Supply Chain 2.0

Supply chain transparency, efficiency and flexibility is a matter of prime importance for businesses of all shapes and sizes. In this age of digitization, businesses are looking to drive cost out of the supply chain, while expecting suppliers to be highly adaptive to their needs and open and ethical in their practices.

In cluttered chains where paper has reigned, it is clear the rate at which companies can modernize and digitize will be vital for their long-term success.

So what are the key steps to turning dusty ledgers into a world-class digital supply chain?

Migrate to a supply chain platform

Competent companies achieve a company-wide digital supply chain. But for global performance, it is necessary to expand the digital supply chain to suppliers and clients too. A popular approach is to enroll on a digital supply chain platform, which allows all participants to interact on a level playing field.

The market leader in supply chain payments and marketplaces is Tradeshift, with more than 1.5 million members on its platform, including around 125 of the Fortune 500. The platform offers a common space to send and receive digital invoices, optimize supplier payments, manage inventory, and find suppliers and customers.

"Supply chains used to be stable," says Tradeshift founder and CEO Christian Lanng. "It took time to register new suppliers and integrate them. That was fine if you were going to work with the same partners for five to ten years. But business has changed, technology is evaporating whole industries," says Lanng. "Incumbents are being disrupted. So large companies are seeing flexibility and agility as being as important as robustness and cost savings were in the past."

Cloud-based supply chain platforms offer accelerated processes needed for this new environment. For example, on Tradeshift, member companies can generate and transmit an invoice to another member in seconds. Onboarding new suppliers is also near-instant, as they are likely to be already on the Tradeshift platform.

Platforms like Tradeshift do not only solve the supply chain needs of the present, they're built to adapt and solve challenges of the future. Tradeshift, for instance, allows anyone to create apps on the platform to solve particular business needs. This circumnavigates the need for companies to have to procure additional systems when new challenges arise.

Collect more data

The next task, when moving to a digital supply chain, is to collect every drop of data. No activity can be left off-grid.

Costa Express, the self-service division of Costa Coffee, with machines in 8,000 service stations and restaurants across the UK, is a great example. The service team originally used shared spreadsheets to collect data – unbearably time-consuming for a large and growing operation. So Costa switched to a digital supply chain tool. The solution uses machine telemetry to gather and transmit real-time information on sales and stock. This data is immediately integrated and reported using an ERP dashboard.

Six months after going live with the new digital system, Costa Express declared a 20 percent reduction in field stock held at partner sites, 30 percent reduction in annual logistics operating costs and associated annual CO2 savings of 70 tons. Over the long term, a digital-supply chain has given Costa Express the ability to expand without limits.

Push analytics to the limit

A digital supply chain offers immediate benefits in terms of operational efficiency. But an even bigger payoff is strategic.

When data is available, businesses can deploy analytical tools, no matter the subject in question. For example, airlines use predictive analytics to estimate when engine parts will fail, to estimate flight no-shows, or to optimize over-booking.

Lipari Foods is a powerful illustration in the logistics sector. Founded in 1963, Lipari Foods delivers 150 truckloads of groceries to 8,000 customers over an 800-mile area. Joe Beydoun, head of supply chain management and business intelligence at Lipari Foods, says: "Supply chain data has evolved to more than just transactional data from an ERP or Warehouse Management System. Today in 2018, we have various data sources that we capture, collect, and react to in a near real-time state."

Lipari Foods uses IoT data and analytics to optimize the layout and slotting of more than 22,000 stock keeping units in its state-of-the-art warehouse. Delivery vehicle telematics data is added to inventory updates and real-time performance measures from warehouse equipment. Exception-based reports are automatically distributed when activities fall outside typical parameters, helping Lipari address potential errors in orders and shipments.

None of this would be possible with a manual-managed supply chain.

Keep Searching for Innovation

Digital supply chains are alive with innovation. The best companies will always be on the look-out for the next breakthrough. The message for companies is simple: the digital supply chain will be at the heart of commerce for all businesses, in all sectors, from invoicing to inventory.

"You can't run your business on manual processes," says Lanng. "Leading companies will embrace the digital supply chain. Those that don't stand to go the same way as companies that ignored the internet."

Tradeshift drives supply chain innovation for the digitally connected economy. As the leader in supply chain payments and marketplaces, the company helps buyers and suppliers digitize all their trade transactions, collaborate on every process, and connect with any supply chain app. More than 1.5 million companies across 190 countries trust Tradeshift to process over half a trillion USD in transaction value, making it the largest global business network for buying and selling.

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This page was paid for by TRADESHIFT. The editorial staff of CNBC had no role in the creation of this page.