes data and enhances overall corporate decision-making. As the Centric Digital staff notes, “The key elements of any successful digital transformation of the supply chain include analytics, optimization and traceability. One of the most significant trends in the supply chain sphere is a movement toward relying on big data and sophisticated predictive algorithms to serve customers as well as internal needs. Companies that don’t — or can’t — take advantage of the coming digital opportunities in supply chain management run the very real risk of falling behind.” Rice adds, “[Companies require] a platform that can serve as a single point of access to all workflow-derived data so that manufacturers can orchestrate cross-departmental transactions with complete accuracy and facilitate a completely synchronized ‘decision network’ between their internal stakeholders and suppliers.” As discussed below, I believe that integrated platform will likely involve a cognitive computing system.

Other technologies playing a significant role in digital supply chain transformation include sensors that generate oceans of data and the Internet of Things that connects sensors and other data generating technologies to cognitive computing platforms. Gina Roos (@Gina_Roos) reports, “New technologies like the internet of things (IoT), big data, and social learning platforms have the power to transform the supply chain to make them more efficient, leading to competitive advantages across industries. Market research firm Gartner Inc. is betting these technologies will help to further digitize the supply chain over the next five years.”[3] Greg Gorbach (@ggorbach), a vice president and analyst at ARC Advisory Group, agrees with the Gartner assessment. “The next several years will bring about the ‘great digitization’ of industry,” he writes. “This will touch nearly every aspect of business as existing systems, jobs and business processes are instrumented, redefined and optimized with artificial intelligence. This transformation will be widespread and far reaching. Information technology (IT), operational technology (OT), engineering technology (ET), supply chain, asset management, services and customer-facing systems will all be affected.”[4]

Cognitive Computing and the Digital Supply Chain

Digital transformation begins with data — gathering it, managing it, and leveraging it. Gathering data is generally not a problem. Dan Clark, President and Founder of Kuebix, writes, “If the amount of data flowing into, out of, and within the four walls of your company is out of control, you’re not alone. … By 2025, research firm IDC believes the total amount of digital data created by the world will reach 180 zettabytes, up from 4.4 zettabytes in 2013.”[6] As noted above, Rice insists enterprises require a platform that can serve as a single point of access for stakeholders requiring data. Another way of stating that is: Enterprises need to eliminate data silos. Rice observes, “As both manufacturers and suppliers are learning, the data silos that exist in most supply chain environments today make it challenging to adapt to the constant churn of product lines and accommodate frequent product customization requests.” Cognitive computing platforms can help eliminate data silos. They can gather, integrate, and analyze both structured and unstructured data. They can offer actionable insights to decision makers. They can discover new relations in almost every area of an organization to help improve efficiency and effectiveness. And, in some cases, they can make autonomous decisions to help improve the speed at which businesses operate. My company’s entry in this field is called the Enterra Enterprise Cognitive System™ (ECS) — a system that can Sense, Think, Act, and Learn®.

Decision-making lies at the core of every business. Bain analysts, Michael C. Mankins and Lori Sherer () observe, “The best way to understand any company’s operations is to view them as a series of decisions.”[6] Cognitive computing is going to play an increasingly important role in enterprise decision-making. Jennifer Zaino (@Jenz514) explains, “Cognitive Computing increasingly will be put to work in practical, real-world applications. The industries that are adopting it are not all operating at the same maturity levels; there remain some challenges to conquer. The wheels are very much in motion to make cognitive-driven Artificial Intelligence (AI) applications a key piece of enterprise toolsets.”[7] The availability of cognitive computing solutions led Clark to write, “What many companies don’t realize is that with effective management of big data, the ability to leverage information and use it to make better transportation and logistics decisions is readily available.”

Summary

The imperative for supply chains to digitalize has never been greater. Because enterprises deal with enormous amounts of data, manual processes struggle to keep up. That’s why cognitive computing technologies have gained traction. Pierfrancesco Manenti (@PierManenti), Research Vice President at SCM World, reports, “47% of the almost 1,500 respondents to SCM World’s most recent survey said that AI was both disruptive and important in respect to supply chain strategies.” He concludes, “Further development in artificial intelligence will help businesses not only make fact-based, risk-adverse decisions, but also make the decisions faster than previously seen in supply chain management. The ability to have such comprehensive understanding across this complex supply chain environment is something that goes far beyond the typical skills and capabilities of your everyday worker. And this is where the true value of AI lies.”

Footnotes
[1] Steve Rice, “Will Your Supply Chain Sink or Swim in the Digital Age?Supply Chain 24/7, 16 October 2017.
[2] Staff, “How Digital Transformation is Revolutionizing the Supply Chain,” Centric Digital, 30 June 2016.
[3] Gina Roos, “Technology Will Drive Supply Chain Digitalization,” EPS News, 15 September 2017.
[4] Greg Gorbach, “Technology Spotlight: The Great Digitization of Industry,” Supply Chain Management Review, 1 September 2017.
[5] Dan Clark, “Why is Big Data, and Managing it, Such a Big Deal?Supply Chain 24/7, 23 August 2017.
[6] Michael C. Mankins and Lori Sherer, “Creating value through advanced analytics,” Bain Brief, 11 February 2015.
[7] Jennifer Zaino, “Cognitive Computing, Artificial Intelligence Apps Have Big Future in the Enterprise,” Dataversity, 17 September 2015.
[8] Pierfrancesco Manenti, “From zero to hero in two years – AI is one of the biggest digital disruptors in supply chain,” Computer Business Review, 29 March 2017.

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