Supply Chain KPI Killer #8: A Handy Guide to Transformation Supply Chain

In our entire series of Supply Chain KPI Killer, we are confident that we can better cope with day-to-day challenges that harass our Key Performance Indicators. We are also sure that any issues in the supply chain can be resolved to overcome drops in KPIs. However, this doesn't happen as often as we would like to see. Our employees aren't always keen to make changes and fail in daily tasks that may remain very simple.

To get more control over what's happening in our warehouse, transportation, and supply chain, we must put an umbrella over well-suited processes. So, that means we need to secure every action in the warehouse and supply chain so that even if people make mistakes, they will be easy to spot and prevent later on. For that reason, we see a massive trend towards supply chain digitalization. It's all about switching from manual work to technology-oriented processes with automation and custom software.

By writing this short article, we'll share our first-hand experience with logistics and the supply chain. It's worth mentioning once again that we hire ex-logisticians who help us create more business-oriented solutions. So, remember that this article about handling KPIs was written based on the experience of someone who walked daily in the warehouse and saw, solved, and ran all those processes. Let's go!

Supply chain digital - what does that really mean?

The digital supply chain means that supply chain management is becoming more oriented towards using automation in SC based on software solutions. Along with this transformation, we can formulate a new term: digital supply chain management. So, all the processes we have done manually are about to change to digital and automation to help companies lower costs and scale. Because, most likely, digital transformation requires fewer people, so it's cheaper in terms of spending on people management and, in fact, allows companies to grow exponentially through online networking.

Many companies in Supply Chain today couldn't grow so big without the possibility of access to their offer online. But that is a slightly different subject. What we want to focus on here is that the significant term "digitalization supply chain" doesn't have to mean being expensive and is no longer applicable only to Supply Chain giants such as UPS, FedEx, and so on. So, you don't have to look up high and dream about a massive transformation.

Predictions for Supply Chain digitization by 2025 already show that there will be an ongoing trend towards AI. Still, another thing is that you won't be able to benefit from it if you cannot collect data in your operations. So, the main question is, how can you speed up and raise your KPI performance to the level of a cost-effective digital solution for the supply chain? Isn't that how it's supposed to sound now? So, if you're a small or medium-sized business, we can help you think about it more narrowly. Learn from below how to do it.

Supply chain digital transformation for SMBs and why is it complex?

In the supply chain, we love to rely on data. In fact, we are very obligated to rely on data. I can't imagine how anyone can make decisions that cost hundreds of thousands of euros based on intuition alone (nevertheless, I've seen it, unfortunately).

So, when we think about a digital transformation decision for small entities, such as carriers with up to 10 trucks or a single warehouse/distribution center with contract logistics services, we assume they may struggle to go smoothly with digital solutions. Simply putting costs on their customers and requiring them to pay for it will be difficult. Most often, they may say that it isn't needed for them. Whatever it is, whether it's a digital POD or other features, they will still tell you they don't need it, and you need to find another way around. So, this is a small thing and often a reason why they won't move further with digitalization.

How do we move towards digitization in the supply chain?

The main reason you would want to transform your operations in the supply chain is that something is happening; some inefficiencies directly impact your KPI. Your customers will definitely see this, too, and what drives down your KPI should be a factor that they are aware of and why improvement is needed. This may also be an influential factor in getting them to pay for it, to some extent, of course.

So, that's what can you offer your customers with digital transformation as a huge benefit:

Enhanced customer experience: all about transparency

• Personalized interactions. You can convince your customer that you can offer tailored experiences based on individual preferences and behaviors in many situations.
• 24/7 accessibility. You can tell them that they can achieve greater transparency by having more convenient access to products and services anytime, anywhere.
• Omnichannel support. This factor will be crucial in logistics, as they can get seamless customer service across multiple channels (e.g., web, mobile, social media).

Increased efficiency and convenience: better performance, fewer KPI dropdowns

• Simplified processes. Move manual work out of the space, don’t let warehouse clerks make mistakes, and streamline operations internally. This should lead to faster response times and reduced wait times, which can make your customers happier than ever.
• Self-service options. Empower customers to solve issues independently, saving time for both parties. To make life easier for both parties, you must enable them to access some parts of operations.
• Mobile accessibility. Digitalization can offer easy-to-use mobile apps for on-the-go transactions and information. Your customers might also use these in their offices, as they can check progress and KPIs from the mobile app.

Data-driven insights: data-based decisions mean fewer unnecessary errors

• Better understanding of customers. When all spots are covered with data collection points, you can analyze customer data to identify trends, preferences, and pain points. Customers love to see data that helps them understand what they are paying for.
• Targeted marketing. Deliver relevant messages and offers to the right audience at the right time.
• Improved decision-making. Make informed choices based on data-backed insights.

Innovation and Competitive Advantage

• New product and service offerings. Develop innovative solutions to meet evolving customer needs.
• Enhanced customer loyalty. Build stronger relationships through personalized experiences.
• Market leadership. Stay ahead of competitors by embracing emerging technologies.

7 steps on how digital transformation can be implemented in the supply chain

Digital transformation in the supply chain involves leveraging technology to improve efficiency. How simple that might be? It all depends on you and where you want to invest in higher visibility, better responsiveness, and so on. It all depends on what you're sure about that can improve your KPI performance.

Here are key points that break down a bit of what to consider when implementing digital solutions:

1. Assess current state and identify pain points with current KPIs. You know best where the weak points in your KPIs are. We assume you've already implemented some measurements, so you can analyze existing processes now. Identify inefficiencies, bottlenecks, and areas for improvement. Gather stakeholder input by checking with your carriers and other warehouses to understand the needs and priorities of different departments.
2. Define clear objectives and goals. Once you know your KPI weak points, it's time to set specific, measurable, achievable, relevant, and time-bound (SMART) goals. Align these objectives with your overall business strategy. Consider what can be cost-effective and where you can share expenses with your customers.
3. Select the right technology solutions partner. To optimize inventory management, demand forecasting, and production planning, you need to consider supply chain planning software (SCPS) as a minimum solution. Transportation management systems (TMS) can also improve route optimization, freight management, and carrier selection. Explore warehouse management systems (WMS) to enhance inventory tracking, order fulfillment, and space utilization whenever you encounter bottlenecks.
4. Data integration and quality. Ensure data accuracy and consistency across systems. If you're still using MS Excel, there's nothing wrong with that, but it should be implemented with data governance practices to maintain data integrity. Integrate data from different sources (e.g., ERP, CRM, IoT devices) to create a unified view.
5. Pilot and implement. Once you have your software partner, they can build your solution. Start with a pilot project to test the technology and gather feedback. Implement changes in phases to minimize disruption and maximize benefits. Provide training and support to employees to ensure successful adoption.
6. Continuous monitoring and optimization. Track key performance indicators (KPIs) to measure progress. Once your custom software is up and running, establish a set of KPIs for your business. Continuously evaluate and refine processes based on data-driven insights. Stay updated on emerging technologies and industry trends.
7. Prioritize cybersecurity. Implement robust security measures to protect sensitive data and systems from cyber threats. These may include encryption, access controls, and regular updates.

Key takeaways

Digital transformation offers supply chains many opportunities to improve customer service, increase productivity, and gain a competitive advantage. Technology solutions, such as supply chain software, can also help you achieve better tracking and performance as measured by KPIs. Are you ready for digital transformation? Get in touch with us. If you still have doubts, get a free consultation!