A digital supply chain is a visible supply chain
Sustainability and resilience. Some might call these the buzzwords of the moment. But we know better. That’s because we’ve always had a backstage pass to the many supply chain disruptions that take place around the world, few of which make headlines like the container ship Ever Given getting stuck in the Suez Canal. Natural disasters, geopolitical crises, and other incidents always send supply chain managers scrambling.
In recent years, the world has witnessed the heavy impact of a global pandemic wreaking havoc up and down international supply chains. From toilet paper and personal protective equipment to computer chips, the nearly universal just-in-time manufacturing model was put to the test. Many are questioning the virtue of this low-cost, high-risk strategy.
But the problem may stem less from the fundamental fragility of the just-in-time model and more from a lack of supply chain visibility and digital supply chain management. Many supply chains remain stubbornly traditional, with siloed processes that may be linked electronically but aren’t truly integrated and are not fully leveraging advanced digital technologies. Such supply chains tend to be reactionary and less resilient, which falls short in today’s environment.
That’s why forward-looking companies are building intelligent, interconnected, and international networks – supply chain management systems that work in real-time, act proactively, and adapt dynamically. In other words: digital supply chains that can predict and prescribe – and be ready for the next disruption.
Warehouse digital twins are an ideal place to test the performance of a digital supply chain.
What is a digital supply chain?
Also called “Supply Chain 4.0”, a digital supply chain is an integrated model in which information flows omnidirectionally up, down, and across the entire system. It breaks from the linear model where information moves from supplier to producer to distributor to consumer and back. But it retains the essential elements of the pre-digital approach. For example, we will still need to order goods and services, select suppliers, ship and receive goods, make forecasts, and more. The difference is the technology we use, how we link it all together, and how we learn from the gathered data.
So, while the moving parts of a digital supply chain still need to be well-oiled, the entire network must be well-connected for it all to work.
A digital supply chain harnesses the latest technologies, such as big data analytics, automation, cloud computing, blockchain, robotics, Internet of Things (IoT), and more, to digitalize everything and integrate it into one intelligent system. Digital supply chain management involves leveraging this system to gain significantly better insights and develop highly efficient processes. This starts with real-time visibility across the chain, allowing stakeholders to see what’s happening at every link and respond quickly, flexibly, and more accurately to changing demand or supply situations. And with the integration of powerful innovations, such as predictive analytics and machine learning, digital supply chain managers can develop new approaches to product distribution, such as predictive shipping.
How do you build a digital supply chain?
Since the advent of e-mail and the internet, most business processes are now electronic, in one form or another. This is no different in logistics and supply chain management. There are thousands of applications on the market – from warehouse, transportation, and logistics management to demand planning, procurement, and order fulfillment. But these typically siloed tools will need to start talking to each other so that there is a more efficient data exchange along and across the supply chain.
Cloud-based service applications and application programming interfaces (APIs) are the keys to this process. They form the framework for a truly digital supply chain and the fuel for the real-time data processing and cloud-based platforms needed to run it. Cloud supply chains integrate every piece of a global logistics management system into one cloud-enabled dashboard, where each link in the chain is recorded, coordinated, and orchestrated. APIs are software protocols that allow applications to communicate and exchange information. Think of them as software superglue that seamlessly connects every touchpoint in the cloud supply chain and ensures smooth data delivery wherever it is needed.
The next critical component of a digital supply chain is data, data, and more data! It’s data that drives the entire system. Without it, you won’t have the visibility and intelligence you need to optimize routes and relationships, reduce waste and environmental impact, and adapt to demand and disruptions.
This is where things get tricky because a truly digital supply chain involves rethinking the entire network – from design to monitoring and execution. First, you need to look at the supply chain more holistically and fully understand it across a product’s entire lifecycle. Next, you need to deploy sensors, next-generation wireless, blockchain, and other technologies to create an Internet of Things (IoT) to improve and accelerate automated data exchange and monitor processes. Then you need to collect and manage all that data to run the system, predict risks, and mitigate disruptions. And to do all that you’ll need a scalable, cloud-based supply chain management solution.
One exciting technology we see as a tipping point is the digital twin. This is a virtual model or digital copy of a physical process that allows you to manage both the physical and virtual worlds as one. With machine learning and predictive analytics, a digital twin can also be used to simulate scenarios and test the performance of a digital supply chain. Warehouse digital twins are an ideal place for this technology to take hold in logistics. But it’s digital twins of entire supply chains that will transport the logistics industry to the next level.
Five ways digital twinning will revolutionize logistics
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Turning to the cloud
Collecting and managing all the information needed to run a digital supply chain requires a scalable data lake and linking everyone to it. To take a further step in this journey, we’re partnering with Google Cloud to deliver scalable cloud services. We also established an API Center of Excellence (CoE) to bring together API experts from across our global organization, with a mission of improving the experience of software developers who use logistics solutions in their applications. By embedding APIs into their systems, our logistics customers can seamlessly access logistics services, digitally enabling them to book shipments, create labels, track packages, and much more along the supply chain – all in one place.
Our global API platform is the foundation of our collaboration with Google Cloud and an essential cornerstone of digital supply chains. Using cloud APIs, we can supply the connectivity and processing power needed to integrate information and exchange data with our customers’ operations. In the first quarter of 2021 alone, Google’s cloud API services provided seamless scaling technology to serve a record number of tracking events on dhl.com – more than one billion per month, with zero downtime. This is triple the volume of 2020.
The journey to digital supply chain management
We’ve been following the trends and transitioning to digital for years, innovating and introducing new technology along the way. We developed DHL Resilience360 – a cloud-based risk assessment tool that helps companies manage disruptive events by mapping their supply chain end-to-end, building risk profiles, and identifying critical hot spots. That solution was combined with Riskpulse to create Everstream Analytics. We launched MySupplyChain to give customers integrated warehouse and transportation insights that provide a near-real-time view of inventory and warehouse level order status across their entire network. We also started creating smart warehouses that leverage the latest wave of technological innovation, such as collaborative robotics, augmented reality, autonomous vehicles, sensor technology, and more.
It’s clear that a digital supply chain that predicts and prescribes is necessary to manage logistics in a more connected and complex world. Supply Chain 4.0 is the only way to ensure sustainability and resilience now and in the future.
Published: March 2022