Digitalization as a Tool for Managing Supply Chain Disruption

The global pandemic disrupted global supply chains, along the way testing the ingenuity, resilience and flexibility of these vital networks. With the long-term impacts of the outbreak—plus labor shortages, rising material costs, transportation capacity crunches and other issues—continuing to impact supply chains around the world, organizations are looking for innovative ways to address their immediate pain points while also planning for the future.

What is Digitalization?

Vital lifelines that keep essential supplies, food and other key necessities flowing to where they’re needed most, global supply chains are in a tight spot right now. For help getting these networks back online and operating properly, a growing number of companies are looking to digitalization.

Defined by Gartner as the “use of digital technologies to change a business model and provide new revenue and value-producing opportunities,” digitalization is the process of moving to a digital business.

Digitalization increases productivity and efficiency while reducing costs. It also improves an existing business process or processes without changing or transforming them. In other words, it transitions a process from a human-driven event (or series of events) to a software-driven one.

For example, when procurement has tools that provide instantaneous access to product availability data—and when it doesn’t have to “call around” or email multiple different suppliers to get available inventory data—buyers can make quick, on-the-spot decisions. This is particularly important in the electronics realm, where availability is scarce and demand is very high right now.

“Companies that have rapid access to data can find alternative sources for parts more successfully than those that have to manually review price books and/or search for parts on their suppliers’ websites,” said Tony Powell, CTO at digital supply chain integration solution provider Orbweaver.

Once artificial intelligence (AI) and machine learning (ML) are added to the equation, digitalization’s business case in the supply chain environment gets even stronger. For instance, an AI-enabled software platform can search across hundreds or even thousands of different suppliers for a specified part, replacement part or comparable part in just minutes. A similar search across 10 or fewer suppliers may take one buyer hours to handle manually. 

“Using technology, buyers can complete broad searches and find alternative sources that aren’t necessarily obvious on the surface,” Powell pointed out, “and make fast decisions that keep production lines running.”

Using Tech to Manage Unprecedented Challenges

The current supply chain shortages are unlike anything most electronics buyers have seen in their lifetimes. As the situation continues to create challenges for companies across most industries, there are also opportunities emerging for organizations that want to come out of the situation stronger and more resilient.

“Because the situation isn’t going to rectify itself quickly, this is a great time for companies to turn to technology for help solving the sourcing issues that they’re dealing with,” said Powell. “There’s still time to adopt and implement digital solutions.”

For companies that are just beginning their digitalization journeys, Powell sees supplier integration as a good starting point. Look for solutions that support real-time requests for parts and components across the entire supply base, and that can sort through millions of parts—plus alternates, availability, lead times and pricing—in just a few seconds.

With this data in hand, buyers can make fast decisions on parts and components that may be available in the supply chain, but that don’t sit still for very long. “This real-time and instantaneous access to data from your suppliers can help alleviate some of the supply chain pain points companies are experiencing right now,” said Powell.

Sharing Data is Important

Powell also tells procurement to focus on forming strong bonds with their suppliers with an emphasis on good data sharing—something that may have been less feasible to arrange before the global pandemic turned supply chains on end. “Where in the past there may have been some reluctance to share the data,” said Powell, “everyone now seems to be moving in the same direction, which is really good news.”

Here’s another piece of good news: The transition to digitalization doesn’t have to be daunting, nor does it have to be all-encompassing or disruptive. By taking small steps in this direction, perhaps starting with supplier integration, companies can begin leveraging the power of digitalization quickly.

“The process of leveraging digital technologies can be really straightforward,” Powell concluded. “Even minor tweaks to existing business processes can add tremendous value by improving access to information, enhancing productivity and making the procurement process more efficient.”