Digitalization is disrupting the Supply Chain

A range of technologies have changed the industrial landscape. Companies that can successfully manage those technologies will also change the way they manage their supply chain.

My last three articles analyzed the relationship between digitalization and the manufacturing execution system (MES), considering MES as a key component of any digitalization initiative. At the time, I touched only briefly on the impact MES has on the supply chain. For this blog, I want to spend some more time on how digitalization is impacting and probably disrupting the supply chain—or at least the traditional concept we have for supply chain.

When we spoke of supply chain over the past 40 years, we mostly thought of logistics. Optimizing the supply chain was basically optimizing the flow of materials, from the first supplier of raw materials to the distribution center of the finished goods, whatever they may be. Efforts have been put mostly on reducing stocks and lead times, guaranteeing the availability of the components at each stage of production. Delocalization of production and globalization have created new challenges in managing supply chains, introducing new complexity in logistics and quality control. The main challenge has become finding the right combination of low production cost, necessary quality of products or semi-finished goods and reasonable transportation costs, guaranteeing at the same time the availability of the products when needed.

Recently, things have changed. A significant reason for that is the availability of new technologies that changed the industrial landscape:

Real-time Big Data and analytics
Mobility
Internet of Things (IoT)
Social media
3D printing
Drones and self-driving vehicles

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