The digital supply chain is coming into clearer focus as organizations adopt more technology and invest in systems that help them break down silos, operate with more agility, and connect the dots between the vital nodes in their global networks.
As the days of slow, invisible supply chains that “worked behind the scenes” continue to fade in the rearview mirror, companies are improving their demand forecasting, gaining real-time visibility across their networks and streamlining their operations.
At the heart of these and other improvements lies a vendor community that’s focused on making its supply chain management (SCM) applications more relevant, useful and dynamic for the modern shipper.
Warehouse management systems (WMS), transportation management systems (TMS), inventory management software and global trade management systems (GTM) are just some of the applications that work together to optimize different aspects of the flow of goods.
Enterprise resource planning (ERP) makers have also jumped into the fray by either building or buying SCM applications that their customers need to run their supply chains. With these systems in their corner, shippers can better manage their transportation activities, optimize routes, forecast demand and use advanced analytics to make better ordering, fulfillment and delivery decisions. This, in turn, translates into happier customers, more repeat buyers and healthier
corporate bottom lines.
At a time when both B2C and B2B customers expect a lot from the delivery experience—80% want same-day shipping and 88% are willing to pay extra for the service according to recent PRG research—warehouses and DCs are under extreme pressure to meet or exceed these expectations.
To help, software developers are adding more advanced functionalities; embedding artificial intelligence (AI) and generative AI into their applications; and using variables like social media trends and weather patterns to help users more accurately predict demand.
Howard Turner, director, supply chain systems at St. Onge Company, says applications like WMS, TMS and yard management (YMS)—commonly referred to as supply chain execution or “SCE” systems—are playing a key role in digital supply chain development. One of the biggest advantages these systems provide is real-time visibility, which used to be a “nice to have” that has since become a must-have for all organizations.
“From the WMS perspective, having real-time inventory visibility was a competitive advantage maybe 20 years to 30 years ago,” says Turner. “Now, it’s a requirement for any company that wants to survive.” Other SCE applications are equally as fundamental, he adds, with TMS and YMS working together to ensure fulfillment, shipping and delivery accuracy and speed.
“These are mission-critical systems,” says Turner, who adds that the market for these solutions is “for the most part very mature” and that the SCE systems themselves are tested and proven. And even warehouses that are still using clipboards and pens to manage inventory “at some point have to take that paper to a computer and enter the data,” Turner adds.
Even companies that have SCE solutions in place are looking for new ways to leverage technology and build out their digital supply chains. Shippers that have been using the same legacy WMS, ERP or TMS for the last 20 to 30 years, for example, want to be able to use AI, gen AI and other advancements.
More of them are now considering upgrades and replacements, based on how quickly technology has advanced in the last few years. “We’re seeing a lot of companies taking this path,” Turner says, “and trying to figure out which system should be replaced first, since they’re all very interconnected.”
That interconnectivity is a critical aspect of the digital supply chain, which relies on all systems to do their part to create a complete picture of what’s going on within the network at any given point in time. That end-to-end visibility remains elusive for many companies, says Turner, who sees the introduction of application programming interfaces (APIs) as a positive development for companies that need help hooking up disparate systems into a more cohesive ecosystem.
Once in place, those APIs act as intermediaries that allow different software systems to communicate with each other, even if those systems were developed by different software vendors. For example, an e-commerce storefront can use an API to get product information from an inventory management system or a customer relationship management (CRM) might use one to send customer order data to a warehouse’s fulfillment system.
Ultimately, APIs provide yet one more way for companies to “knit together” their supply chain management systems into a single, cohesive platform. This is critical in an industry where many organizations are still using older, legacy systems to run their supply chains.
Vamshi Rachakonda, Capgemini’s sales and GTM lead, U.S. manufacturing, auto and life sciences, says that some shippers continue to struggle with the point software solutions that were put in place years ago, and now operate in silos. This approach doesn’t lend itself to good visibility, hence the greater focus on gaining “broader visibility” across the entire digital supply chain.
“From the WMS perspective, having real-time inventory visibility was a competitive advantage maybe 20 years to 30 years ago. Now, it’s a requirement for any company that wants to survive.” – Howard Turner, St. Onge Co.
Achieving that goal requires more predictive and prescriptive analytics that support better demand forecasting and inventory management. “Right now, a lot of companies are asking how to get more predictivity while also leveraging prescriptive analytics,” says Rachakonda.
Indeed, many of those organizations are struggling with the human component in today’s tight labor market, where finding the people who can support the adoption, usage and maintenance of the technology isn’t always easy.
“It’s great to be able to put these systems in place, but you also need the talent to support it,” Rachakonda points out. “It’s not just about implementing these platforms; the rest of the enterprise has to be ready—both in terms of business and organizational readiness.”
As he surveys the current distribution environment, Nathan Lease, senior director, logistics, technology, research and advisory at Gartner, says that he’s seeing much aspiration to digitize logistics and move toward a more “advanced state.”
He also sees a lot of shiny objects being put in front of logistics and supply chain managers who don’t always realize that optimizing those solutions requires a three-pronged approach. “You need people, process and technology to make things work,” says Lease. “You can’t implement a technology and expect people and process to change.”
For best results, Lease tells shippers to carefully assess the return on investment (ROI) on the technology that they’ve already adopted. Look at what is and isn’t working, he adds, knowing that there’s probably not one single solution that will bridge the visibility gaps that start at inbound receiving, run through the warehouse and extend out to transportation and final mile-delivery.
Bridging those gaps takes myriad different systems, plus the processes and people that bring everything together into a cohesive, digital supply chain. “While there’s technology out there that can facilitate the digital supply chain,” says Lease, “unless the people and the processes change, that technology won’t just automatically make things happen.”
The days when companies could use static forecasts based on historical data to manage their supply chains are long gone.
Today, software can predict failures before they even happen; help companies stay agile in the face of unforeseen challenges; and allow them to preemptively adjust inventory levels and production schedules—thus minimizing the dreaded “stockouts,” lost sales and unhappy customers.
According to Turner, some companies are further along than others on their digital supply chain journeys. For example, some of the early adopters are already using business intelligence tools that tap into social media feeds and weather reports to incorporate current trends and weather-related information into the supply chain planning process.
If a retailer knows that a blizzard in the Northeastern U.S. is going to delay its shipments, for example, it can act quickly to realign those distribution routes.
Whether companies are actually using these business intelligence tools in their day-to-day operations remains to be seen. “Just how well this type of business intelligence is being utilized and acted on is another story,” Turner explains. “However, there are some tools out there with a lot of promise, that’s for sure.”
Lease is also seeing more companies putting together their “digital logistics technology roadmaps” this year and says that the best approach is to avoid the shiny objects and focus on those solutions that best address your company’s needs. Then, lay out a multi-year roadmap that can be scaled up (or down) as needed.
Lease suggests starting with TMS, WMS and YMS and then building out from there. “These tried-and-true solutions can serve as the foundation before you start adding emerging options like autonomous vehicles and drones, both of which may sound cool, but they’re not going to solve today’s burning supply chain issues.”
“Don’t try to build the skyscraper without digging down into the ground first. Otherwise, it will become a house of cards that topples over…The best approach is to start by building a foundation that helps those emerging technologies actually deliver the value that you’re looking for.” – Nathan Lease, Gartner
Lease says those burning issues are generally solved by the foundational technologies (TMS, WMS, YMS, etc.). Once that foundation is built, companies can then begin to use emerging technologies for more unique use cases.
“Don’t try to build the skyscraper without digging down into the ground first. Otherwise, it will become a house of cards that topples over,” says Lease, who knows of companies that implemented visibility solutions and starting looking at robotics without ever putting a WMS or TMS in place. “The best approach is to start by building a foundation that helps those emerging technologies actually deliver the value that you’re looking for.”