Why is the digital supply chain taking over the traditional supply chain?

With the advent of technology, everything is going online. People are adopting traditional methods of running their businesses and adopting the digital methods. Such is the case with supply chain solutions. The digital method of supply chain is rapidly replacing the traditional methods of supply chain solutions.

Every country is adopting modern supply chain solutions, be it Australia or anywhere in the world. While some are clear about the reason, some are still confused about the reason why digital supply chain solutions are taking over.

To understand this entire situation, let us look into the structure of traditional and digital supply chain management.

As a supply chain works as an interlink that connects manufacturers to retailers and retailers to customers in a chain, it ensures domestic and international delivery of products. As international exchange has massively increased, the demand for advanced supply chain solutions has also increased. This has led to the emergence of modernized tools and improvised methods of carrying out supply chain operations.

This is the reason why traditional ways of supply chain management is getting replaced by digital supply chain solutions. If you are still thinking about whether to adopt modern supply chain solutions or not, then you are at the right place. Here is a guide for you to know the traditional and digital supply chains in depth.

The Traditional Supply Chain

About

The traditional supply chain involves every process, from the procurement of the raw material to making it available to clients. It involves gathering raw materials, making them available to the manufacturers, manufacturing, distribution, and shipping, and finally making them available to the consumers.

Thus, the traditional supply chain is only confined to making the products available to the customers and does not care about the needs and requirements of the customers.

Steps of Traditional Supply Chain

- Collecting the Raw Material

The first and foremost step is to collect the raw materials from all the sources.

- Raw material to the manufacturer

The next step is to make this raw material available to the manufacturers.

- Manufacturing

Now, the raw material is used by the manufacturers to produce the end product.

- Shipping and distribution to the consumers

After manufacturing, the products are sent to the wholesalers or retailers by using the taxi truck service.

Selling it to the customers

This is the final stage, also known as the consumption stage. In this step, the goods are sold to the customers. If the product is taken from the wholesaler then it is further sold to the final consumers. But if it is taken from the retailers, then it is the final stage.

This is how the traditional supply chain used to work. The main focus is on the flow of raw material to the customer after it get produced finely by the manufacturers. Mentioned below is how the digital supply chain performs.

Digital Supply Chain

About

However, the digital supply chain is not a linear chain like the traditional one. It also considers the requirements of the clients. Then the products are customized as per the needs of the customers.

Unlike in the traditional supply chain, here, a similar product is not produced in bulk for the consumers. Rather, in the digital supply chain, hyper-personalized goods are customized as per the needs. 

Here are some things that the digital supply chain focuses on:

- Use of Technology

Technology is at the heart of the digital supply chain. The entire process is based on technology. On the other hand, in the traditional supply chain method, the process was manual.

- Logistic supply chain solution

In the digital supply chain, proper planning, implementation, and control of goods are performed. Thus, a proper Freight forwarding service and transport and logistics management process is carried out in digital/modern supply chain management.

- Partnership focus

The modern supply chain also focuses on networking. It builds partnerships, alliances, and collaborations to make the supply chain more enriched. This shows that, unlike traditional supply chains, it is not a standalone cycle supply chain. It is more about networking through alliances, partnerships, and collaborations.

- Customer focus

A digital supply chain is client-focused. Every step of the modern supply chain is customer-oriented.

- Service and speed orientation

A digital supply chain is only time-bound. It focuses on quality service and speed. It is ensured that the end product reaches the consumer on time.

Now that we have a fair idea of the minute functioning of the traditional and digital supply chains, listed below are the reasons why modern supply chain solutions are taking over traditional supply chain.

- Value Addition

The modern supply chain focuses on the needs of the customer. On the other hand, the traditional supply chain is only concerned about provision and production. Thus, in the digital supply chain, value is also added to the products, but in the traditional supply chain, the focus is only on distribution.

- No scope of growth

Modern supply chain facilitates networking. It opens the scope for collaborations, alliances, and partnerships. On the contrary, the traditional supply chain only permits the listed organizations to follow a single pathway.

- “Customer Satisfaction”

Every step of the digital supply chain is designed as per the needs of the customers. The products are hyper-personalized, whereas, in a traditional supply chain, the focus is only on production and distribution.

- Logistic Management

The modern supply chain also performs logistics management. It ensures the forward and reverse flow of goods is smooth. In digital supply chain management, proper planning, controlling, and implementation activities are performed. On the other hand, the traditional supply chain does not use any such tool.

- Faster Progression

In a traditional supply chain, the process is carried out manually. Either the person is on-field or maintains an excel spreadsheet. The entire process becomes very slow. We are talking about digital/modern supply chain performs activities through highly advanced artificial intelligence or machine learning tools. Thus, the products are supplied to the customers on time through digital supply chain solutions.

- Room for innovation

As discussed above, technology is at the heart of digital supply chain. It has opened the scope for innovation. The products are also customized as per the needs of the customers; thus, it accelerates innovation, which was not possible in traditional ways.

So, these were some of the reasons that make modern supply chain solutions more reliable than traditional supply chain management. If you are still making your mind to switch to the digital for of supply chain, then this is your sign to adopt it now.