There’s a new challenge within original equipment manufacturers (OEMs): To bring better, closer, and stronger links with their customers, and the best solution to overcome it is embarking on digital transformation, especially extended and improved supply chain.
Many new disrupting technologies can improve supply-chain processes and bring better customer experience, such as the Internet of Things (IoT), Artificial Intelligence (AI), Cloud, Blockchain, Machine Learning, and more.
In this blog, I will show how OEMs are changing, based on a report by The Economist Intelligence Unit (sponsored by Microsoft), and how new technologies can help them address today’s supply chain challenges.
There is a clear difference between traditional and extended supply chains: Transparency.
Consumers may be willing to pay 2% to 10% more for products from companies that provide greater supply chain transparency (MIT Sloan School of Management). Nowadays, customers are demanding knowledge of both internal and external processes linked to the products they consume; therefore, companies must communicate this knowledge to build strong customer relationships.
An extended supply chain is structured to trace every process across the entire company, drawing information from all areas to effectively provide accurate information both for customers and stakeholders about each step of the process. From raw materials to manufacturing, transportation, employee treatment, suppliers, product quality, and much more. This generates value for the company, not only by meeting the newest demand and overcoming today’s challenge but also by getting real-time data from across the supply chain, so decision-makers can easily analyze improvement opportunities and act upon them.
In the Economist Intelligence Unit report, extended supply chain utilizes innovative products to take one step further: Using smart products to transmit data back to the OEMs about their condition and usage to improve customer experience and satisfaction even after purchasing.
It sure sounds great! But The Economist Intelligence Unit asked fundamental questions as the basis for their report: “How willing are OEMs to deploy them, and how prepared are they to identify and act on the valuable insights new technologies will deliver? What are OEMs’ aspirations for intelligent supply chains? And how can supply-chain transformation improve customer experiences?”
The Economist Intelligence Unit found the following:
“99% of OEMs believe that the digital transformation of their supply chain is important for meeting their organizations’ strategic objectives.”
OEMs can achieve these objectives by relying on new technologies. The most effective are the ones that deliver data analysis operations: Cloud, robotics, IoT, AI, and blockchain. But there is a long way to go. When the Economist Intelligence Unit asked which technologies are currently being used, OEMs answered cloud 61%, robotics 18%, IoT 16%, blockchain, and AI just 5% and 4%.
Cloud technology, such as Dynamics 365, has freed data across the supply chain to be easily used for collecting, storing, and processing within various integrated systems. Smart products stream data to these cloud-based systems to provide clues and insights regarding how customers interact with such products.
Blockchain helps supply chain transparency and efficiency by delivering multiple parties in an end-to-end supply chain. It brings a unified view of the process and goods while being constantly recorded to ensure the customer’s demand for knowledge is met.
Microsoft Dynamics 365 is a cloud-based system capable of unifying data across the entire supply chain. I have always thought that ERP solutions, such as Microsoft Dynamics 365 Supply Chain Management, are great steppingstones towards digital transformation for the features previously explained (cloud and blockchain) and for the many capabilities they have available to help a business grow and evolve.