Definition

digital supply chain

Contributor(s): Diann Daniel

A digital supply chain is a supply chain whose foundation is built on Web-enabled capabilities. Many supply chains use a mix of paper-based and IT-enabled processes. A true digital supply chain goes far beyond this hybrid model to fully capitalize on connectivity, system integration and the information-producing capabilities of "smart" components.

The ultimate goal of the digital supply chain is to enable insights for increased efficiencies, doing away with waste and facilitating greater profits. Companies with a digital supply chain are better able to move resources, assets, people and inventory to where they are needed at any given time in order to reduce costs by responding proactively to transportation and manufacturing risks. The potential payoffs of a fully realized digital supply chain include savings in every area, from resources, time, and money to a reduced environmental footprint.

Ideally, a digital supply chain has processes that monitor real-time inventory levels, customer interactions with products, carrier locations, and equipment and uses this information to help plan and execute at increased levels of performance. Technologies such as GPS tracking, radio frequency identification (RFID), barcodes, smart labels, location-based data and wireless sensor networks all play a part in a digital supply chain. In addition, cloud technologies integrated with Web services can unify information and processes to create trading-partner visibility and more efficient collaboration. 

Building a digital supply chain requires a comprehensive strategy that is a fundamental part of the business plan and that weaves in organizational structure, operations, systems, physical assets and processes such as procurement and payment. Tacked-on efforts, in comparison, can result in silos, data duplication and inefficiencies.

 

This was last updated in March 2016

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