Examples for Supply Chain Optimization Through Digital Transformation
Leveraging Technology for Supply Chain Optimization
Digital transformation in the real world is driven by technology that is reshaping every aspect of how businesses operate. With the rapid changes taking place in the market, the margin between commercial success and failure has narrowed substantially. How organizations adapt to these changes will determine how well they do in the new economy.
But was does it mean to become a digital enterprise and how do you successfully transform your business? The key is to rethink the concept of digital transformation. It’s not a one-time project with a start and end – it needs to be viewed as a continuous journey enabling continuous improvement.
In this blog, I will review two examples of how organizations are leveraging digital technology for supply chain optimization and future-proofing their business.
1. ZARA: Faster sales powered by a customer-driven supply chain
Global retailer ZARA has taken “fast fashion” to a whole new level by consistently shattering industry averages for getting their designs into their stores and turning over their inventory. Here are some impressive statistics* on how they have streamlined operations:
- Design-to-store in 15 days (industry average: 6-9 months)
- Up to 12 inventory turns per year (industry average: 3-4 times per year)
- 85% of factory capacity reserved for in-season adjustments
- Only 10% of unsold items (industry average:17-20%)
They have accomplished this by owning and controlling their entire supply chain that is completely customer-driven. The company leverages technology to extensively monitor their social media channels enabling them to react quickly to consumer trends and bring new collections into their stores in as little as two weeks versus months it takes for competitors.
2. Kotahi: Optimizing the Supply Chain
Moving goods to more than 400 destinations worldwide, shipping company Kotahi wanted a better understanding of their demand forecast with the goal of optimizing their global supply chain to achieve higher cost-efficiencies. By combining Microsoft technology with powerful business intelligence capabilities, Kotahi was able to:
- Reduce the forecast cycle from 4 days to 30 min
- Boost forecast accuracy from 80 to 90%
- Create 100,000+ forecasts
To achieve this, the company is leveraging a machine learning model based on Microsoft Dynamics 365, Azure and Power BI. They also achieved better transparency by enabling business users to drive automated reporting which reduced manual processes. Users get instant results allowing them to make faster and better decisions.
So, will you disrupt or be disrupted?
These are just two examples of companies disrupting their respective industry and carving a competitive edge for themselves. But what’s required to achieve such a transformation? To accomplish long-term success, organizations need:
1. Leadership and vision
Digital transformation is not a goal, it’s an ongoing process that involves continuous improvement. It requires leadership to view their entire organization holistically and engage every aspect of their business – from operations, production, and finance to distribution, sales, and customer service.
2. Ability to capture and understand customer expectations
To bring the right product to market, organizations need to understand what the market wants. Consumer expectations are constantly evolving so companies need to be able to capture sentiments and react quickly to changing demands.
3. Analytics-driven decision making
Organizations need a plan on which they can execute. But to be able to do this successfully they need the right data and the ability to act on that data in a timely manner.
Ultimately, companies need to move from a system of records to a system of engagement coupled with insight. It’s no longer just about data, but what you do with that data to leverage its full potential. To turn into a digitally enabled organization and streamline your supply chain, you need to have the ability to harness data and combine it with machine learning and optimization techniques to get a better understanding of your customers and your entire business. This will enable you to create a digital advantage that can set you apart from your competitors.
Want to know more?
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