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Large global companies still manage supply chain with phone, fax and email

Digital supply chain management is still five years off for almost half of the west’s global firms

Almost 50% of large global companies communicate with their suppliers using email, phone or fax when ordering stock and processing invoices.

But research from GT Nexus, a supplier of cloud-based platforms for companies and their suppliers to send each other messages and invoices, and Capgemini Consulting indicates global companies expect their supply chains to be more digital in five years’ time.

Their report, The Current and Future State of Digital Supply Chain Transformation,  looks at so-called “digital transformation” of communication between corporate organisations and their suppliers.

The study surveyed 337 executives from large global manufacturers and retailers in Europe and North America, in November 2015. Fourteen respondents were based in the UK.

Some 48% of respondents admitted “traditional” methods, such as phone, fax and email, are still their main ways to interact with supply chain partners. A total of 75% said digital transformation of the supply chain is “important” to them, and 70% said they have started a programme for digital supply chain transformation. However, only 5% were “very satisfied” with their efforts.

Five years from now, 95% of respondents expect more processes with suppliers to be automated, and 94% expect to receive more real-time status updates from across their supply chain.

Boris Felgendreher, director of marketing, EMEA, for GT Nexus – a company acquired by ERP supplier Infor in 2015 – said it and Capgemini conducted the research to “test what practitioners are saying about [the hype around] digital transformation”.

They believe that most existing research is focused either inside companies or on how they interact with their customers. They felt the supplier relationship dimension was missing, Felgendreher said.

He said it is a problem that companies are still so reliant on “analogue” methods of communication because of the globality and real-time nature of their businesses.

Read more about digital supply chain management

By contrast, using a web-based platform – similar to individuals using LinkedIn or Facebook to communicate with their contacts – means companies can “have a closer handle on knowing where their stuff is”, he said.

“They can move into new markets more quickly. They can lower the their stock inventory. They can save on the transport side – switching mode as required, from ship to air, for example.

“And think about sports and clothing manufacturers and retailers, where consumer demand changes so quickly. Basically, you can be more responsive and agile with a digital platform for supply chain management.”

Felgendreher said the research brought to the surface the fact that more digital and platform-based supply chains will help hold companies to a higher ethical standard, and even enable the extension of credit to suppliers in poor countries who cannot get credit from local banks.

“Nobody likes it when someone goes under,” he said. “Brands can get damaged by scandals by unethical dealings in their supply chain. That has sunk in.

“There is a role here for technology to provide complete visibility, from the cotton fields to the shelves, as the internet of things comes on line. That will help companies to be more ethical.”

Mathieu Dougados, senior vice-president at Capgemini Consulting, said in a statement: “In today’s globalised and outsourced world, digital transformation can only be successful if companies approach it with a holistic view of their entire value chain. That value chain can include hundreds of partners. So connectivity between partners, cross-company access to data, and the use of network-wide analytics become the key focus areas.”

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