Digitalization: Powering the supply chain ecosystem with innovative technology


By Mahmoud Kaied - Head of Client Onboarding, Tawreeq Holdings Limited

Digitalization has become an important buzzword in the global supply chain industry, where the current rapid growth of technology is resulting in a significant transformation supply chains. Digitalization is happening through the adoption of innovative technologies that enable companies to streamline routine activities, expand the capabilities of particular systems, and enhance analytical practices. With technological advancements and the adoption of innovative systems, supply chains all around the world are becoming more dynamic and efficient.

Digitalization can add value at multiple levels of the supply chain by facilitating seamless operations, lowering costs and increasing profitability, improving brand value, and reducing waste. As a way of increasing business efficiency, digitalization streamlines the processes involved in the end-to-end chain, from procurement through to the settlement of invoices. Conceptually, digitalization in the supply chain is meant to lower costs, mitigate risks and improve decision-making and flexibility through seamless processes and comprehensive data analysis like never before. When properly designed and implemented, it yields performance improvements and enables high levels of connectivity, transparency and collaboration across all the parties involved in the value chain. A recent study by McKinsey suggests that, on average, companies that aggressively digitize their supply chains can expect to boost annual earning’s growth before interest and taxes by 3.2 percentage and annual revenue growth by 2.3 percentage. 

Understanding the full potential of a digital supply chain, more and more organizations are striving to transform their businesses by adopting digital changes both internally within the organization and externally with their customers. As the supply chain comprises of various stakeholders, it is imperative that all the organizations involved make an effort to transform their technologies and contribute to the digitalization of the supply chain ecosystem. Digitalization of the supply chain cannot be holistically achieved with just an individual organization’s efforts, as organizations are by definition dependent on each partner in their supply chain, including manufacturers, logistics providers, distribution channels, and finance providers.

Various technologies drive digitalization, such as supply chain platforms, cloud services, big data analytics, simulation tools, nanotech, robotics, artificial intelligence, machine learning, and other new technologies, which positively affect the overall business models and improve their competitiveness in the supply chain industry. A whole new technology that is being used to optimize the supply chain, is blockchain, which is believed to be a game-changer in the supply chain industry. 

The blockchain technology, which underlies bitcoin and other cryptocurrencies, acts as an unhackable, decentralized ledger, and is described as a record-keeping mechanism that makes it easier and safer for businesses to work together over the internet. As an incorruptible digital ledger, blockchain could effectively store records and can help identify new ways to reduce delays and remove human error, saving both time and resources. Blockchain can help supply chain management in a variety of ways, from recording the transfer of assets to tracking receipts, purchase orders and other associated paperwork. The blockchain is quite scalable, offering an almost unlimited database that can be accessed from anywhere in the world, and it provides a higher standard of security and a higher ability to be customized as per the business needs.

No matter what leading-edge technologies are being used, the right approach to digitalizing supply chains is to integrate suitable technologies with revamped operations. It is crucial for the industry business leaders to step up and actively re-define their organization’s roadmaps and strategies through the transformation and seamless integration of digital technologies. Leading organizations have begun to make large digital investments in their supply chain management, knowing that it will result in major improvements and return of investments for the organization and the industry as a whole.

Although noticeable transformations have been happening in the supply chain industry, there is still an enormous gap between the current state of digitization and the potential state the organizations can reach in the future. The mission to bridge and close this large gap of digitalization in global supply chain networks is not going to be an easy venture. Supply chain management leaders must look beyond the horizons of their own organizations and strategically incorporate technology innovations, skills and talents into their respective organizations and blend them into their whole supply chain network. A holistic digitalization across the supply chain is possible with effective far-sited leadership, strategic mapping, and meticulous implementation. Whilst the implementation effort is significant, the rewards can be far greater.