The Digital Supply Chain

The Digital Supply Chain
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Graham Conlon, VP, head of SAP Digital Supply Chain, SAP Asia Pacific & Japan discusses the 2020 edition of Industrial Transformation Asia Pacific (ITAP), the digital supply chain, and SAP’s role in the Smart Industry Readiness Index (SIRI).

Graham Conlon, VP, head of SAP Digital Supply Chain, SAP Asia Pacific & Japan

Industrial Transformation Asia Pacific (ITAP) 2020 comes at an epochal moment in time, when industries and businesses in Asia are looking at ways to build back better from Covid-19. 

Organisations understand that business as usual is no longer an option, and to ensure growth and resiliency against future shocks, they must step up their investments in technology and digital transformation. 

It is not just about Covid – disruption can come in many shapes and forms, and businesses must be agile and ready to address them. 

One of the highlights is the focus on collectively helping the industry recover and rethink their production and supply chains in the wake of Covid-19. 

Being able to see examples of companies being resilient and moving on from this is testament to the importance of adopting Industry 4.0 solutions and digital transformation. 

Hearing and learning about their challenges and success will definitely inspire other companies, be they large or small, to hopefully follow suit. 

On the SAP front, delegates had interesting discussions during our expert-led sessions on SAP Industry 4.0 solutions from ‘Design-to-Operate’ and ‘Design-to-Consume’, as well as guided tours including a LIVE stream from SAP Experience Centre. 

Our sessions for SMEs were also well received. The robust discussions and technology showcase really highlighted the increased premium on resilience. 

 

The Digital Supply Chain

Building on the theme of Industry 4.0 and resilient supply chains, SAP believes that one way manufacturers can ensure viability and relevancy is to embrace a predictive and intelligent digital supply chain model. 

With a digital supply chain, businesses will be able to obtain an end-to-end digital view of their entire supply chain from the status of manufacturing partners to last mile delivery. Such complete visibility allows businesses to plan ahead and ensure supply chains remain intact at all times. 

In addition, the intelligent capabilities of a digital supply chain assists businesses in predicting surges and offers alternatives when disruption occurs. Supply chains, like any other chain, are only as strong as the weakest link.

It is also important to note that under this new normal, supply chains have a direct impact on the quality of customer experience as more consumers are engaging with businesses online. 

With this in mind, forward-thinking businesses must look to transform their supply chains from a cost centre into an opportunity centre capable of helping them exceed customer expectations and go on to thrive in this new digital paradigm. 

The reality is post disruption, we do not go back to the same place (the new norm) so businesses need to be agile as much as resilient.

Smart Industry Readiness Index

The first iteration of the Smart Readiness Index was developed in consultation with several knowledge partners, including SAP. 

As a planning tool, it helps manufacturers prioritise focus areas and digital initiatives based on their Industry 4.0 maturity. Any index to gauge a business’ level of technology readiness will help allow businesses to understand the gaps and make a case for digitisation. 

In many emerging economies, the manufacturing sector is the backbone of the economy.  A steady recovery in the manufacturing sector can be boosted by the right digital transformation. 

Many manufacturers in these economies tend to be SMEs with limited resources, so it is especially important to help them understand where to invest to ensure the best outcomes. 

Singapore is already positioned as a leader in advanced manufacturing, and this partnership with Singapore Economic Development Board (EDB) and the World Economic Forum (WEF) to establish Singapore’s Smart Industry Readiness Index as an international standard for Industry 4.0 transformation can only help the industry, and serve as a platform to also share best practices. 

Transforming the Smart Industry Readiness Index into a global standard is a step in the right direction. 

 

The Challenge Of Digital Transformation

Sometimes the biggest challenge is the misperception that digital transformation is just about updating or changing systems. 

Businesses need to take an integrated design to operate approach —from design, planning and manufacturing to logistics and ongoing maintenance – which allows them to design smarter, address issues with insight and continuously innovate. 

While resiliency cannot be achieved overnight, there are things that can be done in the shorter-term to better understand the drivers of demand volatility and supply reliability, allowing companies to better match supply with demand. 

Companies that have more resilient supply chains and those that are looking to accelerate the process tend to be:

  • Using integrated, cloud-based supply chain planning applications – less reliant on spreadsheets
  • Digitally connected across functions and organisations
  • Leveraging digital technologies like A.I. and advanced analytics
  • Comprehensive visibility into supply (and to a lesser degree) demand risk
  • Have predefined crisis-management resources

 

Best Practice

One of the steps manufactures can take is to explore the concept of ‘parallel supply chains’ – which could now include alternate sourcing strategies, local manufacturing capabilities, inventory optimisation to have strategic buffers of key products, components and raw materials. 

The ability to conduct scenario planning and simulations to plan out risk mitigation strategies will be crucial. To deliver this, supply chains need to be digital and holistic. 

Supply chain is a much higher priority and is more aligned with the digital transformation agenda due to Covid. There is now an urgency to adopt Industry 4.0 – it is no longer a matter of if I should adopt a digital strategy but how can I pivot to technology and reorient my business to become an intelligent one. 

Organisations need mechanisms to put visibility into their supply chains in order to cope with current volatility and future uncertainty. This will vary across geography, industry and company maturity. The important thing is to start now and drive adoption based on business benefit.

 

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