Digital Transformation of Logistics and Supply Chain Management for Mid-Sized Companies

Digitalization is disrupting the way businesses manage and streamline their operations. A variety of technologies have already made their mark on the logistics and supply chain landscape. Upcoming developments in 5G technology, artificial intelligence, blockchain, and cloud computing will only lead to further transformation of the industry. With these breakthroughs, traditional supply chain methods will no longer suffice. To remain competitive in this dynamic environment, companies need to embrace the digital transformation of their supply chain and business operations. 

This rapid pace of digital evolution brings major challenges for mid-sized companies, including the following:

• Scaling operations: The internet has made growth possible for many companies where it wasn’t a few decades ago. Businesses are no longer limited to regions where they have a physical presence, and advertising has been revolutionized. This means that customer bases can widen quickly. But companies that continue to rely on manually managing operations will be hard pressed to cope with fast expansion. 
• Demanding end-customers: Just as the internet can open up new markets for your mid-sized business, it also gives consumers more options. End-consumers today expect a new kind of experience. They have access to an increasing number of vendors, services, and solutions to choose from, and the barriers to changes are shrinking. They can order products from anywhere, at any time and on any device. Mid-sized companies need to transform their business operations to ensure they deliver competitive levels of service when producing, packaging, and shipping their products.

Furthermore, with the market changing so quickly, customer demands are likely to shift fluctuate often. 

• Growing competition: In a buyer’s market, competition among businesses gets fierce. This makes creativity and innovation the defining aspects of a successful company. To stay ahead of the competition, companies must adapt to embrace cutting-edge technologies in logistics and supply chain management. Losing a permanent customer is costly. Improved customer services must be a top priority for mid-sized companies. Leveraging digital solutions for logistics automation and real-time freight data and analysis are great ways to achieve an edge over the competition. 
• Outdated technology: Supply chain managers are still dependent on too many time- and labor-intensive manual processes. This holds workers back and can create bottlenecks in the production and distribution pipelines. With things moving so quickly, even technology that was adopted a few years ago can be wildly outdated and incompatible with newer elements. It’s critical to keep an eye on the digital landscape so you don’t fall behind.

Medium-sized companies cannot afford inefficiency or missed commercial opportunities. Most of the time, these shortcomings stem from poorly managed supply chains. The risks associated with the ever-changing customer demands is enormous for old-fashioned supply chain systems. In many ways, the success of SMBs depends on successfully managing these processes. 

Fortunately, companies can dramatically enhance the efficiency and transparency through digitization of logistics and supply chain management.

Digitization provides tools to improve the entire cycle of business operations through streamlined communication and collaboration. Processes that were once hindered by the limitations of analog supply chain systems are being modernized quickly. Taking advantage of these tools can help your company get products to the market fast. The benefits of using digitization to enhance transparency in the supply chain include:

• Uncovering and removing inefficiencies, resulting in reduced expenses
• Improving analytics to monitor trends and changes in customer demands
• Creating greater agility to meet those dynamic consumer demands
• Streamlining processes to reduce confusion and facilitate cooperation across departments and partner companies

Companies need to adopt real-time data-driven decision-making processes to accurately assess the market situation and prevent disruptions. This is how digitization can provide a competitive advantage. Logistics can be automated at several levels: sourcing, production, warehousing, transport point-of-sale, and consumer. A remarkable example of comprehensive logistics automation is Unicsoft’s excellent tracking system for the gold mining industry.

This system automates the interactions between gold suppliers and recipients. It also facilitates the process by establishing whether supply chain participants are certified. The solution was developed by Unicsoft team from scratch. It’s a custom web & mobile application, integrated with Ethereum private blockchain network in order to track gold lifecycle, through smelting, processing, and trading floors, to end-customers. The MVP was approved by the National Mining Association.  

For a medium-sized company, there are three main areas worth investing in digital innovations:

• Adopt robust logistics software to boost profits and accelerate product cycles for a competitive advantage.
• Use supply chain management software to streamline business operations and make everything efficient and effective. 
• Implement clear lane freight tracking to help manage shipments easily.

To stay on top of the game in this digital economy, innovation and agility are key. You need to integrate all three of these approaches to get things running smoothly. A truly integrated supply chain and logistics system will help your company:

• Predict demand better – so you can adjust accordingly to stay on top.
• Increase flexibility – companies are able to respond swiftly to external events such as a change in consumer demands or a move made by a competitor. 
• Eliminate waste – your firm can reduce waste by using digital tools such as logistics software and supply chain management software to integrate the different components of a supply chain efficiently.
• Increase the profit margin and stay ahead of your competitors – this is the ultimate outcome of the three points just mentioned. With a well-integrated supply chain, mid-sized companies can outpace their more conservative competitors by over 10% in revenue! Effectively managing a collaborative and innovative supply chain by using SCM software as well as product and portfolio solutions lets firms produce and deliver products faster. Take the case of Zara’s highly successive supply chain, which has helped the company stay miles ahead of its competitors. 

If you want to make your company into a market leader, a digitized supply chain is a way to go. Companies that were quick to adopt this strategy are now enjoying immense success. Under Armour, for example, uses its Connected Fitness data to create algorithms that improve customers’ experience, which translates to increased KPIs. E-commerce giants Alibaba use automated warehouse robots. They are also incorporating AI technology to create a tailor-made shopping experience for their clients. The World Economic Forum predicts that digitization will deliver $100 trillion in value to business by 2025. But the question for aspiring business leaders is: what are you doing to be part of this story and ensure your business is not left behind?

Should Mid-Sized Companies Build Custom SCM Solutions or Buy Existing Ones?

If your company needs an SCM solution, the best approach is to evaluate the pros and cons of each option in light of your specific needs. To get you started, we have outlined some of the main points here.

Bespoke solutions

Pros

• Fully customized; built around your company’s needs
• Easy to adjust in the future as needs evolve
• With custom-built solutions, you do not depend on a specific vendor for support and maintenance
• Easy to integrate with existing solutions

Cons

• High upfront costs
• Takes time to build and implement
• There is a risk that the team you assemble will lack the required expertise; execution could be subpar

Out-of-the-box solutions

Pros

• Lower costs than bespoke solutions (at least initially)
• Ready to go
• Ongoing support and maintenance is readily available
• You can select software that has positive reviews from other major players in your industry or related industries

Cons

• A lot of tuning might be required
• Limited control
• Limited customization options
• Ongoing maintenance and support fees
• No flexibility
• Licensing fees
• Functionality gaps

Tips on How to Start the Digital Transformation in Your Supply Chain Today

Technology is important, but it’s ultimately a strategy that drives digital transformation. To execute an effective transformation, you need a clearly defined vision and structure to work around. These three steps will help your company lay the foundations to get the most out of digitalization.

Step1: Define the main goals of your transformation

Before initiating a digital transformation, you need to have clear end goals. Are you aiming to offer perfect customer service, to increase revenue, or to deliver goods and services faster? Try to quantify the results you hope to achieve. Whatever your digital transformation goals are, you need to identify your opportunities and needs at the start, so you can align your strategy properly. 

Step 2: Analyze your business processes

With clear goals in mind, you need to review your business, production, and shipment processes. Determine which of your goals are realistic and achievable.

Step 3: Invest in digital technology and focus on achievable goals

When it comes to investing in digital technology, the company should prioritize technologies that will help you achieve the realistic goals you identified. Understandably, with the tremendous variety of solutions available and the fast rate of change in the IT industry, you might want to consult specialists to make sure you are making the smartest investments in this complex area. 

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Combining operational changes with modern applications such as logistics solutions, clear lane freight tracking, and supply chain management software can bring remarkable performance improvements to your medium-sized business. 

Digital transformation, if properly executed, is a sure-fire way to grow your company and increase your revenue margin. If you would like to streamline your logistics and supply chain or learn more about effective digital transformation, get in touch with our experts. We will be happy to help you through the digital transformation journey.