Supply Chain Digitalization Reduces Common Vulnerabilities

Digitalization may not be the first thing you think about in an environment traditionally dominated by pallets, conveyors and forklifts, but it has become one of the most important trends in supply chain management and a top concern among the C-suite.

Robotics, data analytics, augmented reality and autonomous vehicles are just some of the technologies now being used in distribution and transportation centers and more are on the way. Just this year, robotics innovator Boston Dynamics chose a supply chain process for the first industrial application of its technology, collaborating with DHL Supply Chain on the development and implementation of an autonomous robot for container and trailer unloading. 

Why It Matters

COVID and related social trends exposed vulnerabilities in the supply chain that crippled manufacturing, frustrated customers and eroded profitability. While the direct impacts of COVID have receded, the supply chain remains under stress on multiple fronts and digitalization has become essential to alleviating that stress.

• Labor shortages continue to limit growth and make it harder and more expensive to meet customer expectations. Digitalization is creating opportunities to automate repetitive manual processes, freeing up humans to focus on high-value tasks.
• eCommerce and other retail trends have forced changes in warehouse processes that increase labor requirements and create more extreme demand variability. Digitalization is improving forecasting, making it easier to scale to demand changes, and driving productivity improvements that get organizations off the supply chain recruiting treadmill.
• Climate change and geopolitical instability have increased the threats to manufacturing continuity and supply chain performance. Digitalization has enabled end-to-end visibility across the supply chain and is powering risk mitigation tools that improve the ability to plan around threats and proactively divert freight in transit to minimize the impact of disruptive events.
• In both B2C and B2B markets, customer expectations are now shaped by the “Amazon Effect,” forcing distribution centers to compress order cycle times while maintaining profitability. Digitalization is supporting process automation that reduces cycle times, prioritizes orders based on delivery times, and manages transportation to minimize costs without compromising delivery.
• The supply chain is increasingly being integrated into organizational ESG goals and can be a significant source of greenhouse gas emissions in some industries. Digital planning tools can optimize transportation networks based on greenhouse gas emissions and forward-thinking transportation providers have begun the process of fleet electrification.

How it’s Happening

Supply chain digitalization isn’t simple or easy. It requires deep supply chain and technology expertise to execute successfully. Organizations embarking on supply chain digitalization initiatives for the first time are likely to find the technology landscape overwhelming and may struggle to find the internal resources required to select, pilot, implement and manage digital solutions.

Third-party logistics providers (3PLs) are generally in a much better position to execute digitalization strategies. Through their supply chain focus, they have developed the expertise, processes and relationships required to introduce digital technologies to the supply chain and have taken the lead in advancing supply chain digitalization.

Leaders like DHL Supply Chain work with technology vendors from product development through commercialization, helping ensure the solutions being brought to market meet specific process requirements. In the process, they gain familiarity with the technology that allows them to match solutions to the right use case and design more effective pilot programs. They also benefit from a large operating network that enables new solutions to be piloted in a controlled environment with support from operations, engineering and safety specialists. 

Once new solutions have proven their value, implementation playbooks capture lessons learned and ensure repeatability as solutions are rolled out across the network. This process has proven so effective in bringing robotic automation to the DHL network that the company is now moving to the second phase of automation - orchestrating the performance of multiple robotic solutions within the same site. 

Organizations like DHL Supply Chain have also taken a leading role in optimizing and integrating the warehouse, packaging and transportation management systems that serve as the brains of today’s digital supply chains. They are breaking down silos within supply chain operations to create end-to-end visibility and unlock the value of the massive amounts of data generated in digital supply chains. Working with industry-leading platforms, they can simplify integration, improve management and reporting and leverage microservices that extend the functionality of these platforms based on the application. 

The Bottom Line

Supply chain digitalization has become essential to meeting the challenges of resiliency, efficiency and agility. But few organizations have the resources and expertise required to select, implement, manage and orchestrate digital solutions in the supply chain. Working with a 3PL with solid digitalization credentials will be the fastest and most effective way to mitigate the risks associated with digitalization and accelerate the benefits that can be realized. To learn more, visit dhl.com/allin.