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How to guide: the ‘Dos’ and ‘Don’ts’ of building smart supply chains

How to guide: the ‘Dos’ and ‘Don’ts’ of building smart supply chains

2024-05-21 5 min read

Building smart supply chains allows you to have the ability to transform manufacturing environments. This can be achieved through the application of the Internet of Things (IoT) and the installation of advanced robotics. As well as, the use of big-data analytics in supply chain management.

Harnessing the real-time data provided by these smart supply chain technologies allows businesses to become faster and more agile. It has been reported by McKinsey that there have been significant reductions in costs from smart supply chain implementation. These include up to 30% lower transport and warehousing costs, 50-80% lower admin costs, and 75% less stockholding [1]. This highlights the potential for effective supply chain transformation.

Moreover, industry trends show a widespread usage of smart supply chain technologies. Based on PwC's 2023 Digital Trends in Supply Chain Survey, a major number of companies have embraced cloud technology. As a matter of fact, 84% of companies have either partially or fully adopted it. Additionally, the survey reveals that 79% of companies have also adopted IoT technology.

[2] It’s also gaining traction among late adopters, with 86% agreeing that their company should invest more in smart supply chain technologies. The purpose of this is to identify, monitor, and measure the risk linked to the supply chain.

AI adoption is another key trend in building smart supply chains, with Statista forecasting rapid adoption by 2025. In the year 2022, just 11% of businesses viewed AI to be a vital part of supply chains. These numbers, on the other hand, are projected to reach 38% by 2025 [3].

There is a rapid expansion of the AI market in the manufacturing sector. It is projected to reach $68 billion by 2032, which highlights the transformative impact it has [4].

With the growing importance of building smart supply chains, laying the right framework is crucial for successful implementation. Discover the essential dos and don'ts outlined in this smart supply chain guide. This will help you on your road to an efficient and productive supply chain transformation.

The “Dos” of implementing smart supply chains

1. Do - Produce a realistic roadmap

It is vital to create a clear roadmap for the implementation of smart supply chain technologies. Start by aligning objectives with your business goals, such as improving end-to-end visibility, agility, and inventory management. Assess the present state of your company's supply chain and make note of its strengths, weaknesses, and potential improvements. Your roadmap will also guide you in prioritising which technologies to invest in based on your company's needs.

2. Do - Embrace the power of data, but ensure cybersecurity is built-in

Effective smart supply chain transformations are as only as effective as the data they are based on. If you have good data, you can optimize your operations, find opportunities, and stay ahead of market trends. By harnessing the power of data, you may go from intuition-based decisions to insights drawn from real-time information.

On the other hand, growing digitisation raises the risk of cyber threats. This means that it is crucial to prioritise robust cybersecurity measures. These steps help to protect digital infrastructure, sensitive data and ensure the reliability of supply chain operations.

3. Do - Break down silos with effective communication

Smart supply chains rely on communication and collaboration in order to function. To create an environment that promotes these principles, it is crucial to break down silos within your company.

Adopting collaborative technologies that enable cross-functional cooperation can help achieve this when building smart supply chains. In addition to this, establishing open dialogue can help promote real-time information exchange. By sharing insights and expertise, efficiency can be enhanced across the entire supply chain network. This collaboration helps all stakeholders to strive towards common goals.

4. Do - Ensure you have the right skills

Since people are also a core part of smart supply chain models, it is vital that they receive ongoing education and training. Training programs are designed to equip your team with the necessary digital skills to navigate the challenges and opportunities presented by smart supply chains. Focus on data analytics, automation, and emerging technologies to ensure that your team is well-prepared.

Having a team that is adept in digital technology has many benefits. It raises the likelihood of a smooth transition when building smart supply chains and enhances adaptability to new processes and ways of working.

The ‘Don’ts’ of smart supply chains implementation

We’ve reviewed some of the 'Dos’ in this supply chain guide, now, here is a list of ‘Don'ts’ that can trouble companies. The good news is that with enough planning and foresight, you can scale down these hurdles.

1) Don't - Neglect supplier and partner readiness

It's important to note that supply chain stakeholders may have different levels of digital readiness. If there is a misalignment in technology capabilities, it can potentially halt progress. Also, it takes much longer to onboard technologies when both suppliers and customers are hesitant to use a new digital platform.

Tips to encourage digital readiness:

Develop customised training programs based on each partner's specific needs and capabilities.
Create a clear onboarding process that highlights the benefits for both parties involved. It must be stressed that being digitally prepared requires ongoing commitment.
Offer resources like supply chain guides, tutorial videos, FAQs and hands-on training sessions to ease the transition and address concerns.
Work closely with partners to develop phased implementation plans aligned with their capacities and priorities.

2) Don't - Underestimate the complexity of Global Supply Chains

Global supply chains bring new complexities, such as diverse regulations, cultural differences, and varying technology adoption rates.

How to avoid underestimating these challenges:

Choose flexible technology solutions that can scale up or down on a global scale to meet the needs of different regions.
Develop a thorough strategy for implementing new smart supply chain technologies. One that accounts for the fact that different regions have different degrees of digital maturity.
Integrate regional experts into the supply chain management team to ensure compliance, handle cultural nuances, and streamline operations.

3) Don't - Ignore interoperability issues

For information to move freely along the supply chain, it is critical that various systems connect with one another. Some suppliers and partners may use different technologies and systems, which may not be naturally compatible. These inconsistencies in data formats can lead to misinterpretations and errors.

Actions to improve interoperability:

Make combability tests a requirement prior to onboarding new partners. As well as creating a standardised checklist to ensure systems align.
Select a scalable and versatile middleware solution that can interface with several systems.
Push for data standards within the industry and promote the use of widely accepted formats for data exchange. This is to minimise integration challenges.
Establish mechanisms for continuous monitoring of interoperability. Also, regularly update systems and protocols to align with industry changes and emerging standards.

4) Don't - Overlook the cost of smart supply chain implementation

Adopting new technology, training staff, and upgrading systems all incur large upfront costs. Securing the necessary funds is quite challenging, especially when your technology adoption budget competes with other operational needs. It can also be difficult when the ROI is not immediately apparent.

Steps to budget for smart supply chain implementation:

Adopt a phased approach, prioritising critical areas that provide quick wins and enable incremental investment.
Collaborate with others to share resources such as supply chain guides, training programs, technology platforms and expertise, reducing individual financial strains.
Explore relevant government grants, subsidies or tax incentives to offset upfront costs.
Consider cloud-based technologies for a pay-as-you-go model and the flexibility to scale up or down based on your needs.
Implement energy-efficient technologies and redirect the cost savings to other areas of your operation.

5) Don't - Fail to prioritise cybersecurity

As businesses rely more on digital technologies to enhance supply chain operations, cybersecurity becomes a key problem. This poses serious risks to sensitive data, digital assets and overall supply chain integrity. To safeguard against cybersecurity risks, firms must prioritise cybersecurity measures throughout their supply chain processes.

Ways to enhance supply chain cybersecurity:

Conduct thorough risk assessments to identify vulnerabilities and threats.
Implement strong access controls and encryption mechanisms for data security.
Determine what suppliers and vendors must do to comply with cybersecurity regulations.
Deploy continuous monitoring and threat detection tools to identify and respond to incidents.
Keep software systems and devices updated with the latest security patches.

Conclusion – do not forget the power of partnership

This supply chain guide of dos and don'ts serve as essential guidelines for navigating the implementation of smart supply chains. Striking the right mix between automated systems and human involvement is crucial. Automated systems are efficient, but human knowledge ensures thoughtful decision-making and a grasp of each unique customer's needs.

It is of utmost importance to engage employees in the adoption process. This helps to address their concerns. Also, it promotes a culture where automation is viewed as a valuable addition rather than a threat.

In addition to these best-practice pointers, strategic partnerships play a vital role in successful smart supply chain implementation. Having strong relationships with global suppliers like EU Automation, logistics partners, and technology providers can greatly improve the availability of replacement parts. This, in turn, can help create a networked ecosystem where information flows seamlessly and continuously. By incorporating advanced technologies, fostering collaboration and embracing a forward-thinking approach, companies can build resilient operations ready to meet future demands.

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How to guide: the ‘Dos’ and ‘Don’ts’ of building smart supply chains