Five Steps to Developing a Supply Chain Digitalization Strategy

Corporate boards delivered a strong message to their senior executives following the worst days of the pandemic: fortify the supply chain to reduce the risk of future disruptions.

One of the ways executives are responding to that challenge is through increased supply chain digitalization and warehouse automation. But the path to digitalization isn’t always straightforward and is marked by its own set of risks. Unless properly planned, new technology can disrupt operations, fail to deliver the expected value and reduce future flexibility.

Here are five steps organizations can take to develop a supply chain digitalization strategy that leverages the value of innovation while effectively managing the risks.

1. Let Priorities Drive Strategy

It would be ideal to have a five-year strategic plan that outlines the innovative technologies you will introduce in the coming years, but that isn’t feasible today—at least not in any detail. Solutions are too immature in some areas and there is too much uncertainty around future requirements. But that doesn’t mean you should sit back and wait. The labor challenges within the industry today simply can’t be ignored. Organizations that delay moving forward with labor-saving technology investments risk being unable to deliver reliable service to their customers. That makes the first step in the automation journey clear: identify labor-intensive, repetitive tasks that lend themselves well to automation.

2. Understand the Innovation Landscape

The next step is to identify the type of technology that is the best fit for your application. This is where things can get complicated. The supply chain technology market is dynamic and encompasses dozens of companies, which can be overwhelming for managers whose primary focus is keeping goods flowing. At DHL Supply Chain, we proactively address this challenge through our proprietary innovation process.  At the top of our innovation funnel are dozens of established and emerging technology vendors whose solutions we track through the development process. The most promising of those solutions then advance through the funnel to a proof-of-concept stage before being scaled across our network. Not every organization will have the resources for this type of in-depth market analysis, but they can access it through partnerships. 

3. Know Your Risk Tolerance

Some organizations are very comfortable being “early adopters.” They are willing to assume some degree of risk for an opportunity to experience benefits early in a new solution’s lifecycle. Others want to see a technology proven in multiple applications before they will even consider adoption. Each approach can be valid and effective. To some degree, it’s a matter of how much time and resources an organization is willing to invest during the early days of the implementation. Pilot programs are a good strategy for minimizing the risks of early adoption. But if your organization is risk-adverse, you’re better off focusing on solutions that have a proven track record in applications like yours.

4. Maintain Operational Flexibility

Different supply chain technologies require varied levels of investment and commitment. For example, Locus Robotics has a robot-assisted picking system that is highly scalable and is delivering productivity improvements of 300% or more for DHL Supply Chain’s eCommerce customers. But that doesn’t mean there won’t be a more effective item-picking solution available in the future, whether due to advances in the Locus Robotics line or the emergence of completely new technology. Either way, solutions like autonomous mobile robots don’t require significant changes to warehouse infrastructure – although you’ll want to be prepared for making some process changes to optimize the solution within your operations. Autonomous mobile robots enable the flexibility to implement complementary solutions or replace one solution with another when additional value can be realized. Be careful about locking your organization into inflexible technologies as the innovation market continues to quickly evolve. 

5. Partner for Success

Digitalization in today’s supply chain is an ongoing process that must be executed with discipline while also maintaining the flexibility to adapt to business and technology changes. Few organizations have the internal resources to monitor the dynamic vendor landscape, vet technologies for their ability to deliver value and develop application-specific implementation plans that can be executed without disrupting operations. That’s why partnering with an experienced third-party logistics (3PL) leader like DHL Supply Chain, which brings all of those capabilities to every relationship, is often the fastest and most effective way to realize the immense benefits of supply chain digitalization.

Learn more about how DHL Supply Chain can partner with you.

Author: Sally Miller, CIO, DHL Supply Chain North America