These examples of using apps and IoT devices to increase visibility into the supply chain highlight one of the key trends in supply chain design and management: digitization. As the BSR researchers point out, at the heart of this digitization is the simple fact that product designs and information today exist digitally. On the one hand, the digitization of product designs and related documents accelerates the transfer of critical design information with partners, allowing for earlier collaborative iteration. On the other hand, this digitization accelerates product design and prototyping. For example, by creating 3D printed models from digital drawings and manufacturing instructions early in the design process, companies can quickly see finished, physical products without having to create or source materials.
A McKinsey report on “Supply Chain 4.0” provides other ways digitization impacts the supply chain:
Predictive shipping. Thanks to digitization across the supply chain, Amazon can ship products before the customer even places an order. They do this by matching a customer order with a shipment that is already in the logistics network (being transported toward the customer region), and the shipment is rerouted to the exact customer destination.
Continuous planning. Thanks to real-time production capacity feedback from machines, planning becomes a continuous process that is able to react dynamically to changing requirements or constraints.
Real-time performance management. End-to-end visibility across the supply chain helps customers and can also improve supply chain performance. Thanks to advanced digitization, including strategic deployment of IoT devices, organizations can track performance from the highest level (management KPIs and service levels) down to the lowest, including the throughput of machines and the speed and location of delivery vehicles.
Single source of truth. Cloud-based solutions allow customers, manufacturers, and suppliers to actively share information through a common logistics infrastructure system without having to install software. As we will discuss, this is essential for truly collaborative relationships in which any partner can easily engage with the system of record to advance product designs, manufacturing methods, cost reductions, best practices, and project details.