For years supply chain management has involved a series of processes completed in disparate legacy systems. In today’s hyper-competitive digital business world, however, enterprises face challenges rising from customers’ demand for more customized products via varied channels and with faster delivery times. To meet this demand, enterprises need better collaboration and communication with their suppliers, vendors, manufacturers, logistics managers, inventory managers, and anyone else involved in every stage of a product’s life and its journey through the supply chain.
Digital transformation provides organizations with a way to meet this challenge and get a leg up on their competition. But what is digital transformation? What does it mean to supply chain managers? I think you could talk with five different people, and you would end up with five different definitions of what this term means.
According to SAP, “Digital transformation is a fundamental rethinking of customer experience, business models, and operations. It's about finding new ways to deliver value, generate revenue, and improve efficiency – and companies are using innovative technologies to do it.” (For more information click here.)
Technology and Business Impacts Are Equally Important
One of the biggest mistakes companies make when it comes to emerging technologies is that they focus on the technology first without really examining where in the business it can be best applied for the greatest return on investment (ROI).
For example, most current supply chains are more reactive than proactive. But technologies such as artificial intelligence (AI) and Internet of Things (IoT) enable you to flip that model. You can receive feedback from IoT devices on assets in your supply chain that provide you with real-time information about the status of an asset and the ability to take corrective action when necessary (for example, monitoring the temperature of stock in transit via trucks and knowing when the temperature is nearing the point where the integrity of the product is endangered).
The ability to create digital twins of products and scenarios without actually building them enables you to simulate conditions of an asset in the field and make adjustments before you actually build the product or asset (for example, monitoring the performance of a wind turbine in real and simulated conditions).
You can use robotic process automation to intelligently automate key processes, eliminating manual error and reducing the amount of resources required.
With predictive analytics functionality you can improve the accuracy of your demand planning for optimized inventory management and can better forecast the impact of different market conditions and changing customer behavior.
Key Concerns for SAPinsiders
When it comes to the technology underpinnings for digital transformation there are some core decisions and questions every SAPinsider must consider closely:
- When and how should you consider SAP S/4HANA? SAP S/4HANA is being positioned as the de facto standard for next-generation ERP. The migration or upgrade to SAP S/4HANA carries with it many decisions and intricacies of its own. Every company must build its own business case, but keep in mind that you should not underestimate some of the technical impacts and decisions you will need to make, such as how to migrate your existing custom code and whether you need all your custom apps, configurations, and reports that you’ve built.
- Should you deploy SAP S/4HANA on the cloud or not? Much of the answer to this question links to your appetite for hosting data in the cloud and giving up some control and customization capabilities.
- Should you upgrade or reimplement via greenfield? Again this is linked to amount of work you estimate you need to do for your migration and whether it will be more cost-effective just to start over.
- What emerging technologies should you start to invest in and how? We mentioned several of them, such as AI and predictive analytics, earlier, but each also carries its own set of requirements and applications. The good news is that SAP has productized different scenarios such as predictive maintenance, which makes it a bit easier to implement and support. SAP has also made many of these available via cloud deployment models. You should always look at these types of offerings as they will ease your implementation and support burdens.
We plan to cover these issues and their impacts extensively in our first SAPinsider benchmark report, “Digital Transformation in the Supply Chain.” The objective of this research is to help you:
- Learn about the drivers, actions, requirements, and technologies you need to become a digital enterprise
- Understand the strategies to use and the tools you need to build a digital supply chain
- Learn about how industry leaders execute digital supply chain strategies
We hope this article and upcoming report will help you better keep pace with the fast evolution of today’s business processes and find ways to ease pain points you may have on your organization’s journey to becoming an intelligent enterprise.
If you would like to discuss leading digital SCM industry trends and technology issues, feel free to email us at firstname.lastname@example.org and email@example.com. Follow us on Twitter: @SAPinsider and @FI_SCM_Expert. You can also get more information on SAP S/4HANA at the upcoming SAPinsider conferences. For more information click here.