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Digital Transformation and Technologies in Supply Chain Sourcing

by Editorial Office

The increasing digitization of global supply chains is also having an impact on Supply Chain Sourcing: Companies are turning to smart technologies and strategies to optimize their procurement processes and better adapt to ever-changing market demands. The digital transformation in sourcing offers a multitude of opportunities and is fundamentally changing how managers identify, select, manage and interact with suppliers. We discuss how companies can optimize the different elements of Supply Chain Sourcing with the help of various technologies.

Stronger focus on Supply Chain Sourcing

Increasing customer satisfaction, reducing costs, realizing time advantages and improving quality – to achieve these objectives, supply chain management (SCM) takes a holistic approach. The different areas of a supply chain are no longer viewed individually, but increasingly from a cross-company, process-related perspective, i.e. from the end customer’s point of view. To this end, decisions of supply chain players are coordinated in order to exploit synergies and avoid bottlenecks. A key component of the supply chain is sourcing, which includes the procurement of raw materials and services and therefore often acts as an interface for the procurement of external services. After all, the increasing specialization of companies, which in many cases goes hand in hand with outsourcing to specialists, and a growing variety of products in many industries entail that an ever-increasing number of companies are involved in many supply chains.

To ensure that the logistics processes of these multi-level supply chains interacts seamlessly, managers must carefully consider how they select their suppliers, structure contracts and optimize their supply chains. In a constantly changing business environment, strategic Supply Chain Sourcing is therefore increasingly becoming a decisive factor for success. It plans, organizes and controls the procurement of goods and services and can ensure that the impact of the growing number of players is minimized while increasing the flexibility and competitiveness of your own company.

How digital technologies optimize the sourcing areas

Various digital technologies can be used in the area of Supply Chain Sourcing for procurement and inventory management as well as for increased collaboration and joint networks. The use of intelligent tools pays off – not only from an organizational perspective, but also with regard to the procurement strategy. Yet which solutions contribute to the optimization of work processes – and in which areas?

Procurement planning and analysis – utilizing the potential of data

By using data analysis, market research tools and machine learning, companies are able to gain in-depth insights into their procurement habits. This enables more accurate demand forecasts and the identification of potential cost savings. The analysis techniques process and evaluate historical procurement figures in real time and create precise forecasts. As a result, managers can plan more efficiently and avoid over- and understocking in the warehouse.

Supplier management – promoting collaboration via digital platforms

Selection, evaluation, interaction – companies can use digital platforms to improve interaction with their suppliers and promote collaborative cooperation. The use of digital communication tools facilitates a seamless exchange between supply chain participants, which strengthens trust and increases the transparency of all processes. Inefficient areas, bottlenecks or delays can be uncovered and addressed more quickly through multilateral data exchange. This is also reflected in the results of the 19th Hermes Barometer on the topic of transparency: a large proportion of the companies surveyed particularly value the improved ability to react to unforeseen events, which they believe goes hand in hand with improved supply chain visibility.

Digital order processing – reducing potential sources of error

E-procurement systems, electronic order processing and automated order processing are proving to be extremely valuable in the area of order processing. E-procurement systems form the backbone of this, enabling companies to automate, digitize and accelerate processes. Thus, manual intervention and potential sources of error are significantly reduced. Electronic order processing and digital order processing also help to increase efficiency and ensure shorter delivery times, lower costs and improved competitiveness.

Inventory management – avoiding costly under- or overstocking

Innovative technologies such as inventory management software, IoT sensors or RFID technology play a crucial role in warehouse management. They offer precise real-time monitoring of warehouse stock and record data on temperature, humidity and other environmental conditions in addition to the physical state of the goods. Costly bottlenecks and under- or overstocking can thus be avoided and the punctuality and quality of deliveries guaranteed. By using these intelligent tools, companies are able to increase operational efficiency while optimizing capital tie-ups and storage costs.

Sustainability and compliance – tracking environmental impact in real time

Digital technologies also make it easier to monitor sustainability aspects along the sourcing processes. Companies can track and analyze energy consumption, environmental impact and CO2 emissions in real time. Based on this data, managers are able to make a more targeted selection of suppliers or use materials that meet ecological criteria. The same applies to adherence to compliance guidelines and ethical standards: supplier files and documentation can be better managed thanks to digital tools, thereby ensuring that suppliers act in accordance with applicable laws and regulations. Overall, the topic of sustainable procurement is becoming increasingly important.

Supply chain planning – increasing transparency by using smart tools

The integration of IoT sensors and blockchain technology enables uninterrupted real-time tracking of products. This contributes significantly to increasing supply chain transparency and enables companies to stay informed about the exact location and condition of goods at all times. In the event of disruptions or quality deviations, the data can be used to take appropriate measures quickly and in a targeted manner.

The different areas of Supply Chain Sourcing are closely linked and interact with each other. However, this is not the only aspect that should be considered when selecting suitable technologies. Specific objectives and requirements of the company should also be taken into account when making decisions – often several tools and solutions can be integrated in order to fully exploit the optimization potential.

Conclusion: Exploiting synergetic effects through Supply Chain Sourcing

The digital transformation of Supply Chain Sourcing aims to improve the transparency, flexibility, efficiency and competitiveness of a supply chain. With the help of intelligent technologies, companies can adapt their procurement strategies to dynamic market conditions and optimize existing processes at an operational, tactical and strategic level. The more precise design of procurement strategies, the use of data analysis and the use of automated systems in order processing allow resources to be better utilized and costs to be reduced. The ability to adapt supply chains in an agile manner, use innovative technologies and develop strategic partnerships enables companies to adapt to the dynamic logistics environment. They therefore benefit in the long term from the symbiotic and synergetic effects of a Supply Chain Sourcing approach.

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