Supply chain management is a challenging task for every business, and digitalization can reduce various challenges associated with conventional supply chain management. Typically, a supply chain management process involves sourcing, distributing, and selling materials. While the conventional supply chain management system makes the process slow and complex, a digitized system can automate the tasks.
According to Allied Market Research, the value of digital supply will increase to $13,679.00 million in 2030 from $3,918.00 million in 2020. Therefore, the CAGR of the digital supply chain will be around 13.2% in a decade. However, many enterprises face complications in implementing a digitized supply chain management system. In the following section, you can find those challenges with digitizing logistics and supply chains.
1. Lack of Skills in Handling Digital Systems
Though the world is moving rapidly towards digitalization, many companies are not ready yet to adapt to a digital supply chain system. Lack of knowledge and experience in handling digitized systems is a common reason in such cases. Sometimes, enterprises lack the infrastructure to adopt a digitized supply chain and logistics system.
Such challenges in digitizing SCM are common with small and medium enterprises. If employees are not prepared to adapt to the digitized systems, the organizations should arrange corporate training for them. On the other hand, it is also essential for enterprises to invest in digital infrastructure. Cloud infrastructure helps businesses to implement a digital supply chain system easily.
2. Poor and Unauthorized Software
Businesses need cutting-edge software for digitizing logistics and supply chains. Finding the right software is one of the major challenges for businesses. Choosing poor-quality and unauthorized software will bring many hiccups in managing the supply chain on the digital platform. Moreover, data theft is a risk if you choose an unauthorized tool.
According to the BCI Supply Chain report, around 69% of businesses have limited visibility of the supply chain due to poor and unauthorized tools. For logistics automation, it is essential to find an advanced tool for managing the supply chain and logistics. The platform should be feature-rich and secured. Most importantly, it should not exhibit frequent technical hiccups, which cause troubles for the companies to track and manage their supply chains.
3. Poor User Experience and Disjoint Systems
Despite choosing an advanced tool, businesses face technical glitches that lead to poor user experience. Faulty implementation of the automating SCM software is the reason behind poor user experience. Businesses face challenges in implementing the tool due to multiple reasons. A common reason is the lack of quality in digital infrastructure.
Disjoint implementation of the supply chain software does not allow the users to track orders, tickets, contract management, logistics, and other crucial things on the centralized system. In such cases, a business must find professional services for implementing the supply chain system.
4. Cost of the Supply Chain Management Tools
Digitalization of logistics and the supply chain is not all about buying and implementing the tools. Businesses should arrange training for the employees before implementing the digitized supply chain platforms. Moreover, the enterprises also need to develop digital infrastructure to implement the digitized supply chain management system.
Small-scale organizations find challenges in finding a fund to make such investments. Therefore, cost remains a big concern for small businesses in digitalizing their supply chain management. However, investing in a digitized supply chain brings cost-effectiveness for businesses. The digitized supply chain and logistics management tool can automate various tasks. Nevertheless, it can prevent expenses in tracking and monitoring the goods.
5. Maintaining a Seamless Communication
Businesses need end-to-end logistics when it comes to the digitization of supply chain and logistics. However, maintaining flawless communication can be challenging due to the absence of an end-to-end system. Businesses have to find advanced logistics and supply chain software for obtaining end-to-end support. Moreover, the implementation of the system should be seamless. Otherwise, businesses will come across communication hassles.
In the end…
Therefore, these are some common challenges for businesses in implementing SCM automation through digitalization. Overcoming these challenges is essential for the businesses that want to implement an effortless supply chain system on the digital platform.