What is a digital supply chain and why is it necessary to stay competitive?
In order to understand a digital supply chain, we need to first speak of what it would replace or improve upon: the analog supply chain.
With an analog supply chain, tasks and information are moved in non-digital ways, such as sending a paper invoice in the mail or manually typing in inventory counts. For the building materials industry, supply chains are still largely analog. While supported by some automation and digital tools, they still involve a lot of paperwork and human labor.
In a digital supply chain, tasks and information are automated and moved electronically between parties. For example, let’s assume you’re a distributor and you invite your customer, a local truss manufacturer, to view your available inventory online. The buyer at the truss manufacturer logs into your website, finds a truck of 2×4 16′ lumber, and buys it—simply by entering a PO number and choosing a delivery location. This immediately takes that product out of your inventory and puts it into the truss manufacturer’s inventory with a status of “on-order.”
Notice there was no phone call, no need for you to write up a sales order, no need for the truss manufacturer buyer to write up a purchase order, no need to allocate or manually remove inventory from your system, and no need to add that inventory to the truss manufacturer’s system of record. This is a digital supply chain experience, and it takes about 1/100th of the time for the transaction to complete versus how things operate in many businesses today. There are no errors and it’s convenient for everyone involved.