Like most businesses, you’re probably familiar with the traditional supply chain. In a nutshell, it’s a system where products are sourced from different locations and brought together to create a final product.
While this model works well in some cases, it’s not ideal for all businesses. For example, many companies now rely on digital supply chains and purchase order automation to speed up product delivery and reduce costs. So, what is the difference between traditional and digital supply chains? What does PO Automation do?
In this article, we outline the key differences between a traditional and a digital supply chain; we have also mentioned the advantages of one over the other in certain areas.
What is Digital Supply Chain
Digital supply chains can help businesses save money and time by moving goods more quickly and securely. By digitizing processes, like purchase ordering, companies can eliminate inefficiencies and use resources better. In addition to saving on costs, a digital supply chain can also improve customer experiences by giving them access to products quicker and making sure products are authentic. Some companies choose to outsource these processes to third party logistics providers, like Shape Fulfilment and other similar companies. These kinds of services help to streamline the supply chain management and smoothen the flow of operations.
In the same vein, there are several instances of traditional companies implementing digital supply chains to stay competitive. For example, Coca-Cola uses a digital supply chain to bottle its product in Costa Rica. The process uses robots that help speed up the production process and reduce the amount of waste generated. Digital supply chains can also help small businesses get their products into larger markets more quickly. Tom’s Shoes began selling online in 1997, with over 1,000 online retailers selling its products worldwide. Using a digital supply chain, Tom’s Shoes could bypass traditional distribution channels and reach a wide audience very quickly.
While digital supply chains have many benefits, they also have some drawbacks. One potential issue is cybersecurity. A cyber-attack could sabotage a company’s digital supply chain, causing delays or product defects.
How Have Things Gotten So Much Faster To Get the Goods?
Stock-keeping units (SKUs) are an important part of a traditional supply chain. When you order something from a store, the store stocks’ SKUs get pulled down and put in inventory; this helps the store predict what will sell and where to allocate its limited resources.
In contrast, digital supply chains use computer-generated inventories (CGIIs). A CGII database stores information about the quantities of products available in various locations at any time. For example, when you place an order with Amazon, your purchase is automatically pulled down from their CGII and added to your physical inventory at their fulfillment centers.
Quality and Shopping Experience
A digital supply chain is a supply chain that leverages digital technologies to optimize the flow of goods and services from the manufacturer to the customer. While digital supply chains offer many benefits, such as increased efficiency and reduced costs, there are also several challenges that must be addressed, including quality assurance. In a traditional supply chain, products are produced and delivered to the customer before they are tested and approved. However, in a digital supply chain, this process may not be possible, or it may be done after the product has left the manufacturer’s facility.
As a result, it is important to have a system that monitors and maintains quality control throughout the supply chain. Firms can probably benefit by utilizing advanced tools such as GPU Direct Camera, automated identification and data Capture (AIDC) devices, barcode scanners, RFID tags, and machine vision systems. These tools can provide real-time feedback on the quality of products as they are processed, enabling manufacturers to quickly identify and address any issues, ensuring that only the products that meet the necessary standards are being shipped to customers.
Suppliers and Customers
One of the advantages of a digital supply chain is that it can improve communication between suppliers and customers. Suppliers can more easily keep track of customer orders and shipments through shipment tracking systems, making it easier to respond to customer requests for updates or changes.
In addition to that, they set up measures to help prevent theft or loss of products, especially in warehouses and storage facilities. With hired security personnel, those areas tend to be kept under tight surveillance. They may also reach out to lock and key consultants to have their keys managed externally, reducing the scope of access to authorised personnel .
Digital supply chains also allow for more accurate forecasting of needs. This allows companies to allocate resources better and plan for future production requirements. In addition, using real-time data analytics tools allows companies to identify potential issues early on in the process, allowing for remedial action to be taken before any damage has been done.
However, transitioning to a digital supply chain can be difficult for large companies or economies. Introducing new technology can be expensive, and it can take time for organizations to adapt to the new way of doing things. Additionally, Old-School infrastructure may need to be decommissioned to make way for the New Supply Chain Paradigm.
Today’s businesses constantly battle to stay ahead of the curve and keep up with ever-changing technology. To do this, they rely on digital and traditional supply chains. However, you should be aware of some key differences between a traditional and a digital supply chain if you’re planning on switching to one. Hopefully, this article has helped you determine which supply chain system you should follow to make your business successful. Thanks for reading!