Understanding the move from a traditional to a digital supply chain with the Supply Chain of Things

Fifty years ago, Moore’s Law told us the number of transistors per square inch on integrated circuits will double every two years for the foreseeable future. While that estimate has mostly held true, it is predicted that Moore’s Law will end by 2022 as it becomes physically impractical to shrink transistors much further.

Steve Vecchiarelli, vice-president
supply chain solutions, Digi-Key Electronics.

Today, companies are changing their methodologies in how they manage their supply chains. In the maturation of supply chain management, the processes to get goods and services from one company to the other were a mix of manual and computer driven routines. The only means of accomplishing this was through manual intervention and Excel spreadsheets up and down the chain. In the days of shorter life cycles for new products this is becoming too slow.

The demand for ‘Better, Cheaper, Faster’ is causing a move towards an inflection point on how a company responds to its customers’ supply chain demands. Companies are looking for a way to automate the purchasing process and increase their time to market performance. Moving to a completely digital environment not only improves a company’s time to market, but, drives up quality, improves cost reduction activities and heightens customer satisfaction.

Chains are forced to compete in a rapidly changing environment

In today’s global marketplace, supply chains are forced to compete in a rapidly changing environment, where they must either change and be open to innovation or lose valuable market position. The companies that are going to thrive in the move to a digital supply chain are the ones who are able to adapt or the ones that can see the current limitations of their manual (analog) systems and have mapped out a clear a path to digital.

As companies move towards a digital supply chain, Application Program Interfaces, commonly known as APIs give better visibility into suppliers’ systems to make computer driven solutions. With this technology a customer’s software can retrieve real-time data, such as stock and pricing information. This real time data helps make a decision comparing their needs with a supplier’s ability to satisfy them. Digi-Key has built a digital platform that becomes the beginning of the Supply Chain of Things (SCoT). Companies can gain exponential advantages in their processes by exploring and adopting some of these methodologies.

In a traditional supply chain scenario, analysis provides information to make a decision based on a responsive approach. This may perhaps include looking at current stock levels within the company and past production needs to retroactively determine what incoming supply of components is needed. The data from outside the company, such as distributor stock levels and delivery dates, have to be curated manually which costs time and impacts the relevancy of data. With a digital supply chain that harnesses the power of SCoT, purchasers can make decisions from real-time, live data that gives a stronger basis of actual needs within the business, as well as the invaluable insight of real-time, live data from outside the company. Now these decisions can be made using a digital platform such as Digi-Key’s Supply Chain of Things, which gives a more complete view of the supply chain from end-to-end and empowers businesses to make more educated and more accurate purchasing decisions.

Digital supply chain has made the traditional supply chain even more effective

In the pursuit of better visibility, faster payment and cheaper options, the digital supply chain has made the traditional supply chain even more effective. The SCoT integration smooths the process because of lateral information sharing and cross functional involvement. Order, pay, receive and use the components much faster than ever before. The traditional supply chain allowed you to see where your shipment had been according to information from the courier. Now the actual location of a shipment is available, at times, through GPS technology. Examples like GPS tracking and other technologies are reasons why improved communication provided by using a digital approach provides a significant change in the way we do business.

Just as Moore’s Law opened our eyes to the possibilities of integrated circuits, it is mind-boggling to imagine the exponential improvements the integrated digital solution can bring to the supply chain. Digi-Key Electronics is continually improving its involvement with the Supply Chain of Things by providing digital solutions such as our API to provide customers with real-time, relevant information.

The up and coming Supply Chain of Things takes “Cheaper, Better, Faster” to a whole new level, giving analysts and purchasers actionable and real-time data exactly when they need it. Supply chain decisions are now more insightful rather than just a reaction to data that loses its relevancy with every passing hour. While it will become physically impossible to shrink transistors, it seems the digital solutions such as Digi-Key’s SCoT are just beginning to shrink the inefficiencies of a traditional supply chain model.