Digitization for the real world

Digitization is promised as a solution to any problem - using a combination of artificial intelligence or machine learning, big data, automation, and the Internet of Things. A recent McKinsey study shows that a fast-growing group of supply-chain technology companies refer to features like AI and machine learning in marketing materials but - in the overwhelming majority of cases - these are either niche features or of unclear value to the end user.

I quote from The human side of digital supply chains (McKinsey, 2019): “There’s no doubt that technology is set to have a big impact on every part of supply-chain operations, from planning to logistics. By focusing so much attention on digital solutions, however, companies may inadvertently be ensuring their failure. That’s because the technology-first approach ignores an inconvenient truth: the intensely human nature of the supply chain."

McKinsey, while recognizing the critical role of people, still identifies the use of supply chain technology in three areas:

1. Provide more data, and new insights from existing data
2. Automate previously manual tasks
3. Address human problems by enabling greater trust, better communication, and enhanced collaboration across the organization

McKinsey considers the last one as the largest untapped and overlooked source of value in modern supply-chain improvement, and confirms that there are technological solutions available that are often cheaper, simpler, and easier to implement than most companies expect.

The first technological solution prompted by McKinsey is Visibility: “In almost all supply-chain problems, the first and most fundamental requirement is visibility. Despite advances in technology and multi-million-dollar IT budgets, few companies have a full picture of their supply-chain operations. That lack of a “single source of truth” leads to widespread waste, arguments, and suboptimal decision making. Supply-chain visibility can be achieved by simple solutions, provided they do three things well. First, they must connect and consolidate data from multiple sources. Second, they must clean and organize that data to provide a single, reliable source of truth. Finally, they must present that data in a digestible way.” Sounds familiar? These types of solutions are precisely what Logit One is providing.

McKinsey underlines the last point. It is important that supply-chain visibility tools can be accessed easily by the operations and management staff, without advanced database skills or support from IT specialists. Part of this is also standardizing and automating the generation of exception reports and KPIs. Instead of conducting a postmortem analysis on numbers produced at the end of the month, direct and real-time access can support supply-chain managers to spot issues as they arise, which might allow them to take timely corrective action, and use real-time KPIs as the basis for forward-looking, proactive management of supply-chain exceptions, without needing elaborate and costly digital tools.

We are looking forward to take up the challenge with you in 2020 and help you to digitize based on a realistic approach. I wish you a wonderful 2020 on behalf of all at Logit One!

Frank Knoors, Managing Director


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