The future of supply chain logistics lies in digitization. With major consulting firms like McKinsey predicting that aggressive supply chain digitization can increase annual revenue growth by 2.3%, digitization is crucial to companies’ ability to compete in a rapidly evolving, omnichannel business environment.

The business case for digitization.

Digitization can be understood to refer to the use of digital technologies like robotics and blockchain. More broadly, digitization can be understood as the process of optimizing logistics by leveraging a combination of leading-edge mechanical/physical technologies and analytical/informational technologies.

Digitization manages and “opportunizes” complexity, therefore improving the agility and resiliency of supply chain logistics. This strategy enhances efficiency, accuracy, and real-time responsiveness, promoting greater customer satisfaction and increasing revenue and market valuation.

Top-ranked mechanical and analytical digitization technologies.

Based on a survey conducted with 350 supply chain and operations professionals across the globe, respondents ranked physical and informational digitization technologies in terms of perceived importance in the coming 3 years.

Among mechanical digitization technologies, 63 percent of respondents named robotics as chief among the 5 technologies they were invited to rank. Autonomous vehicles ranked next, followed by 3D printing, augmented reality, and the use of drones.

Though robots have been in use in the manufacturing industry for decades, the software interface afforded through the Internet of Things (IoT) has opened up vastly new applications for robotics, especially in relation to artificial intelligence (AI). For example, companies are in the beginning stages of robotized “piece picking” in distribution, and almost all advanced manufacturing facilities are employing AI to deploy existing robotics with greater efficiency.

Among analytical digitization technologies, 73 percent of respondents named Big Data as first among the 5 technologies they were invited to rank. Cloud-based applications ranked next, followed by the IoT, blockchain platforms, and sharing-economy platforms.

Digitizing the supply chain requires an integrative strategy.

It’s not enough for companies to take a piecemeal approach to digitization. Rather, digitization involves a fundamental redesign of supply chain strategy — a task that can be exceptionally challenging to most businesses. A common error is to jump prematurely to acquiring digital technologies before making the necessary operational changes to support them.

To tap the power of a digitized supply chain, companies must also revamp their operations. Key stakeholders must reconceive the future supply chain, taking stock of the status quo and discovering ways to extract greater value while engineering strategies for doing so. Further, manages must make decisive improvements as well as incremental changes that occur over time. Operations and technology must be well integrated and the organizational structure must be sufficiently agile to promote innovation and ongoing improvement. Last, strategies for digitizing must include compressed time frames in order to scale with rapidly changing digital solutions.

Product design, development, and manufacturing firm, Pivot International, has taken an integrative strategy to supply chain digitization. This strategy has resulted in compounded annual revenue growth of more than 100% over the last 5 years and made Pivot an industry leader. For businesses seeking a single-source partner, Pivot ranks first in customer satisfaction, and for more than 46 years has been the driving force behind some of the most innovative products on the market. If you’d like to learn more about how Pivot can help take your product or supply chain to the next level, reach out today for a free, no-obligation consultation.