As Businesses Seek Resilient Supply Chains, Digitalization is Key

The current pressures on the supply chain are enormous. Three years after the global pandemic created a tsunami of backups and disruptions that are still reverberating through the supply chain today, brands and retailers are navigating a seemingly endless cavalcade of new threats ranging from inflationary pressures to trade wars to the Russian invasion of Ukraine. Conditions seem unlikely to improve soon. In a new survey, 46 percent of CEOs report adjusting their supply chains in response to recent geopolitical conflict. These CEOs also report enormous worries about the impact of climate change, with 78 percent predicting climate risks will impact their supply chains within the next year.

As businesses work to build more resilient supplier networks in response to economic and political volatility, they must start by investing in a comprehensive digital transformation. Once seen as a competitive advantage, digitalization has become an indisputable necessity as supply chains have grown more complex and more outsourced, with more brands and retailers relying on vast overseas networks to supply and manufacture their products as they’ve increasingly invested in their own private-label lines.

After the pandemic wreaked havoc on their sourcing operations, it's imperative that businesses don’t get caught flatfooted again. Seventy-eight percent of supply chain leaders reported accelerating their digital transformations in the wake of the pandemic, and those investments were long overdue. In truth, however, some of the systems they’ve implemented are too narrow and don’t integrate as seamlessly as they need to. Brands and retailers that outsource their supply chain need to optimize their processes from end to end.

That means implementing a multi-enterprise platform that can streamline workflows from sourcing, logistics and product development to vendor, order and quality management, all of which are integral for improving efficiencies that will enable cost decreases. Such a platform allows these processes to work together seamlessly as a complete unit while helping mitigate supply chain risks by creating guard rails and notifications.

A multi-enterprise platform helps businesses more efficiently identify, select and onboard suppliers, allowing companies to rapidly adjust their supply chain based on sudden pressure points such as raw material shortages and shipping bottlenecks. It also facilitates smarter, more cost-effective material procurement. The right platform can not only identify missed cost-saving opportunities and show landing costs for different commodities based on countries of origin, but also help predict demand and identify alternate or future supply sources.

Digitalization creates visibility into pricing, supply bases and costs, enabling predictive sourcing and allowing buyers to negotiate more transparent agreements. When brands and retailers have visibility into sources and suppliers they weren’t already using, they’re better able to mix and match materials during the specification and procurement process. This visibility is key to sourcing competitively.

Comprehensive Systems Create Agility

The needs of supply chain departments are vast and varied. As port backups have become more pervasive, logistics departments require timelier, more reliable data. Sourcing managers need efficient systems for managing enormous global networks of suppliers, selecting and onboarding new vendors, and collecting and comparing quotes. Merchandisers also require smarter systems for confirming orders with suppliers and for getting status updates on orders after they’ve been issued. They need to ensure that any changes to those orders are received and approved by suppliers — which is often more difficult than it should be since the industry’s reliance on spreadsheets means that parties are often working from inaccurate or outdated information. Too often key product details are siloed across disparate emails, Dropboxes, WeChat and WhatsApp messages.

Quality managers, meanwhile, need better systems for controlling risk and for viewing and auditing the historical performances of vendors. They also need a smarter way of managing inspection schedules and a system for quickly tracing the root cause of defects and for communicating between factories and third-party testing and inspection agencies, otherwise delays in the inspection process can slow a product’s time to market. And, of course, all departments need to know whether shipments are arriving on time, since too often teams only find out about delays after it’s too late to prevent them.

A digital transformation with the right multi-enterprise platform addresses all those problems. A connected supply chain management software suite can extend the data that businesses are already entering into their PLM and make it available to all stakeholders across all departments. This software serves as a central conductor of all supply chain operations, monitoring orders and suppliers and keeping departments on track.

For compliance teams and supply chain sustainability managers, the benefits of digitalization with a multi-enterprise platform are especially profound. Due to recent regulations like the United States’ Uyghur Forced Protection Act and Germany’s Supply Chain Due Diligence law, large brands and retailers face more stringent requirements. To meet them, they need complete documentation of all their suppliers, from raw materials to finished goods, and they need to be able to document the full chain of custody of materials, including where they were shipped from and where they were made, including all transformations from raw materials to finished goods.

In the wake of these ESG laws, my company has seen a significant surge of interest from brands and retailers for our TradeBeyond platform’s supply chain mapping and traceability features, which help safeguard against heavy fines and lengthy detainments while enabling businesses to source to the highest standards of responsibility. It also enables businesses to more accurately back up the sustainability claims they make about their products, which is essential as regulations have pushed back against the excesses of greenwashing.

Brands and retailers that have started adopting standalone digital solutions have made an important first step. But to reap the full benefits of digitalization, they need to ensure their digital transformation covers their supply chain processes from end to end. It’s the surest way to prepare for the unknown and for businesses to set themselves up for success regardless of whatever pressures, disruptions and surprises challenge the supply chain in the years to come.

Eric Linxwiler is senior vice president of TradeBeyond, a company that connects retail supply chain operations from product development to delivery.