Against a backdrop of sluggish consumer spending, retail companies are on the lookout for ways to improve profitability and competitiveness to sustain their growth. The digitizing the supply chain responds to this dual challenge.
It helps to significantly reduce logistics costs. For a retail company, logistics costs generally represent between 10 and 15% of total sales. At Amazon, they even amount to more than a quarter of sales.
The digital transformation makes it easier to align demand with stock and supply levels. Thanks to automated processes and reliable forecasts and projections, retailers can improve their inventory management and optimize their logistics flows.
Digitizing the supply chain means greater responsiveness to fluctuations in demand, greater visibility across the entire chain, and the ability to optimize the customer experience by tackling irritants such as out-of-stock situations or improving product and delivery traceability. Finally, automation boosts the productivity of supply chain teams and processes.
To take advantage of these benefits, retailers need to optimize their data management and integrate new technologies such as AI and automation in the supply chain. This digital revolution requires a close collaboration between business teams and the IT Department (and other affected departments, such as Finance and Controlling).
In this article, find out more about the role played by the IT Department (Direction des Systèmes d’Information) and the key issues it must address as part of the digitization of the supply chain.
The role of the IT department in digitizing the supply chain
In 2022, a PwC study revealed that that 68% of supply chain managers had initiated a digital transformation plan. Pourtant, deux tiers d’entre elles ne se considéraient pas encore matures sur ce sujet.
The obstacles to digitalization were :
- Lack of in-house skills
- Lack of quality data
- Reluctance to change
- The disconnect between IT and business
In our discussions with retailers, these obstacles are still a recurring theme. Even if supply chain managers understand the benefits and ROI of digitalization, a lack of digital maturity remains an obstacle to project progress.
In this context, the IT Department has a key role to play in support supply chain teams in upgrading their skills and aligning technological solutions with business needs. Mais qu’implique concrètement cette mission ?
Making data accessible to business users
To meet the challenges of profitability, competitiveness and productivity for retail players, supply chain management must be able to rely on data. La disponibilité de la data, en temps réel, est la clé pour améliorer la gestion des stocks, les approvisionnements, les flux logistiques, la coopération avec les fournisseurs et les autres maillons de la chaîne.
The basis of this “data-based” supply chain management is forecasting. It is the forecast, and the resulting projections, that feed into decision-making or serve as the basis for the automation of logistics processes. The forecast is the result of a cross-analysis of several endogenous and exogenous factors (sales history, seasonality, climate, etc.).
In short, this intelligent management requires in-depth work on the part of the IT department to ensure that upload the various sets of data to the supply chain’s business tools.
The IT Department is responsible for integrating the technological tools needed to connect the various links in the supply chain. It implements solutions capable of smoothing the exchange of information between departments and external partners. This integration helps to improve the synchronization of operations, reduce inefficiencies and create a solid foundation for automation.
It makes data accessible and actionable, to help supply chain teams optimize their processes, improve decision-making and, ultimately, increase overall supply chain performance.
Improve supply chain visibility and traceability
Anticipation, via forecasting and projections, is the driving force behind a more efficient supply chain.
By working with data, supply chain managers can make informed decisions about inventory and supply management. They can react more quickly to changes in demand, and gain greater flexibility in critical situations.
Beyond this predictive dimension, the digitized supply chain is also more adaptive. To provide a real-time overview of product flows, the IT department deploys solutions such as warehouse management systems (WMS) or transport management systems (TMS). It also integrates technologies such as IoT or collaborative cloud platforms, enabling critical data to be centralized and visualized. These tools help identify bottlenecks in the supply chain and anticipate disruptions.
Automate processes for greater efficiency
The IT department implements technologies such as AI, IoT or robotics to automate repetitive tasks, reduce errors and increase efficiency.
For example, the introduction of machine learning solutions for forecasting helps teams to integrate a growing number of influencing factors to refine the forecast. This makes forecasters’ work easier, and increases the reliability of forecasts and projections. On this basis, we can move towards an intelligent supply chain in which tasks such as planning and scheduling are largely automated.
Similarly, data sharing and communication between different tools facilitates automation. For example, in e-commerce, if you interface your ordering system (OMS) with your warehouse inventory management system (WMS) and your transport system (TMS), you can automate a large part of the order management process, from picking in the warehouse to choosing the carrier and printing the delivery note.
Manage relations with technology partners
Last but not least, the IT Department is involved in the choice of technology solution providers.
Even if the request comes from business users, the IT Department ensures that a solution meets the company’s strategic needs.
She works with the publisher’s teams to integrate the solution into the company’s IS architecture, and to provide the data required for optimal operation of the new tool.
What are the challenges facing the IT department when implementing a new supply chain solution?
For the IT department, implementing a new supply chain solution involves several major challenges:
Integration and interoperability of the solution with existing systems
The IT department must ensure that the new solution integrates seamlessly with existing systems and enables seamless data sharing.
For example, when implementing a forecasting solution, you need to ensure that in-store sales data flows back correctly. However, existing systems are not always natively compatible with new-generation solutions.
From an IS point of view, there are 3 possible options for new tools to extract data from these systems without disrupting company operations:
- API integration, provided existing systems have suitable APIs
- The use of middleware to enable the new tool to communicate with existing systems
- Development of customized integrations
Data security
The IT Department must guarantee the protection of all supply chain flows and data against hacking and cybercrime.
The fact is, the supply chain has become a prime target for cybercriminals. Les attaques peuvent viser à rendre inaccessibles des données importantes, modifier des informations essentielles comme les volumes de production ou de commandes, ou voler des données confidentielles.
From an operational point of view, the inaccessibility or corruption of data can disrupt or interrupt the activity of the entire supply chain, with cascading consequences not only financially, but also for the retailer’s reputation.
Change management support for business users
When choosing a software publisher, the IT department ensures that the solution meets the specific needs of all supply chain players, while remaining user-friendly and easy to use.
Throughout the project, the IT department and business teams work with the software publisher’s project managers to facilitate the transition to the new tool. They can plan and organize employee training to remove barriers to change and facilitate adoption of the new solution.
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The digitization of the supply chain represents an essential lever for competitiveness and profitability for retailers.
However, this transformation is not limited to the implementation of new technologies. It requires a strategic vision, support for change and close collaboration between business teams and the IT department.
As the conductor of the digital transformation orchestra, the IT Department plays a key role: it ensures the integration of tools, guarantees data quality and security, and supports employees to maximize the adoption of new solutions.
This collaboration is part of a global dynamic in which every technological decision supports the company’s strategic objectives.
The success of your supply chain digitization projects depends not only on the alignment of business needs and IT challenges, but also on fruitful cooperation with your software vendor.
At Optimix, our project managers work hand in hand with the customer’s cross-functional supply chain and IS teams to ensure that all your issues are taken into account, to optimize the timeframe and progress of the POC, and to support your teams in the effective use of our solution.
