Executive Briefings

Getting Better Return on Your Supply Chain Technology Investment

For years, companies have used digital supply chain technologies to improve service levels and reduce costs. But the inability to connect disparate systems, provide end-to-end visibility into the supply chain, and crunch massive amounts of data, among other issues, has prevented many companies from achieving the full potential of their supply chains. Now, thanks to the wide availability and adoption of much more powerful digital technologies, including advanced analytics and cloud-based solutions, companies are generating dramatically better returns on their investments.

A study by The Boston Consulting Group shows that the leaders in digital supply chain management are enjoying increases in product availability of up to 10 percentage points, more than 25 percent faster response times to changes in market demand, and 30 percent better realization of working-capital reductions, on average, than the laggards. They have 40 percent to 110 percent higher operating margins and 17 percent to 64 percent fewer cash conversion days. With the help of three key strategies, these agile companies are quickly leaving behind their less nimble competitors.

Some companies apply digital technologies to relatively straightforward supply chain problems that are too cumbersome to address with conventional approaches. For example, advanced analytics help managers dynamically calculate optimal inventory allocations and forecast demand more accurately - two areas that have always been difficult with traditional processes based on static, monolithic enterprise resource planning systems. Often, newer digital technologies ride on top of legacy systems, making them more flexible and easier to operate. That avoids the workarounds that often plague new-technology roll-outs and encourages employees to use the integrated system rather than dispersed Excel spreadsheets. Ultimately, companies can create a single version of the truth, thus improving decision making, customer service, and asset and working-capital utilization.

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A study by The Boston Consulting Group shows that the leaders in digital supply chain management are enjoying increases in product availability of up to 10 percentage points, more than 25 percent faster response times to changes in market demand, and 30 percent better realization of working-capital reductions, on average, than the laggards. They have 40 percent to 110 percent higher operating margins and 17 percent to 64 percent fewer cash conversion days. With the help of three key strategies, these agile companies are quickly leaving behind their less nimble competitors.

Some companies apply digital technologies to relatively straightforward supply chain problems that are too cumbersome to address with conventional approaches. For example, advanced analytics help managers dynamically calculate optimal inventory allocations and forecast demand more accurately - two areas that have always been difficult with traditional processes based on static, monolithic enterprise resource planning systems. Often, newer digital technologies ride on top of legacy systems, making them more flexible and easier to operate. That avoids the workarounds that often plague new-technology roll-outs and encourages employees to use the integrated system rather than dispersed Excel spreadsheets. Ultimately, companies can create a single version of the truth, thus improving decision making, customer service, and asset and working-capital utilization.

Read Full Article