How Digitalization and AI are Transforming Supply Chains

Digitalization is all about changing workflows and developing processes to improve manual systems. When applied to supply chain management, it helps optimize the flow of goods, information, and money across the supply chain and helps keep supplier data clean and updated. While there are several long-standing solutions for supply chain digitalization in the market, new trends in AI are changing the game.

In this article, we will explore how digitalization or digital transformation enhances supply chain management and how current trends in AI make supply chain digitalization easier and more powerful than ever.

What is supply chain digitalization, and why is it important?

Supply chain digitalization is using digital technologies to connect, automate, and optimize the various functions and processes involved in the supply chain. These processes and functions include planning, sourcing, procurement, manufacturing, logistics, and customer service.

Some examples of digital technologies that enable supply chain digitalization are cloud computing, machine learning (ML), the Internet of Things (IoT), and artificial intelligence (AI).

Supply chain digitalization is vital for companies today because it can help them improve their efficiency, productivity, quality, risk management, and more. By using digital technologies, companies can gain real-time data and insights into their supply chain operations and performance, helping them adapt to changing market conditions and customer demands and cope with disruptions and uncertainties.

How digitalization transforms supply chain management

Digitalization is transforming supply chain management by:

• Improving efficiency and productivity: Digitalization helps reduce costs, waste, and errors, as well as increase speed, accuracy, and quality.
• Enhancing visibility, transparency, and control: Digitalization provides real-time data and insights on the status, location, and condition of products, materials, and resources and on recent news and events related to suppliers.
• Increasing agility and resilience: Digitalization helps adapt faster to changing market conditions and customer demands and cope with supply chain disruptions and uncertainties.
• Automatically purifying and updating supplier databases: Technologies like AI, ML, and data analytics help maintain and improve the quality and accuracy of supplier data, such as contact information, product specifications, certifications, and ratings.

• Ensuring traceability, i.e., validating the origin, history, and condition of products and materials across the supply chain using technologies like barcodes, QR codes, RFIDs, digital certificates, and blockchain technology.

Trends and future of supply chain digitalization

Various trends and drivers influence the digital transformation of the supply chain.

Customers today want personalized and on-demand products and services and transparency and traceability of their brands’ supply chains.

The need to address the 17 sustainable development goals also calls on companies to reduce their supply chains’ environmental and social impacts.

But by far, one of the strongest trends in digitalization is the use of artificial intelligence, which is at the forefront of innovation in many fields, including supply chain management. This emerging technology is creating new solutions to many old and new supply chain woes (more on that below).

The challenges of supply chain digital transformation

Despite its strategic importance for long-term goals, the 2023 Digital Trends in Supply Chain Survey by PwC shows that supply chain digitalization today faces many challenges:

• Lack of adoption: 86% of supply chain executives agree their company should invest more in digital transformation, yet very few report companies planning to do so in the next 24 months.
• Talent gap: Digital transformation requires new skills that businesses don’t yet have.? For example, 80% of supply chain executives say that a lack of digital skills among employees is a significant challenge for integrating ESG into their supply chains. Furthermore, 25% report that attracting, developing, and retaining the talent needed to transform their supply chain is a major obstacle.

Consequently, companies rely more on reskilling their current workforce than hiring new talent.

• Budget and technology challenges: Digitalization of supply chains is often hindered by budget constraints, resistance to change, and shortcomings in software and hardware capabilities. Furthermore, according to a PwC Pulse Survey, 39% of executives find achieving the expected ROI from investments in new technologies significantly challenging, hindering widespread adoption.

Considering the potential for improved supply chain performance, these challenges represent an opportunity for businesses to jump ahead of the competition if they embrace digitalization and do it right.

How BabelusAI can help you with supply chain digitalization

BabelusAI is a generative AI-powered platform that can help transform your supply chain. It offers a suite of tools for supplier discovery, data purification, and collaboration with suppliers.

BabelusAI can help you:

• Analyze, purify, and enrich your supplier data in minutes with its GenAI-powered Insight360 tool, allowing you to identify errors, gaps, and inconsistencies while keeping your data safe and updated.
• Summarize previous conversations with suppliers at the click of a button, helping buyers and supply chain managers always stay in the loop.
• Discover new suppliers for existing or new projects in a tenth of the time it would take to do it manually, making it the smarter choice for your nearshoring endeavors.

If you want to learn more about how BabelusAI can help you with supply chain digitalization, contact us today or schedule a call now to discuss developing a pilot for your company at no cost.