DIGITAL TRANSFORMATION OF LOGISTICS AND SUPPLY CHAIN

MANAGEMENT

Dr. M. MAHALAKSHMI

PROFESSOR, PG & RESEARCH DEPARTMENT OF COMMERCE CA

HINDUSTHAN COLLEGE OF ARTS & SCIENCE, COIMBATORE-28

MOBILE: 9486254594

MAIL ID: ammurugu5@gmail.com

ABSTRACT

Modernization has now become a competition among themanufacturers which in

turn pulls in loads of digital services into theshelter and also pushes the tech world to
improvise more of
theirproducts.InclusionofdigitalspectrumssuchasBlockchaintechnology,DataScience,Art
ificial Intelligence, cloud Computing and Robotics in theindustry have brought changes
in the way production, supply
chain,financialtransactionandalsosaleswork,thenandnow.Thischangein approach is
unavoidable because of the sudden surge in number ofcustomers and market
competitors. This calls the stakeholders of allthe sectors which include service
industries, banking and insurancesectors, communication and Information technology,
Logistics and Transportation and alsoin education who still fantasize over such digital
transformations whichhave the ability to bring more money into their pockets and make
the customer more satisfied.

Introduction

Technology is rapidly changing the landscape of most consumer oriented businesses

in a fundamental way. Consumer buying behaviors and demand patterns are being
significantly affected by high Internet penetration, ubiquitous information availability, and
rapidly growing social networks. This has a significant impact on consumer oriented
industries such as music, publishing, consumer electronics, retail and financial services. But
will this technology adoption by consumers have any major impact on the supply chains in
traditional industries which continue to produce physical goods? Will the application of
emerging technologies in supply chains, across industries, help organizations better fulfill the
needs of their customers?

The answer is an unequivocal yes. As there is a fundamental performance difference

between traditional and digital supply chains. Traditional supply chains rely on a mix of
electronic and paper-based processes and documentation. The organizational structure is
often characterized by functional and geographic silos which do not share information
openly, thereby leading to sub-optimal performance. Digital supply chains, on the other hand,
have the capability for extensive information availability, and enable superior collaboration
and communication across digital platforms resulting in improved reliability, agility and
effectiveness. For instance, the U.S.-based land transportation company J.B. Hunt started
using sensor based technology and Global Positioning Systems (GPS) to improve visibility of
shipments and improve fill-rates. Advanced planning, scheduling and communication with
truckers and customers alike helped J.B. Hunt to increase EBIT margin from 3% to over 11%
within 4 years resulting in a quintupling of its share price1.

Literature Review

Digital transformation has mainly been associated with the need to use emerging
technologies to maintain viability in the Internet era. Both online and offline services and
products are distributed to the customer (Puriwat&Tripopsakul, 2021). The transformation of
online services has increased flexibility and automation by standardization (Andal-Ancion et
al., 2003). Digital technology is rapidly developing globally because of its widespread
availability, portability. More importantly, its capability to transmit information,
merchandise, and distribute content (Lee et al., 2015). According to consumer demand, some
define transformation as a process of updating business models to use the latest technologies
(Berman, 2012). The effects of digital transformation strategies include market delivery
changes and new types of direct customer interactions, such as adapting goods and services to
changing customer needs through social media (Bilgeri et al., 2017). Digitization provides for
the development of network economies, in which the core business model offers a platform
for interactions between external suppliers and consumers. (Bechtsis et al., 2017).
Barriers to digital supply chain transformation

1. No clear, well-defined goals: Unlike many other projects, digital transformation of the
supply chain may have multiple objectives. For example, you may want to reduce invoice
processing time, cut costs, enhance efficiency and so on. However, if you aren’t sure of what
you want to achieve, the entire exercise would be futile. In the absence of clearly defined
objectives, organizations wouldn’t exactly know if they have made any progress and
achieved what was desired.

2. Ill-equipped workforce: Your workforce holds the key to successful implementation of

any project. The introduction of advanced technologies and tools would go in vain if people
don’t have the required skills to work with the new systems. It’s vital to assess the differences
— and fill gaps — between existing and required skills.

3. High investment: Digital supply chain transformation can be a capital-intensive process.

Huge investments can be at stake if the project is not successfully implemented. To mitigate
this risk, consider introducing the digital project in phases. Once you start to see the results,
you can move on to the next phase of the project.

4. Reliance on traditional communication channels: Many supply chain teams have not yet
deployed advanced communication platforms that facilitate the smooth running of a digital
supply chain. They continue to rely on email and phone and paper trails to manage supplier
partners. However, it is effective and real-time communication with supply chain partners
that determines the success of digital transformation efforts.

5. Integration with existing systems: Advanced digital supply chain management

software must be able to seamlessly integrate with existing systems such as ERPs. Some
platforms may require more time (and investment) to integrate with the current systems. Lack
of compatibility with existing systems can hamper the working of an integrated supply chain
ecosystem.

6. Where to start: This is perhaps the toughest decision. Should you begin by automating
manual processes? Should you automate processes across all functions and levels?
Regardless of where to start, a successful digital supply chain transformation project requires
you to adopt a holistic, enterprise-wide approach. It is a good idea to start the exercise by
assessing existing systems and processes to identify gaps, communication barriers and data
latencies.
7. Managing vendors: The introduction of digital technologies can put to test long-standing
relationships with preferred vendors. But by providing more data around vendors and their
products, digitization of the supply chain can provide opportunities to better evaluate and
choose vendors. A business may enable sourcing on demand and choose a new vendor to
reduce supply chain risk and increase efficiency. Relationships with vendors are likely to
focus more on innovation and customer experience and not just on cost savings.

8. Security concerns: The introduction of digital technologies also brings with it associated

risks of cyber threats and data thefts. Often, businesses tend to continue traditional supply
chain processes as they aren’t sure how to deal with emerging threats in the digital landscape.
The deployment of new technologies with unknown risks and the lack of capability to handle
such risks can discourage the adoption of digital processes. A security lapse can harm
confidential data and supply chain processes and ruin relationships with key partners.

9. Plan stays on paper: Some businesses make detailed plans to transform their supply chain
processes. Some even outsource the planning process to ensure they get everything right.
However, when it comes to implementation, they fail to deliver. While planning is vital, the
success of a digital transformation project relies more on the engagement of key stakeholders
across different levels in the organization and change management capabilities. Failure to
develop change management capabilities or reduced involvement of teams across functions
can result in a project that lacks direction and objectives. Businesses that outsource their pilot
transformation project realize they lack change management capabilities and cannot replicate
the pilot project across all functions.

Successful digital supply chain transformation requires a thoughtful organization of new

technologies and processes with existing systems, people and management infrastructure.
More than technology, it’s the approach and larger business model that are crucial for
success. By eliminating these barriers, enterprises can ensure an effective and high-impact
digital transformation of their supply chains.

Overcoming Obstacles in 2020 to Optimize the Digital Supply Chain

The logistics and supply chain market is transforming quickly. For the stakeholders
involved, managing multiple partners, high customer expectations, siloed IT systems and
dynamic conditions is a challenge. I recently shared my predictions for the supply chain and
logistics industry and what global and domestic businesses can do to prepare for success in
the new year. But, exactly how can businesses prepare for and confront some of the

Transportation capacity constraints lead to inflated prices and significant waste.

In the supply chain, the saying “time is money” is particularly meaningful. Digital
freight forwarder, Zen cargo, analysed more than 100 shipments from across the UK and
found that more than 100 million hours are wasted per year in procurement, supplier
management and freight-administration functions, for a total annual cost of nearly $2 billion
dollars.
With the state of capacity constraints, the transportation industry is a key contributor
to the waste and inflated prices in logistics and supply chain processes. In India alone, 20 to
30 percent of trucks on the road are empty — and for non-empty miles, trailers are 36 percent
underutilized. The Environmental Defence Fund (EDF) advises that capturing just half of this
underutilized capacity would cut freight truck emissions by 100 million tons per year and
reduce expenditures on diesel fuel by more than $30 billion a year. According to EDF, the
movement of goods currently accounts for nine percent of U.S. greenhouse gas emissions,
which is nearly 500 million metric tons annually in direct emissions.
On top of that, due to the fuel emissions produced by this sector it is responsible for
an additional 100 million tons of climate pollution each year. Globally, trucks are the largest
source of freight emissions (57 percent), and the emissions resulting from transportation
vehicles and logistics operations contribute significantly to air pollution and unhealthy air
quality.

With advanced technology-driven solutions, organizations have the ability to reduce

waste and capacity constraints. By leveraging artificial intelligence and GPS devices to
optimize shipping routes on an international, national and local scale, companies can decrease
the distance and time involved in shipping products. In addition to optimizing planned routes,
advanced analytics can also be utilized to take account of congestion and update routes in
real-time. Through the use of technology, companies of all sizes can reduce carbon emissions
and drive sustainability across the supply chain.
Looking ahead, we will continue to see a concerted effort to reduce waste in the
supply chain. We need to. The potential of an orchestrated, collaborative supply chain that
addresses environmental and social challenges is profound. It is the responsibility of the
industry to make the movement of goods sustainable. Across industries, leading with
purpose, ethics and social responsibility is a model that resonates with businesses —
including employees, partners, stakeholders, as well as with customers.

In fact, today’s consumers expect companies to meet a certain set of ethical standards
to gain their buy-in. Companies that don’t address sustainability issues are at risk of losing
business. Eliminating the empty miles and excess CO2 emissions will become a bigger focus
for smaller companies as larger organizations use sustainability initiatives and ethical
standards as criteria when selecting supply chain partners. Prepare for tomorrow, today by
maximizing capacity and minimizing empty miles.

Increasing customer demands and faster delivery expectations

Due to rising customer demands and unprecedented expectations for product

availability and expedited delivery, companies’ transportation spend is skyrocketing — and
will continue to accelerate. Thanks to a culture of instant gratification, customers want what
they want, where and when they want it — and that means they want it immediately.
According to findings from Drop-off, 69 percent of consumers would not purchase from a
retailer again if their delivery was late. Keeping up with the high customer demand brought
on by events like Cyber Monday can be challenging for companies and especially exhausting
resource-wise. However, this elevated pressure offers an opportunity to optimize and reduce
costs.
. With dynamic mapping, retailers can gain real-time visibility into their products,
receiving exception alerts and recommendations, including dynamic predictive ETA. In
addition, use of solutions like dynamic mapping provides real-time analysis, based on data
from inside and outside their network, delivering the most accurate dynamic visibility
available.

Conclusion
In this increasingly complex industry, the supply chain will never be immune to
disruptions — some things are simply unpredictable. But moving forward in 2021, one thing
is certain: the ability to rapidly innovate and adapt will be vital for companies in the supply
chain ecosystem. To effectively manage expectations and strategize for the year ahead,
businesses should take a proactive approach to addressing any obstacles in their path and face
challenges head on. Prioritizing sustainability as a strategic initiative is imperative for all
businesses, across industries. Companies should equip themselves with the talent, tools and
resources to navigate disruptions and deliver real results in 2021 and beyond.

References

1. Prakash Agrawal, Rakesh Narain, Inayat Ullah,“Analysis of barriers in
implementation of digital transformation of supply chain using interpretive structural
modelling approach”, Journal of Modelling in Management, Volume 15 Issue 1.
2. Puriwat, W., &Tripopsakul, S. (2021). The impact of digital social responsibility on
preference and purchase intentions: The implication for open innovation. Journal of
Open Innovation Technology, 7, 24–36.
3. Andal-Ancion, A., Cartwright, P. A., & Yip, G. S. (2003). The digital transformation
of traditional business. MIT Sloan Management Review, 44(4)
4. Lee, J. W., Kwag, M., &Potluri, R. M. (2015). Antecedents of acceptance of social
networking sites in the retail franchise and restaurant businesses. Journal of Asian
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