A tough balancing act

Today’s leaders face challenges that require a delicate balance between innovation, efficiency, and transparency.

1. Meeting customers’ demands
   Supply chain leaders are under constant pressure to enhance business performance and improve customer service while maintaining full transparency. With customers demanding speed, innovation, and sustainability, the competition for market share will be won by the companies with the best-run supply chains.
2. Staying agile in the face of change
   Adaptability is essential to maintaining a resilient supply chain. Real-time visibility and insights enable faster, more informed decisions—helping teams mitigate risk and respond effectively to disruptions.
3. Minimizing waste
   Efficiency is also critical for staying competitive, so automation can play a major role in unlocking new levels of productivity for supply chain teams.

Why do companies need a digital supply chain?

Supply chain management spans the entire spectrum—from product design and planning to procurement, manufacturing, logistics, and the operation of critical assets and services. By connecting these processes and collaborating with external partners through a digital business network, companies can enable more contextualized decision-making and achieve levels of automation that were previously out of reach.

There are two main reasons why companies should build a digital supply chain: the benefits and results it can offer—and the possible negative consequences of not having one.

What is a digital supply chain?

A digital supply chain is a system of digital processes, tools, and technologies that optimize supply chain management and operations. It involves the use of advanced technologies and analytics that improve visibility, efficiency, transparency, agility, and performance across supply chain operations.

What are the consequences of not having a digital supply chain?

A digital supply chain can help companies adapt to market changes, improve operational efficiency, and deliver a competitive customer experience. Conversely, not having one can undermine the entire supply chain management and adversely affect other aspects of the manufacturing business:

Limited visibility: Without a digital supply chain, manufacturers may lack visibility into key supply chain processes and tasks, such as inventory management or monitoring demand fluctuations.

Inefficiency: Non-digital supply chain increases the chance of human error, slow down processes, and increase lead times for sourcing, procurement, logistics, and manufacturing execution.

Lack of agility: A digital supply chain involves a continuous stream of real-time data on production, inventory management, and other key processes—without it, manufacturers may struggle to react to changing market conditions quickly.

Competitive disadvantage: A non-digital supply chain suggests that a company is underutilizing innovative procurement solutions that could have offered a competitive edge; it also undermines broader digital transformation and may hinder the adoption of advanced technologies, such as AI, Internet of Things (IoT), and predictive analytics.

Environmental impact: Mitigating environmental impact is increasingly important, due to both consumer sentiment and regulatory pressure, and digitization is an important step towards building a sustainable supply chain.

Impediment to customer acquisition and retention: Without a digital supply chain, it’s harder for manufacturers to meet their customers’ demand for efficiency, sustainability, and transparency.

Why can’t my manufacturing company just keep its non-digital supply chain?

While not a requirement, a digital supply chain offers a strong competitive advantage. By contrast, an outdated or inefficient supply chain infrastructure may hinder customer acquisition and retention, increase costs and disruption risks, and impede innovation.

Sustainability is not just about ethics

Due to strong consumer sentiment on environmental practices, a sustainable supply chain may have the added benefit of improving customer perceptions. At the same time, there’s also growing regulatory pressure. For example, failing to meet sustainability requirements can result in fines or hinder expansion into particular markets. This is where environmental management software, which tracks, measures, and reports on manufacturers’ sustainability KPIs, can be invaluable.

Why use SAP Business Suite and SAP supply chain management solutions together?

Supply chain leaders must rethink how they manage and use data to stay resilient and drive meaningful growth. SAP Business Data Cloud Insight Apps can empower your supply chain team to act with precision by using AI-driven insights to streamline operations, enhance decision-making, and adapt to a rapidly shifting business landscape.

• Today’s complexity demands more than incremental fixes—it requires a bold shift to a new era of enterprise management.
• Central to this shift are AI and systems of agents that collaborate across functions—picture a finance agent instantly coordinating with a supply chain agent to redirect logistics, while a workforce agent adjusts staffing.
• But AI alone isn’t enough. You need robust applications—your mission-critical backbone—that unify and enrich data for real-time insights.
• And that’s where SAP stands out: we seamlessly combine applications, data, and AI into one ecosystem.
• This integration empowers finance teams to transcend silos, harness cross-functional intelligence, and steer the enterprise with agility and confidence.

SAP Business Suite empowers supply chain leaders to collaborate across all key areas, including procurement, finance, operations, HR, sales, and IT. That way, every executive—from the CRO to the CPO—can rely on supply chain data to gain deeper insight into risk, projected costs and revenue, workforce safety, and total cost of ownership.

This collaborative model breaks down departmental silos, allowing the supply chain function to actively influence decisions across the enterprise—driving not just compliance and efficiency, but also innovation and growth.

SAP Supply Chain Management base and premium packages provide supply chain leaders with a strong foundation for digitizing core processes, along with the flexibility and agility to scale operations as business needs evolve.

How does SAP Business Suite enable true supply chain orchestration and make the COO a strategic ally to the overall business?

Supply chain management across design, planning, and operations

Data-driven decision-making

• Use real-time operational data and AI-assisted analytics to make informed, in-context decisions
• Achieve end-to-end visibility over supply chain processes, from order management to logistics and distribution

Multilevel supply planning

• Anticipate and overcome supply chain disruptions with advanced available-to-promise (ATP) functions
• Improve demand forecasting with machine learning algorithms, statistical modeling, and automated outlier correction in your sales history data

Supply network management

• Assess supplier reliability based on historic performance
• Collaborate with supply chain partners
• Streamline procurement transactions with logistics and trading partners

Warehouse and inventory management

• Optimize warehouse management and operations through automation
• Reduce labor and inventory costs
• Improve space and resource utilization
• Increase warehouse transparency and reduce risks like stockouts and excess inventory

Optimized logistics

• Streamline and speed up deliveries
• Gain real-time visibility into inbound and outbound shipments
• Improve order management
• Increase cost-efficiency of logistics and avoid logistical bottlenecks

Product research and development

Relevant products

• Identify the most urgent and promising product development projects by running crowd innovation campaigns
• Use voice-of-the-customer systems to obtain customer feedback and insights

Integrated innovations

• Combine business and sensor data with engineering models to create digital twins
• Connect 3D CAD data to ERP and data to visualize, test, and manage products using digital twins

Accelerated product development

Reduce time to value and costs with a scalable cloud-native solution, SAP Product Lifecycle Management (SAP PLM), that supports the entire collaborative idea-to-market process.

Transparent product lifecycle management

• Support decision-making and collaboration by providing a 360-degree overview of the entire product development process
• Enforce consistent change management
• Consolidate product, material, and packaging specifications in a single source of truth

Production planning and manufacturing execution

Streamlined production planning

Manage complex production planning cycles that involve multiple supply network partners, different production locations, and multilevel bills of material.

Informed manufacturing decisions

• Establish an uninterrupted flow of data across financial, operational, and supply chain processes
• Gain real-time insights, which help make decision about production planning and manufacturing execution

Scalable production

Shift, adjust, and scale production in response to fluctuating supply chain conditions, seasonal challenges or demand, and new product launches—thanks to cloud scalability, it doesn’t have to involve extensive on-premises infrastructure.

Sustainability and responsible production

• Design and produce products sustainably
• Reduce waste and carbon footprint
• Minimize risks related to environmental regulations

Monitored manufacturing execution

• Empower shopfloor operations personnel
• Boost manufacturing performance
• Track and analyze production with manufacturing execution systems

Asset management and equipment maintenance

Extended equipment life

Use real-time performance data gathered by IoT devices connected to equipment to optimize maintenance of physical assets, lower the risk of unexpected breakdowns, and increase equipment reliability.

Reduced downtime and costs

Prevent downtime by anticipating and addressing equipment failures before they even occur—a proactive approach made possible by AI-based predictive maintenance and digital twins.

Optimized spare parts inventory

Integrate asset and inventory management with the digital supply chain solutions to minimize costs associated with excess stock or emergency sourcing of spare parts.

Simplified maintenance operations

Enable maintenance technicians to access manuals, work orders, and inventory information on mobile devices.

How to select the right software for your digital supply chain: Resources and practical tips

We know that decisions about supply chain management take time and research. For example, manufacturers looking to build a robust digital supply chain need to evaluate prospective software providers. Here are some green flags to look for:

Innovation: AI for supply chain and the use of artificial intelligence in manufacturing are becoming increasingly widespread, so manufacturers should look for digital supply chain solutions that include or support AI capabilities.

Scalability: The needs and challenges in supply chain management (and in smart manufacturing) can change quickly, so manufacturers that want to future-proof their digital supply chain need scalable, cloud-first software infrastructures, which would ensure the necessary flexibility and agility.

Portfolio synergy: Manufacturers benefit from a versatile software portfolio, which includes digital supply chain solutions that are cross-compatible with other key systems already used in manufacturing, such as ERP.

Privacy and security: Innovative digital supply chain solutions often require on data, especially those using AI, so manufacturers should look for software providers that have a good record when it comes to data security.

Success stories: Finetuning a digital supply chain is a high-impact initiative, so manufacturers need software providers with a proven track record of success, who have testimonials from successful customers, relevant case studies, and a solid reputation in the industry.

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