Welcome to the world of digital value creation 

"Everything will be different in the future; nobody knows what to expect". It's a statement that everyone knows, but what's behind it? Will the way we interact really change fundamentally? Is it really possible to estimate future developments? Let's take a look together at how digitalization is already influencing value chains today and what can be derived from it for the future.

From logistics to supply chain management 

The classic, single-organization logistics in the form of transportation, handling and warehousing services has evolved into modern, cross-company supply chain management. Increasing demands from customers, employees, and partners require the entire value-added process to be more reliable and efficient. Instead of a sum of individual options, an overall optimum of the value chain is sought, in which processes are implemented as seamlessly as possible from the supplier to the end customer (i.e. across all procurement and sales stages). As a result, individual companies no longer compete with each other but rather the performance of their entire network competes with other networks. Supply chain management enables companies to unlock cross-network potential for success by developing, designing, managing, and realizing effective and efficient flows of goods, money, and information. If you want to make the best possible use of this potential, digitalization plays a crucial role. 

Supply Chain 4.0

In the era of Industry 4.0 and digital transformation, technologies such as big data, the Internet of Things, 3D printing, or augmented reality have emerged. They promote the emergence of new business models, the digitalization of products and services, and enable the integration and synchronization of the activities of all actors in the value chain. The question as to whether Supply Chain 4.0 is science fiction can be answered quickly: The mentioned technologies are part of our current working world. A survey conducted by management consultancy PWC in 2016 showed that already one-third of companies surveyed in 2000 have started digitalizing their value chain and that 72 percent of companies will start doing so within the next five years. Why almost every company wants to invest in this area long term is obvious. Many economic advantages are expected: Scientists forecast a possible increase in efficiency of 4.1 percent and an increase in revenue by 2.9 percent every following year. Digitalization has great significance for the future existence of your company. We show you what the concrete possibilities of digitalization along the supply chain look like and what opportunities arise for your business.



Six starting points for using digital technology in the supply chain

The supply chain is full of digital possibilities. Much is already present and some still lie in the future. Not every idea that we will present below will be suitable for your business or be translated one-to-one. However, they are a good opportunity to question your supply chain in terms of the potential use of digital technologies. 

1. Integrated planning and execution
The central goal in supply chain management is to deliver the right product to the end customer at the right time - which usually means as fast as possible. The flexibility and reliability of the material flows, as well as the efficiency of the processes and thus low transaction costs must be ensured. In short, as is often the case in everyday logistics, it is about making the impossible possible. To do this, we can provide you with a basic infrastructure that simplifies the integration of planning and execution activities along the supply chain: 

This is just a sampling of the ways you can make planning and execution of supply chain activities more efficient. Only when the systems are not only used individually, but networked via a platform, can their entire potential be exploited. 

2. Connected supply chain platform

Wrong demand forecasts or missing blanks endanger the supply chain process, as a large number of activities are usually built on each other. In order to solve problems quickly and to minimize consequences, information exchange is extremely important. By integrating internal and external data, digital platforms form a central control and monitoring entity for all actors in the supply chain -  from pickup at the supplier to delivery to the customer. For example, all communication, tracking, and control can be done via a cloud platform. This combines several systems so that you always have an overview of all processes along the value chain in the case of abnormalities. You'll be informed in real time and can intervene promptly via escalation management. Implementing a platform requires both technological understanding and human skills. Once the integrated platform is up and running, it reduces the overall planning effort enormously and generates significant added value for the user. When building a platform, you are supported by our experts. 

3. Procurement 4.0 – A holistic procurement solution

The digitalization of our working world redefines purchasing and procurement processes. The demands placed on employees for IT know-how are increasing, new procurement categories are emerging, and the benefit promises of procurement functions are changing. Foresighted market and supplier analyses, co-creation (i.e. the involvement of suppliers in product development), and electronic contracts open up new possibilities for purchasing and increase its importance for the strategic success of your company. However, it is not enough to oil the gears within your own company. It is crucial that you also involve upstream and downstream stakeholders, thereby increasing process efficiency along the entire value chain. 

4. Smart Warehousing
Smart warehousing is the intelligent automation of warehouse operations. In doing so, we connect automated processes with each other via various technologies so that they interact optimally through the mutual exchange of data. The goal is to increase the productivity and efficiency of warehouse operations while, at the same time, reducing personnel requirements and error rate in manual handling. Smart warehousing affects the entire supply chain, from inbound to outbound logistics. 
An operations scenario: HGVs automatically communicate their current position and estimated time of arrival to the Intelligent Warehouse Management System on the way to the warehouse. A loading ramp is automatically reserved to allow a quick unloading process. The stock goes straight to the store, and all stocks are updated in real time via sensors at the storage locations. Driverless transport systems store the goods without intermediate steps, along with parallel, automatic recording of all data into the system. After receiving a customer order, a picking robot assembles the products to be shipped and forwards them to the dispatch department. The next robot is already waiting there, packing the goods and loading them into a pre-booked truck. 

Do you think that sounds like science fiction? It's not. It's already a reality. The fact that the innovative technologies are not so widespread is only due to high development and production costs. Once they drop, nothing stands in the way of broad-based application. 

5. Efficient spare parts management – with 3D printing

Spare parts management is a tiresome topic. In many industries, around half of all orders consist of one-off requests for spare parts. Demand is erratic and therefore hard to predict. This leads to large inventories, especially as spare parts have to be legally deliverable for up to 30 years. Keeping all C-parts in a second-rate, lower cost warehouse is not an up-to-date solution. Rely on 3D technology instead. Laborious pre-production and long-term storage are no longer necessary; you can re-produce the spare parts requested by your customers within minutes. All you need is some technical skills, a 3D printer, appropriate software, blueprints of spare parts, and the material needed for production. Investment costs are quickly recouped by the associated storage fees and the reduced goods handling. 

6. Autonomous Distribution

The shortage of skilled workers and the increasing volume of transport on the roads make it increasingly difficult for companies to satisfy all customer requests. In the warehouse, therefore, autonomous means of transport will continue to gain in importance. Digitalization will also create new transport options in road traffic. The first autonomously driving trucks are on the way. Companies like Daimler, Tesla, and some IT companies have already developed other technologies for autonomous transport solutions. First and foremost, however, it is important to create both the legal basis for autonomous driving and the infrastructure for the most current-powered means of transport of the future. In the long run, the economy cannot run without new technology; the implementation of these technologies into daily business is only a matter of time. 




Success factors for the implementation of a smart supply chain

When implementing a smart supply chain, you should, in our experience, consider the following success factors: 

  • Processes: Establish holistic value creation processes by involving your suppliers and customers in the digitalization process. For example, all parties can collaborate on cloud-based platforms and drive innovation together. 
  • Organization and Skills: Prepare your ordanization for the new technological requirements beforehand. To do this, you'll need specialists who have a thorough understanding of the individual components of the value chain and know how to successfully implement digital concepts into operations. 
  • Performance Control: Develop a concrete goal that you want your supply chain to achieve and think about which key figures are needed to ensure long-term success. 
  • Partnerships: Look for a partner with whom you develop solutions and successfully implement your project. The value chain consists of a large number of actors. Everyone has to work together to maximize total benefit. 
  • Technology: Create a roadmap with useful technologies to help you digitalize your supply chain. You can fall back on already existing components from your company as well as future-oriented technologies. 

You have any questions? We're looking forward to hearing from you.

This post won't teach you what the value chain of the future looks like. The topic is too complex for that. But it shows that fundamental changes are coming to us in the not-so-distant future. If you want to find out how to use digitalization and innovative technologies in your company, we are here to help.