Everyone’s going digital with their supply networks, aren’t they? Well, no, they aren’t. They should be, but in my conversations with clients and colleagues, it’s my estimation that only about 30% of companies are in the process of implementing a digital supply network (DSN). Probably another 60% plan—or want—to, but they don’t know how to get started, or they can’t secure buy-in. What’s the big deal? Do DSNs live up to the hype? Yes, if you do it right.
This week and next, I’m going to discuss the benefits and key challenges of building a DSN, and we’ll take a look at some real-world examples of how companies are improving their operations by taking on the challenge to leave the traditional supply chain behind and move to an interconnected network that helps you create a strategic advantage and grow your bottom line.
When you create a DSN, you do truly leave the old supply chain mentality behind. Information no longer flows linearly. Instead, you create an ecosystem where information flows to and from who and where its needed, when its needed, to maximize efficiency throughout the network. Information latency is no longer an issue, because on-demand, near real-time information flow creates almost instantaneous insights that are accessible to all interested and authorized parties.
DSNs—What They Can do for You
The benefits of these freed-up, on-demand information flows are enormous. First, more timely information can help you reduce costs by improving efficiency. The back-and-forth data flows can also help you gain the information you need to make product improvements more quickly, which results in more satisfied customers. More satisfied customers leads to a better reputation, and with that reputation and better information in the hands of your management and salespeople, your sales effectiveness can soar.
On a macro level, increased information flow speed gives you the insights you need to develop more effective business strategies, which leads to more business opportunities and helps you create new strategic advantages.
It’s all about the flow—and the speed. If you know more things more quickly than your competitors, you can make quicker decisions and meet market demands faster, which makes you flexible enough to change with the markets—and you know they don’t ever sit still.
As with anything worth having though, there are some challenges to building a true DSN. They’re daunting, but not insurmountable, and it’ll be worth it in the end to meet them.
Talent will be your first obstacle. Advanced analytics capabilities are the heart of any DSN. And, if you haven’t been hiding under a rock for the past five years, you know that the demand for analytics skills is currently outpacing supply. Fortunately that’s changing. More universities are turning out more quant jocks these days, and more IT people are re-skilling to meet the need.
Data management will be your next hurdle. If you don’t have clean, organized data, it will be hard to make it flow through the ecosystem. Governance is key, along with programs to remove information silos across your enterprise, and then from your supply network at large, to build a consistent, high-quality data set for your supply network—end to end.
Unfortunately, perhaps the biggest challenge you’ll have to overcome is the “yeah-buts.” Yeah, but we’re doing fine with what we have. Why should we invest millions in some supply matrix technology we don’t understand? Yeah, but can you show the business value before we spend all that money? Yeah, but do we have the buy-in from our stakeholders and partners that we need to pull this thing off? The list is endless, but you get my point.
These political challenges will represent the biggest threat to your DSN project. Do everything you can to educate all stakeholders—your Board, your C-suite colleagues, your suppliers, and your customers. Build a sound business case to show them how this thing will benefit them. There’s a litany of information out there about the benefits and value of building a DSN. Like the Caveman commercials say, “Do a little research.” Don’t just build it. They will not come. Build the business case. Show the value. Get the buy-in.
No doubt, building a DSN will give you the timely information and insights to help you compete more effectively. You’ll be able to create better products, move them more efficiently, and satisfy your customers on a whole new level. Next week, we’ll discuss some real-world examples of how DSNs deliver on their promise. Stay tuned!