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Digital Transformation Is Changing Supply Chain Relationships

Editor's Note: If you are interested in becoming an expert on Supply Chain Management (SCM), take a look at Flevy's Supply Chain Management (SCM) Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

Featured Best Practice on Digital Supply Chain

25-slide PowerPoint presentation
In today's Digital Age, organizations are faced with the changing nature of the demand curve and the element of uncertainty in the Supply Chain. For Operations Teams, the challenge and Competitive Advantage has become: How well we respond and execute against ongoing uncertainty. With the world [read more]

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Digital business transformation is an opportunity to improve the operation of any company by increasing efficiency and productivity. But the whole essence of the process lies in the formation of new channels with other companies that were previously unavailable or not popular.

For example, today the managers of some enterprises agree with representatives of another business on the use of the same warehouse for the storage of products. This helps to save the budget for both parties, build trusting relationships for continued cooperation, and generally makes work easier.

In addition, digital transformation involves the implementation of new services and products in conjunction with other enterprises. We will talk about this and other pros and cons of the process further.

What Is the Problem of Digital Business Transformation?

Despite facilitating the work of the company, the digital transformation of the supply chain and other components requires business representatives to have closer relationships with each other. This causes difficulties for many, because. requires building trusting relationships that cannot be built overnight. In addition, all levels of the organization itself need them. Employees of different departments, their leaders, and managers should work together for the common good in normal and stable relations with each other. Otherwise, it is unlikely that you will be able to implement digital transformation in your business.

Another challenge that companies may face is the need to change the way they establish and manage relationships with other companies. This will entail both the adaptation of documentation and the choice of more unusual models of communication with providers of necessary services. New contracts and new deals, meeting new people, and not always successful cooperation – it would seem that these are the constant hardships of any business, but when switching to digital transformation, everything will be a little different.

Despite these challenges, digital transformation is very beneficial for the future of enterprises.

How Digital Transformation Has Impacted the Supply Chain Industry

According to research, by 2023 organizations that have undergone digital transformation will contribute more than half of the global GDP. Perhaps, this can already be considered indisputable proof of the importance of DT.

No. 1. Identification of opportunities for interaction with other business representatives

Supply chains are undergoing major changes due to the urgency of digital transformation. This implies changing the model of communication with those who are interested in changing the nature of cooperation. Third-party companies, in turn, must also make adjustments to their work.

Thus, digital transformation allows companies of different levels to quickly establish relationships with existing or new partners. In the end, each side gets what they want. When all communication is reduced to the digital sphere, new horizons open up for creating interesting customer-oriented projects. Not only two companies can be in a trusting relationship, but there can also be many more – the main thing is that each party is interested in and participates in the life of another business.

No. 2. Formation of performance indicators to measure success

Every project that is created in the context of digital transformation must have a clear plan, strategy, and goal. So that both you and your partner can track the result and success of this cooperation. Sometimes you will have to face failures, but they also need to be analyzed based on data about the desired result.

Also, performance indicators are needed to be able to implement adjustments in the course of interaction with partners.

With the help of digital transformation, it will be possible to save time for data collection and analysis. Often companies have to spend several hours every day filling out tables and prescribing information about each transaction, sale, etc. And automation will also affect the efficiency of the company.

No. 3. Assistance in the implementation of responsive contracts

As we already wrote, the problem of implementing digital transformation lies in the need to form new contracts and build new business processes with unfamiliar companies. Moreover, all this should take place at the level of trust.

But therein lies the big plus of the transformation. The digital world opens up access to electronic contracts, which saves a lot of time. For example, when everything is written in the usual paper form, each document must be drawn up anew with changes. Also, all of them need to be stored in folders, and if they are lost, it will be extremely difficult to recover important data. And electronic documents are always stored in one place, they are much more difficult to lose (if transferred to the cloud), and they are also easily copied and changed depending on the needs.


We have dismantled the undeniable evidence of the value and importance of digital transformation, which can be applied in every area of business. This is a bright future for your company, which, despite the initial problems, is an important link in your prosperity. Use it and implement it into your strategy today to get great opportunities tomorrow.

25-slide PowerPoint presentation
We are living in the Digital Age. For organizations to remain competitive, they must develop and execute robust Digital Transformation Strategies. Organizations that have excelled in Digital Transformation distinguish themselves through their mastery of the 4 critical Business Ecosystems: 1. [read more]

Want to Achieve Excellence in Supply Chain Management (SCM)?

Gain the knowledge and develop the expertise to become an expert in Supply Chain Management (SCM). Our frameworks are based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. Click here for full details.

Supply Chain Management (SCM) is the design, planning, execution, control, and monitoring of Supply Chain activities. It also captures the management of the flow of goods and services.

In February of 2020, COVID-19 disrupted—and in many cases halted—global Supply Chains, revealing just how fragile they have become. By April, many countries experienced declines of over 40% in domestic and international trade.

COVID-19 has likewise changed how Supply Chain Executives approach and think about SCM. In the pre-COVID-19 era of globalization, the objective was to be Lean and Cost-effective. In the post-COVID-19 world, companies must now focus on making their Supply Chains Resilient, Agile, and Smart. Additional trends include Digitization, Sustainability, and Manufacturing Reshoring.

Learn about our Supply Chain Management (SCM) Best Practice Frameworks here.

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About Shane Avron

Shane Avron is a freelance writer, specializing in business, general management, enterprise software, and digital technologies. In addition to Flevy, Shane's articles have appeared in Huffington Post, Forbes Magazine, among other business journals.

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