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Digital Supply Chain 101

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Digital Supply Chain 101

Digital supply chains have existed since machines were introduced into the manufacturing process in the early 2000s. However, in recent years, the Internet of Things has changed the process, ushering in an era of transformation. The new digital supply chain is characterized by advanced features such as machine automation and communication. In order to stay current, companies must understand the evolution of the digital supply chain and the advantages that come with staying abreast of developments in the sector.

What is the new digital supply chain?

The new digital supply chain, also referred to as Industry 4.0., is an optimized version of the existing supply chain. Instead of having machines simply replace human work, Industry 4.0 adds sensors to machines so that they can interact with each other and beyond the factory walls. The machines are optimized to automate much of the supply chain processing, from determining when a manufacturer is low on raw materials and ordering more, to communicating the amount of supply to sales teams.

Industry 4.0 is powered by four key design principles:

  1. Interoperability, allowing different machines to connect and communicate with each other through the Internet of Things.
  2. Transparency of information, empowering IT systems to make virtual copies of the real world through sensors.
  3. Technical assistance, where machines help humans by making data visualizations and taking over the dangerous or painful “heavy lifting” work.
  4. Decentralized decision-making, providing machines with the opportunity to take over some of the low-level decisions, like automatically ordering more raw materials when inventory is low.

What are the benefits of a modern digital supply chain?

An interconnected digital supply chain has a number of benefits for manufacturing. Among these, a recent study by PwC highlighted three major advantages that make a digital supply chain a worthy investment

1. Overcoming human flaws in the supply chain

Humans are always susceptible to errors in the supply chain. Human factors can influence the supply chain in any number of ways from poor communication, irrational decision making, to fatigued performance. These errors can affect productivity and ultimately profitability. 

An automated digital supply chain can reduce errors and increase consistency. Unlike humans, automated machines never get tired, distracted or indecisive. Instead, they complete one job with extraordinary precision, 24 hours a day, 7 days a week.

Furthermore, by allowing machines to communicate with each other at different points along the value chain, manufacturers can avoid miscommunications and misplaced forms. This interconnectivity means that warehouses will run smoothly and with a greater understanding of everything that is happening along the value chain.

2. Using human talent more effectively

Automating the supply chain does not only reduce the number of human mistakes but can also provide increased availability for employees to take on tasks that require human intervention and critical thinking. Instead of allocating employees’ time toward inventory management, for example, you can utilize human talent for more creative endeavors. Automation also reduces contact with potentially dangerous operations, such as heavy lifting jobs.

In addition, automation can optimize human talent by giving previously-unavailable insight into the inner workings of your warehouse floor. Data visualizations will help to determine where your operations can improve, both for machines and for your human team.

3. Increased speed and efficiency for maximized profits

Finally, a digital supply chain will increase overall speed and efficiency. A machine-driven program will yield consistent results, and digital insights provide for a better understanding of overall productivity. With clear-cut data, manufacturers can avoid costly miscommunications along the entire value chain. A digital process decreases your overall costs while increasing your long-term profitability, according to Bain & Company.

Final thoughts

The digital supply chain has the potential to reorganize manufacturing as we know it. By using automation, companies can give their employees the availability to take on more engaging, valuable roles in production. 

How can your operations harness the power of the digital supply chain? Don’t wait. Get in contact with ICS Support to learn more about how we can help you.

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