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In today’s fast-paced and ever-changing world, the capacity of organisations to keep up with and manage risks across their supply chains depends on their ability to leverage on digitalisation to collect, analyse, and use electronic data to ensure the stability of global supply chains.

One of the positive results of globalisation is that it has increased relationships and integration among organisations around the world. This has led to an increased awareness of the opportunities for market expansion and alternative sources of supplies for raw materials required for the production of goods. 

The potential to benefit from access to new markets and cheaper raw materials has encouraged organisations to expand their supply chain processes beyond national boundaries.

The expansion of supply chains beyond national boundaries has had its benefits and shortcomings. The benefits include low cost of raw materials and access to low labour rates. The shortcomings include risks of disruptions due to exposure to adverse government regulations, labour laws, geopolitical issues, pandemics, natural disasters, and transportation and logistics challenges. 

The risks associated with global supply chains can cause disruptions that affect the ability of organisations to source raw materials and timely deliver goods to their customers. The uncertainties associated with conducting supply chain activities across different countries demand planning and proactive coordination of operations to ensure that supply chain processes promptly recover after or remain stable amid disruptions.

Traditional vs digital supply chains

Traditional supply chain models are generally ill-equipped to manage the demands that contemporary production methods and consumer demand patterns place on supply chains. This is because they are reactive and rely largely on manual processes and standalone systems.

Digital supply chains are, however, more adaptable to the demands of the present-day technology-driven and interconnected world. This is primarily because they rely on the use of technology to manage the physical supply chain (procurement of raw materials, logistics, and production of goods) as well as the financial supply chain (financial requirements linked to each physical supply chain event).

Through digitalisation, organisations have been able to leverage electronic data from supply chain activities (the information supply chain) to accurately manage their inventory and production levels by forecasting consumer demand and the risk of disruptions within their supply chain ecosystems. Through digitalisation, organisations have been able to achieve the following in their supply chain activities:

Transparency

Digital transformation has ensured the real-time collection and dissemination of information from events within global supply chain ecosystems. The information covered includes internal information about production and external information about the sourcing of raw materials, labour practices, and ESG considerations.

The transparency offered by the clarity and availability of information on global supply chain activities has built trust and enhanced visibility and responsiveness between manufacturers, their suppliers, and customers. In addition, the use of artificial intelligence (AI) has aided the real-time monitoring of shipments and enabled the provision of information on the condition of goods in transit and storage.

As supply chains have evolved into global and complex structures, the need for end-to-end management of activities, processes, and events within the network has become critical. Digital global supply chains have also enhanced the effectiveness of supply chain control towers in acting as shared service centres where information about physical and financial supply chain events is stored for easy dissemination across organisations. This has led to improved transparency and visibility across the supply chain.

Efficiency

The use of technologies such as robotics, machine learning, and AI across supply chains has enhanced efficiency by improving productivity within supply chain activities by improving the speed and accuracy of operations as well as optimising routes for transportation and logistics. 

The digitalisation of operations within global supply chains has also increased efficiency by automating previously manual tasks such as returns, refunds, customer service functions, and scheduling of appointments

Some of the technologies used within global supply chains are useful for forecasting customer demand and managing inventory levels. This has enabled organisations to manage their inventory levels against prevailing demand for their products to avoid having funds held up in inventory as excess raw materials or goods. 

AI and machine learning technologies are also being used to manage the reduction of carbon emissions and eliminate waste in supply chain activities. They have proven useful in cutting inventory and logistics costs by identifying sources of inventory damage such as poor or malfunctioning storage facilities.

In addition, the use of cloud computing has enhanced real-time visibility of data across supply chain ecosystems, forecasting, predictive analytics, and logistics management thereby enhancing the identification of opportunities within the supply chain and operational efficiencies.

Resilience 

The volume of data generated and disseminated across organisations as a result of technology and digital transformation has helped organisations maintain effective end-to-end oversight over events in their supply chains. 

Organisations have used the data available to them to model, anticipate, assess the likelihood, analyze the impact of, and take preemptive actions to minimise or eliminate the effects of potential risk events within their supply chains. 

The use of AI machine learning and Internet of Things technologies has enhanced resilience in supply chains. Through predictive and prescriptive analysis of electronic data, these technologies have improved the forecasting and monitoring of consumer demand, inventory, supplier performance, and availability of raw materials thereby enhancing the accuracy of decision making thus contributing to the reduction of costs.

Technological advancements such as data analytics, enterprise risk management systems (ERM), and enterprise resource planning systems (ERP) are also making it easier to gather and analyse risk data across supply chain activities.