- Supply Chain Strategy
- Supply Chain Network Design
- Inventory Management & EOQ
- Route Optimisation
- Distribution Logistics Tendering
- Fulfillment & Warehouse Logistics
- Last Mile Transport Tender
- eSCM & Supply Chain Analytics
eSCM & Supply Chain Analytics
eSCM, also referred to as digital supply chain management, combines material, product, person, and information flows across different logistics channels through integration of existing or newly installed IT systems. Especially transport management systems and warehouse management systems are well-known in digital supply chains. Leveraging also further concepts such as supply chain analytics, data-fueled process automation, artificial intelligence, and robotics, the digital supply chain is one pillar of the much-discussed Industry 4.0 and will be key to the success of the future supply chain. In this section, we discuss questions such as:
- What is eSCM and what are the benefits?
- When does eSCM make sense?
- What is the right approach to eSCM?
- How do you know you’re on the right track?
After answering these questions, we discuss potential challenges and their solutions and provide an outlook on how you can contribute to the future success of your company through eSCM and supply chain analytics.
What is eSCM and what are the benefits?
The traditional supply chain acts in a linear manner, with one function communicating demands and output to the adjacent function. At a simplified level, sales forecasts are made and communicated down the chain, raw materials are ordered, the forecast quantities are manufactured, and the finished products are prepared for delivery to the customer. Ideally, the forecasts match the demand and there are no disruptive events so waste is small. Often, however, a lack of transparency between process steps, slow reaction to unforeseen circumstances, and inefficient communication creates bottlenecks or under-supply, resulting in wastage and disappointed customers.
eSCM acts as an ‘integrated ecosystem’. The linear view of the supply chain is exchanged for one which is fully integrated and has central and immediate transparency. A proven means of this integration is the use of supply chain analytics, such as a “Supply Chain Cockpit” or “digital control tower”. This is a platform that connects the systems operating across the supply chain (e.g. warehouse management system, transport management system, ERP, ..), analysing the generated data and illustrating the findings to provide a better overview and basis for data-driven decisions. The supply chain becomes agile and responsive.
For example, operatives in production can collaborate with their colleagues in logistics, ensuring that appropriate raw material order quantities are placed, while adverse shipping conditions are communicated efficiently, enabling timely and effective mitigating actions. Waste is reduced and the customer’s demands are met.
There is a veritable sea of supply chain digitalisation initiatives a company can undertake, from sensor technologies and robotics in warehouses to AI forecasting algorithms. To ensure your eSCM initiatives are impactful and appropriate, understanding your needs and tailoring your efforts to your specific situation is essential.
When does eSCM make sense?
Before undertaking any eSCM initiative, a company should first be aware of exactly what it wants to achieve through the digitalisation of its supply chain management and which areas will be affected. Many companies claim to use supply chain analytics in entire corporate divisions – but what does that actually mean?
eSCM can be narrowed down to 3 essential objectives:
The use of integrated IT systems (e.g. warehouse management system, transport management system, ERP, ..) is a fundamental prerequisite for acting faster, more flexibly, and more cost-effectively in the supply chain and in logistics. Creating data, linking data, and making data transparent through digitalisation can give a decisive competitive advantage, but only if companies have the right resources, methods, and tools to process this data. These must be in place prior to any digitalisation initiatives or put in place as part of the digitalisation effort.
What is the right approach to eSCM?
After the objectives have been evaluated and the most relevant identified, the actual initiatives that seek to achieve these objectives must be derived. Based on these initiatives, we jointly draw up a project plan for the medium to long-term implementation of digitilisation.
Typically, the business requirements of an eSCM initiative and functional eligibility of IT solutions will be defined by the SCM department and the management team. However, usually, the IT department is in charge of the realization and integration of the eSCM initiative, with the functional department responsible for carrying out the operational implementation.
There are three key steps to eSCM implementation.
Step 1: Analyse Status Quo
First, collect and identify pain points that exist in the area under consideration. Evaluate the extent of the pain points and the effectiveness of a digital solution. Check prerequisites, dependencies, and other risk factors of a possible implementation. Is there an already available software solution or is in-house development possible and reasonable? What resources are necessary: programming, specialist resources, IT resources? Develop a realisation strategy for testing and implementing the digitalisation opportunities and present it for a go/no-go decision.
Step 2: Develop Solution
Regardless of whether there are existing software solutions or whether you want to program your own – first define the objective and the path to a solution. Consider the business requirements and the optimal process, data availability, and other user requirements. Use-cases are a good way to do this, describing in concrete terms how the business benefits will be achieved. In the case of in-house development, work with the required resources on a blueprint of the solution, then evaluate and plan the realisation phase in milestones with concrete dates and the functional statuses to be achieved. In the case of external software, find out what is on offer and compare it with your requirements and objectives. Demos and supplier presentations are a great way to drive the selection process. In both cases we recommend a pragmatic implementation via one or more Proofs of Concept (PoC). Here, both in-house programming and external solutions can demonstrate their degree of suitability for achieving objectives. This check should be as fast, cost-effective, and risk-free as possible, and enable you to make the decision on whether to roll out fully.
Step 3: Implementation of IT systems and new processes
Once the decision has been made to roll out the solution, the first step is to draw up an implementation plan. Risks, such as the impact on day-to-day business or rejection of the change by the employees involved, must be identified early on and counteracted. Targeted information, the motivation and involvement of the affected users, as well as a step-by-step approach, will help with the roll-out. An effective project management process should regularly report on difficulties and successes and, if necessary, provide steps for mitigation. Training based on user-related exercises that demonstrate the benefits for the user help with integration into everyday processes.
Are we on the right track?
Use the following check-up questions to determine whether your strategy for eSCM or your current initiative is on the right track:
- A clear strategy with concrete plans has been formulated by examining all prerequisites and is anchored in the objectives of the initiatives
- There is a clear roadmap with firm test dates at which certain aspects of functionality are presented in terms of their practical added value
- Resources with appropriate experience and overall vision were involved in the design of the implementation plan
- The selected project method and control are suitable for the digitalisation project
We would be happy to support you through dialogue or discussion to evaluate your eSCM strategy or specific supply chain analytics project.
What are common practical pitfalls and what are the solutions?
To provide insight into some avoidable mistakes or to identify adverse situations at an early stage, we describe below some typical examples in which an eSCM initiative can face failure. The approach in each of these cases can be used to prevent such problems reoccurring, and, where necessary, find solutions.
Outlook and conclusion on eSCM
eSCM enables improved information availability, evaluation, and dissemination; cost, quality, and time-optimised processes; and the optimisaiton of management activities. eSCM as a disruptive use of technology is becoming increasingly important and will potentially lead to a competitive revolution in supply chains over the next few years.
Following a suitable digital strategy and the use of software and hardware with a structured and functioning information flow can make the supply chain faster, more flexible, and more cost-efficient.
The ability of a company to create competitive advantages through eSCM at an early stage without losing its interconnectedness will become essential for survival.
OCM offers comprehensive support on your path to eSCM. We support you in the design of your customised eSCM strategy as well as its implementation, e.g. supply chain analytics – also in combination with our comprehensive service offering in SCM & logistics. We would be happy to present our approach and modules in this regard or discuss specific issues and possible solutions based on your challenges.
Our project modules at a glance:
Logistics optimisation & Supply Chain Consulting modules
Logistics & SCM Opportunity Assessment
- Benchmarking & maturity testing
- Identification of opportunities & action plan
Transport Partner Management
- Transport partner strategy & professionalisation
- Securing resources and resource training design
- Competition, effective transport tendering, fact-based negotiation
- Transport cost reduction
Freight & Logistics Tender
- Competitive pricing, quality, and performance assurance
- Individual weight-distance matrix
- Efficient warehouse logistics & layout
- Optimised processes & working capital
- Optimising logistics through synergies
- Finding a fair and stable collaboration model
- Distance and route reduction
- Reduce resource & logistics costs
Supply Chain Network Optimisation
- Optimise delivery times, service levels, & processes
- Reduce working capital
Inventory & Order Management
- Optimal order quantity & stock on hand
- Optimise working capital
- Fleet concept tailored to requirements
- Cost optimisation
Supply Chain & Logistics Strategy
- Sustainable maximum value contribution of the supply chain
- Clear objectives, concrete measures
Digital Logistics Management & Reporting
- Information advantages in speed, scope, & significance
- Efficiency through automation, data integration & process simplification
Interim Supply Chain & Logistics Manager
- Rapid response: candidates within 48h
- Matching of requirements and assessment of suitability using logistics experts
- From dispatcher to logistics manager
Short-term staff shortage? Unexpected need for action?