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Benefits of Digital Transformation for Your Company’s Supply Chain Management

benefits of digital transformation

Business disruption in the digital age is increasing as the exponential growth in technology has ripped through conventional guidelines. The presence of services like Amazon Prime Now in the US – where shoppers get their goods delivered the same day or within 24 hours has changed the global business landscape. Retail companies in the US are grappling with a new competitor that is felt all over the world.

The e-commerce sector is the future of retail, where new entrants around the world are leveraging new technologies and paying attention to trends to deliver offers to new customers. The convenience of shopping from anywhere has encouraged consumers to shop online.

Meanwhile, the emergence of the Covid-19 pandemic last year boosted the e-commerce industry where 10 years of e-commerce growth occurred in just 90 days according to a study by Shopify. This event has helped drive supply chain management as a critical business component in the digital age.

The Important for Companies to have a Good Supply Chain Management System

To meet the demands of modern business, it is very important for companies to have a good supply chain management system. Supply chain management involves a combination of both the company’s internal entities such as sales, manufacturing and distribution, and external partners such as suppliers and customers.

Supply chain in the digital era is a long process. When things go wrong in this process, companies often get angry with customers because they don’t receive the purchase as promised. In July 2019, during the peak sales season, online retailers such as Asos reported experiencing problems in their warehouses, which resulted in millions in losses.

Reuters notes that many companies are still not equipped with efficient supply chain management systems.  and what is surprising in this survey is that several companies are still operating under a legacy system.

Reuters, who interviewed nearly 400 supply chain executives from companies across various industries, revealed that “22% stated that they use Excel for operations planning”. As we know, spreadsheets do not have special features to handle logistics especially in today’s digital era.

Another surprising finding – “55% of respondents said they still use manual processes to make planned decisions, with 28% saying that their entire decision-making process is manual and does not have support from any system”, and 15% of respondents said “their system has no mobile access”, a major need today, and even more so in a fluctuating climate.

Below are some other problems that occurred by respondents:

  • 44% think that their system is not well integrated with other systems.
  • 43% say their system lacks automation planning/optimization.
  • 41% reported that they couldn’t enter all the complex rules and exceptions they needed.
  • 32% were unable to test some scenarios.
  • 28% noted their system did not link warehouse and logistics operations.
  • 26% have difficulty collaborating with multiple partners.

After the world was hit by Covid-19, digital transformation is an obligation for companies to survive and thrive. Inventory management is no longer a guessing game. The ability to forecast demand using best-in-class technology will enable the company to operate efficiently.

The Benefits of Supply Chain Management in Digital Transformation

Research shows that investments in supply chain technology have a payback period of less than two years. Meanwhile, a McKinsey study shows that “companies that aggressively digitize their supply chains can increase annual revenue growth before interest and taxes by 3.2% – the largest increase of digitizing any business area – and annual revenue growth of 2.3%. “.

Below we look at some of the benefits that businesses can get from supply chain management in their digital transformation efforts using a cloud-based ERP system.

Unified real-time view of business processes

In this case, the goal is to provide your customers with a seamless shopping experience across all platforms, regardless of whether they shop at physical stores or digital channels, and to give them the privilege of getting their products or services in the method that is most convenient for them.

Cloud ERP systems offer a unified and real-time view of all your customers and their transactions. This allows you to respond quickly to customer requests.

A tracking system that sends detailed updates on orders throughout the lead time also allows you to keep your customer’s order status up to date.

The unified view also gives you total visibility of all your warehouses. This can ensure that you are always informed about your inventory levels, allowing you to make the necessary adjustments.

Analytical Demand Planning

Supply chain planning is a complex process of trying to match supply and demand potentially worldwide. Cloud ERP systems ensure you get the right combination of cost control, lead time and service levels.

Cloud ERP solutions also enable businesses to calculate and predict demand using modern technology. This is especially important at times like today, where the business world is filled with uncertainty.

Easy Integration with Low Code/No Code

In a borderless business environment, transactions occur all over the world. For example, if you are a third party logistics (3PL) provider, you are likely dealing with many different systems to accommodate different retailers.

One of the great advantages of modern cloud-based systems is that they provide easy integration with external sources, often involving little, or no coding. This helps 3PL companies to save a lot of time and money by not having to hire an internal IT team to work on solutions for every different system they encounter in their transactions.

Scalability

Solutions in digital business environments such as cloud ERP systems are built on a flexible infrastructure and enabling businesses to scale conveniently and when needed. Your inventory system can grow just like your business.

Moreover, it also enables businesses to carry out digital transformation in a structured and organized manner where the system can easily accommodate their growth needs when they feel the need.

The 5 Benefits of Using Supply Chain Management Software

Running a retail or wholesale business is closely related to supply chain management or SCM. Every movement of goods from factories to warehouses, warehouses to stores, and stores to consumers is included in the supply chain management process. This process requires good information management to avoid miscommunication between one division and another.

Therefore, many businesses are starting to use supply chain management software to simplify the process. There are a number of advantages that you can get from using supply chain management software.

Here are five of them:

For retail and wholesale businesses, knowing exactly where their merchandise is very important. Having this information allows you to sell an item that hasn’t even arrived at your warehouse yet. This is possible with the help of supply chain management software. The software will inform you where the item is and when it will arrive at your warehouse. With this, you can provide assurance that the goods purchased by your customers will definitely arrive in their hands.

This method is widely used by those who sell their merchandise with a pre-purchase system. This method allows business people to make a profit even though they have not sold a single item. Supply chain management is an effective way to increase your business competition with competitors. With this system, you can control the supply chain effectively and efficiently. Here are five advantages of using supply chain management software:

Supply Chain Management Increase Productivity

In addition, another advantage of supply chain management software is the increased productivity of your business. SCM software facilitates communication, cooperation, and coordination between vendors, shipping companies, and suppliers of goods.

All information flows and involved parties will be available in the SCM Application. This supply chain management application also makes it easier for you to formulate a better goods distribution strategy, as well as generate much more accurate reports. Increasing productivity is the same as increasing the potential profit you can get.

Better Inventory Management

SCM software makes your products no longer need to be in the warehouse. With accurate item location information, you can record sales while the item is being manufactured or in transit. The advantages of this SCM software not only make it easier for you to control your inventory. From the production line, you can more easily estimate how many items your company should produce. This eliminates overproduction which is difficult to achieve manually.

Report Accuracy Improved

Report accuracy is important in retail and wholesale businesses. Starting from the number of items sold, the availability of goods in the warehouse, to how many items are being shipped, this is important information for retail and wholesale businesses.

Accurate reports make it easier for management to make better decisions. Supply chain management applications also contain information flows including demand forecasts, order transmission and order status reports, these flows run both ways between end consumers and raw material providers so that report accuracy also increases. As a business owner, you can make decisions faster thanks to supply chain management software.

Minimize Delay Time

Delay time occurs when communication between divisions does not go well. One of the reasons is the out of sync information. If left unchecked, this can result in delays in delivery of goods, delays in the production process, and logistical record errors. The further impact is the decline in consumer confidence which will endanger the continuation of your business.

SCM software can minimize this by synchronizing data in one central location. Synchronous information can facilitate communication between divisions, increase collaboration, and improve the level of trust from your loyal customers.

Conclusion

The five things above are the reasons retail and wholesale businesses decide to use supply chain management software. In addition to facilitating management, increased collaboration between divisions thanks to smooth communication is a major consideration for those who want to switch to supply chain management users. With this software, communication between employees and divisions will be smoother.

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