With big data and artificial intelligence, businesses can monitor, analyze, and adjust the supply chain more flexibly and efficiently, quickly responding to customer demands. The digital supply chain leverages big data, artificial intelligence (AI), and the Internet of Things (IoT) to transform supply chain management (SCM) in order to achieve maximum flexibility, adaptability, and scalability. Today, technology captures big data at every inch of the process and then uses real-time automated analytics tools to share company insights and viable solutions.
In this article, you will learn more about digital supply chains and how they differ from traditional supply chains. You will also see examples of digital supply chains in operation, the benefits and risks of implementation, and what the future may hold.
1. Understanding digital supply chains
The digital supply chain is like the traditional supply chain but digitized with AI and IoT technology.
Traditional supply chain | Digital supply chain |
The traditional supply chain includes a linear process moving goods from suppliers to manufacturers to stores to customers, heavily relying on manual processes. | The digital supply chain is a system for managing and coordinating activities from raw material sources to consumers, supported by modern digital technologies. It creates a tightly connected, intelligent network, allowing businesses to monitor, manage, and optimize every step in the supply chain effectively. |
Many businesses are facing the issue of fragmented supply chain management systems, which hinder operations and reduce efficiency. The lack of connectivity between systems causes information exchange to become sluggish, leading to errors and delays in the production and distribution process. However, by transitioning to a digital supply chain, businesses can overcome these limitations. The integration of technologies such as AI, IoT, and data analytics across the entire system will help businesses operate more smoothly, thereby increasing productivity, reducing costs, and enhancing customer satisfaction.
2. Key technologies driving the digital supply chain
Advanced technologies are revolutionizing the supply chain, transforming it from a static system into an intelligent, flexible network.
Artificial intelligence (AI) and machine learning (ML) play a central role, providing the ability to predict market demand and customer behavior with unprecedented accuracy. AI algorithms can analyze vast amounts of data from various sources, from sales history to market data, to detect hidden trends and patterns. Thanks to this, businesses can make timely and more effective business decisions, from demand forecasting to optimizing production processes.
The Internet of Things (IoT) also plays an important role in the digital transformation of the supply chain. IoT devices are integrated into every stage of the supply chain, from suppliers to warehouses and retail points, continuously collecting data on the condition of goods, location, temperature, humidity... Thanks to this, businesses can monitor and manage assets accurately and efficiently, minimizing the risk of damage and loss, and ensuring that goods are always transported in the best conditions.
Big data analytics is an indispensable factor in maximizing the value of data collected from IoT devices and other sources. By using modern data analysis tools, businesses can transform large amounts of raw data into valuable insights, helping to optimize every aspect of their operations, from inventory management and production planning to customer relationship management. No longer relying on data experts, everyone in the business can access and analyze data to make smarter decisions.
3. Benefits of the digital supply chain
The adoption of digital supply chains brings about a true revolution, surpassing what traditional supply chains can achieve.
Outstanding effectiveness:
- Maximal automation: Processes from ordering, inventory management, transportation to payment are all automated, minimizing human intervention and reducing errors.
- Resource optimization: Thanks to big data analysis and AI, businesses can accurately identify customer demand, forecast market trends, and adjust production and warehouse resources flexibly, helping to reduce costs and increase profits.
- Enhancing accuracy: The IoT-based warehouse management system allows for tracking each product, from the moment it enters the warehouse until it is delivered to the customer, ensuring that information about quantity, location, and condition of the goods is always accurate.
- Predictive maintenance: IoT sensors help detect early signs of equipment failure, allowing for scheduled maintenance, minimizing downtime, and extending the lifespan of the equipment.
Enhancing visibility and transparency:
- Comprehensive tracking: All activities in the supply chain are recorded and stored on a unified platform, allowing stakeholders to easily access and monitor information about orders, inventory, transportation, and more.
- Improving customer experience: Customers can easily track their orders, receive notifications about delivery status, and resolve any issues that arise quickly.
- Strengthening cooperation with partners: Partners in the supply chain can connect and share information effectively, helping to enhance cooperation and mitigate risks.
Making decisions based on data:
- Accurate forecasting: Thanks to advanced data analysis algorithms, businesses can accurately forecast market demand, helping to plan production and business operations effectively.
- Quick response to changes: When there are any fluctuations in the market, businesses can quickly adjust their business strategies to adapt.
- Personalizing the customer experience: Based on customer data, businesses can provide products and services that meet the needs of each individual customer.
4. AI in the digital supply chain
AI is a transformative force for today's and tomorrow's digital supply chain. It enhances many aspects of SCM, from demand forecasting to predictive maintenance.
Demand forecast
AI algorithms analyze historical data and market trends to predict future demand. Supply chain managers use these AI algorithms to forecast demand and plan inventory levels, reducing storage costs, overproduction, and stockouts.
Predictive maintenance
AI-supported predictive maintenance can help machinery and equipment operate at peak conditions. It allows for proactive maintenance scheduling instead of waiting for equipment to fail. This helps minimize downtime, extend the lifespan of machinery, and can ensure more continuous production.
Optimize the route
AI enhances the ability to optimize routes for deliveries. In addition to the free GPS applications that most people are familiar with, AI-assisted route optimization can analyze countless data points to outline the best route, including vehicle capacity, fuel consumption, and delivery timeframes. It can also adjust the route in real-time flexibly to respond to road closures or sudden spikes in demand.
This approach is also much greener, as this improved logistics can reduce idle time and additional carbon emissions, leading to increased sustainability and reduced costs.
Read more: The application of AI (artificial intelligence) in the manufacturing industry
5. IoT - revolutionizing the digital supply chain
IoT is revolutionizing the supply chain, transforming it into an intelligent, interconnected, and efficient network. IoT devices act as sharp "senses," collecting and transmitting real-time data about every aspect of the process, from production to delivery.
Asset tracking does not stop at location identification but also extends to monitoring the condition of each shipment. Integrated sensors can detect signs of damage, impact, or unusual temperature changes, thereby providing early warnings and helping to minimize damage. This real-time data not only provides businesses with a comprehensive view of the supply chain but also helps build customer trust by offering order updates.
Environmental monitoring is another important factor, especially for sensitive products such as food and pharmaceuticals. IoT helps ensure that products are always stored in ideal conditions, from the warehouse to the transportation process. By using temperature, humidity, and other environmental sensors, businesses can promptly detect and address potential issues, minimizing losses and ensuring product quality.
Smart warehouses are a typical example of applying IoT in the supply chain. IoT-controlled automation systems help optimize inventory management, from receiving, storing to shipping. Automated robots can perform tasks such as inventory management, packaging, and transporting goods, helping to increase productivity, minimize errors, and create a safer working environment.
6. Integrated supply chain management: Harnessing the power of AI and IoT
In the digital era, supply chain management has undergone a profound revolution. The integration of artificial intelligence (AI) and the Internet of Things (IoT) has created a tightly connected, intelligent, and efficient network.
An intelligent ecosystem: With AI and IoT, every step in the supply chain is connected and shares information seamlessly. From demand forecasting, optimizing transportation routes, warehouse management to customer care, everything is automated and made intelligent. This not only helps reduce errors and save costs but also enhances accuracy and speed in meeting customer demands.
Enhancing resilience: Thanks to AI's ability to analyze big data and machine learning, businesses can predict potential risks in advance and implement timely preventive measures. IoT with a diverse sensor system helps closely monitor activities in the supply chain, thereby quickly detecting and resolving issues.
Extensive interaction and collaboration: An integrated supply chain facilitates cooperation among partners within the ecosystem. Information is shared transparently and promptly, helping stakeholders coordinate closely, thereby enhancing overall operational efficiency.
The customer is at the center: Ultimately, the goal of an integrated supply chain is to deliver maximum value to customers. By providing personalized services, fast delivery, and a seamless shopping experience, businesses can build customer loyalty and create a sustainable competitive advantage.
7. Conclusion
With the rapid development of AI, IoT, and other technologies, digital supply chains are becoming an inevitable trend. Companies like Amazon and Walmart have demonstrated the effectiveness of implementing digital supply chains. To keep up with this trend, Vietnamese businesses need to quickly invest in technology, build a skilled workforce, and be ready to face changes. By doing so, businesses not only enhance operational efficiency but also create new value for customers and society.