Transitioning to a Digital Supply Network: Building Resilience in an Unpredictable World

The New Reality of Supply Chain Management

In today’s volatile business environment, predictable and stable supply and demand are relics of the past. Companies face a myriad of risks:

• Macro environmental risks
• Extended value chain risks
• Operational risks from internal processes
• Functional risks in enabling areas like finance, HR, IT, and legal

Attempting to eliminate these sources of risk may prove unfruitful, given the overwhelming number of ways things can go wrong in an intricate supply chain. Even with robust risk management, unpredictable “Black Swan” events like the COVID-19 pandemic can disrupt operations dramatically. 

The Imperative for Resilience

Supply Chain Disruptions have increased in frequency and magnitude. The COVID-19 crisis highlighted two critical points regarding supply chains:

1. Disruptions can cause extreme demand fluctuations and capacity reductions.
2. Information silos hinder effective responses.

To increase resilience, companies must invest in:

• Enhancing supply chain visibility
• Improving control of critical operational and quality processes
• Boosting flexibility

The innovative combination of emerging technologies empowers organizations to challenge traditional supply chain limitations and build resilience. This technological revolution presents a significant opportunity to disrupt conventional supply chain management, develop new capabilities, and effectively address both existing and emerging threats. By embracing these advancements, companies can transition from traditional models to more agile and responsive digital supply networks.

In short, visibility, data transparency, and collaboration to ascertain data flow are crucial enablers of resiliency. The key is having organizational access to accurate, real-time data.

Why Visibility, Transparency, and Collaboration Matter

These elements are crucial for building resilience:

• They enable faster, better decision-making
• Organizations can achieve agility and connect with partners
• New operating models become possible

During crises, many organizations scramble to assemble data manually, often in a “war room” scenario, because there’s no centralized, single source of truth. To build resilience, we need seamless data flow throughout the production and supply network.  Digital transformation is essential to have a competitive supply chain network in the “Industry 4.0” economy and beyond.

Enter the Digital Supply Network (DSN)

A Digital Supply Network is an integrated set of digitally enabled capabilities powered by an interconnected flow of information. It’s linked to a digital core that integrates these capabilities.

Key features of a DSN:

• Combines data from multiple sources to drive production and distribution
• Enables system-wide information and data analytics management
• Provides a single version of the truth
• Integrates in-house and external data for comprehensive understanding
• Focuses on real-time analytics at the point of decision or action

The Digital Core: The Heart of DSN

The digital core is the basic operational data infrastructure that leverages fully integrated, flexible, and scalable platforms around a common data model. It provides:

• Real-time visibility into all mission-critical business processes
• Better collaboration between functions
• Ability to predict, simulate, plan, and anticipate future outcomes

The Digital Supply Network (DSN) model harnesses these diverse technologies, enabling rapid adaptation to the dynamic infrastructure surrounding its core. At the heart of the DSN lies the Digital Core—a unified operational data infrastructure built on integrated, flexible, and scalable platforms. This core provides:

1. Real-time visibility into mission-critical processes across the entire supply chain
2. Enhanced cross-functional collaboration within the organization
3. Advanced capabilities for prediction, simulation, and planning

By centralizing data and leveraging cutting-edge technologies, the Digital Core empowers companies to anticipate future business outcomes and thrive in the digital economy.

From Linear Supply Chains to Dynamic Networks

Traditional supply chain models are linear, leading to siloed information systems and delays. The DSN approach, captured by digital capabilities models, offers:

• Near real-time feedback loops
• Transparency and visibility
• Ability to incorporate the latest learning quickly

Building Resilience Through Technology

Technology forms the foundation of digital transformation, from AI applications to sophisticated robots automating production lines.

The digital supply network leverages various technologies:

• Internet of Things (IoT) and Industrial IoT
• Data analytics
• Artificial Intelligence
• Digital twins

These technologies enable:

• Real-time decision making
• Better inventory management
• Reduced trade-offs between high inventory and expedited shipping
• Enhanced market understanding

The Evolution of Supply Chain Management: From Linear to Digital

Traditionally, we’ve viewed supply chains as linear sequences of activities:

1. Goods flow downstream through various stages
2. Information and money are exchanged between sequential steps
3. Supply Chain Management (SCM) follows a process from design to source, make, distribute, and return/recycle

This linear model, exemplified by the SCOR (Supply Chain Operations Reference) framework by ASCM, has been invaluable in advancing supply chain practices. However, it has limitations:

• Encourages siloed information systems across functional areas and locations
• Results in significant delays and multiple versions of the truth
• Lacks transparency and visibility
• Doesn’t support near-real-time feedback loops for rapid learning and adaptation

Enter the Digital Supply Network Approach:

The digital capabilities model offers a more interconnected, agile alternative to the linear approach. This new paradigm:

• Breaks down information silos
• Enables real-time data sharing and visibility
• Supports rapid feedback and continuous improvement

It’s worth noting that the traditional SCOR model is evolving into the SCOR digital standard. This evolution incorporates emerging practices to address the growing need for supply chain digitization, including:

• New technologies
• Advanced knowledge systems
• Radically different process organization methods

As a result, it incorporates emerging practices to address the growing need for digitization of supply chains. Emerging practices introduce new technology, knowledge or radically different ways of organizing processes. By embracing these digital capabilities, organizations can transform their supply chains into more responsive, efficient, and resilient networks.

Benefits of Transitioning to a Digital Supply Network

The data and information from all six digital supply network capabilities converge into the digital core to be stored, distributed, and analyzed, leading to the five crucial benefits:

• Always-on agility
• Connected community
• Intelligent optimization
• End-to-end Transparency
• Holistic decision-making

In today’s digital age, we often hear phrases like “data is the new oil” or “data is the electricity of the twenty-first century.” These comparisons highlight the critical role of information in our modern economy. To thrive in this landscape, businesses must build a comprehensive digital infrastructure. At its foundation, this infrastructure needs the capacity to collect and analyze enormous datasets, often measuring in petabytes. The key to successful digital transformation lies in extracting meaningful insights and value from this wealth of information.

To transition your supply chain effectively:

As Winston Churchill said: “Dream big but start small”.  Build confidence with quick wins and share the achievements.

1. Focus on experimentation and learning
2. Start small but dream big
3. Prove concept with quick wins and share achievements
4. Consider using the ASCM DCM framework as a reference model to guide the development of digital supply networks and help leaders envision and then build digitally enabled capabilities to transform their linear supply chains into a set of dynamic networks.

The goal is to transform linear supply chains into dynamic, digitally interconnected networks that integrate ecosystem partners and display greater agility.

Conclusion

Digital transformation has forever changed how we live and work. Competitive success now depends on:

• Adoption of new technologies
• More collaborative and connected processes
• Enhanced resilience
• Smarter, data-driven decision making

When your organization is ready to make the transition to a Digital Supply Network, consider leveraging the expertise of industry experts like Bright International. As early adopters, we can guide you on the path to success and help unify your company’s data into a powerful digital core.