Conventional wisdom says it takes three to five years and tens of millions of dollars to digitize a corporation’s supply chain. However, a few companies have reaped major benefits—including higher revenue and customer retention—with a faster, cheaper approach. It involves assembling available data; using analytics to understand and predict customers’ and suppliers’ behavior and optimize inventory, production, and procurement; and adding automation to revamp or introduce processes. The transformation requires three main initiatives: replacing consensus forecasts with one unified view of demand, changing one-size-fits-all supply strategies to segmented ones, and creating a plan to continually balance supply and demand and manage deviations or disruptions.
Buy CopiesDigitizing a company’s system for managing its supply chain is a megatransformation project that takes three to five years and costs tens of millions of dollars.
There is an alternative: Substantial benefits can be reaped from a modernization effort that takes 12 to 24 months and costs a few million dollars.
Assembling readily available data; using advanced analytics to understand and predict customers’ and suppliers’ behavior and to optimize inventory, production, and procurement decision-making; and adding some automation to revamp existing processes and introduce new ones.
Most executives believe that digitizing a major corporation’s supply chain costs tens of millions of dollars. The assumption is that it will be a massive three- to five-year transformation effort—requiring major investments in cloud technology, the installation of RFID tags and readers on every product container and in every facility, the deployment of 3D-printing and robotics technologies, and new instruments on machines on the shop floor to monitor their performance and condition. All that is necessary, the thinking goes, to break down the walls between functional areas and create an integrated supply chain that provides a competitive advantage.
