Companies in the race to go digital to avoid supply chain disruptions

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Technology

Companies in the race to go digital to avoid supply chain disruptions


Doug Hunter, Head of Customer Activation and Ecosystem for SYSPRO Africa. FILE PHOTO | NMG

The Covid-19 pandemic has come with many lessons for businesses. It’s been a learning curve, but Kenyan manufacturers and processors are rapidly harnessing technology to tackle supply chain issues resulting from lockdowns and movement restrictions in 2020.

For almost two years, these companies have been unable to source raw materials to manufacture different products. Warehousing costs have increased at ports and the cost of importing materials has increased.

A 2022 report from South African business management software provider SYSPRO indicates that 70% of businesses experienced material handling and supply chain disruptions, while 60% were unable to interact with customers and suppliers.

To address the issue, industry players have embarked on digital transformation initiatives, with 69% developing digitalization strategies.

“As businesses began to realize that the change created by the ongoing disruptions was enduring and uncountable, many accelerated digital transformation,” the 2022 report states.

In their digital roadmaps, 58% have optimized operational processes that also include developing people, improving customer services (48%), improving resource efficiency and reducing costs (46%). ) as well as the promotion of internal collaboration (50%).

Doug Hunter, head of customer and ecosystem enablement at Syspro, said Digital business that although Covid-19 has broken supply chains in South Africa and Kenya, causing many goods to be delayed at ports, business leaders in both countries have shown resilience in the face of the effects of the pandemic .

“The crisis has opened the eyes of many companies to using technology to achieve efficiency. Most African companies are not fully implementing technologies, but over the past two years they have seen the need to do so. With IoT software, they see more benefits such as higher production volumes in shorter times and overall quality of the production cycle. There is more feasibility and verifiability,” a- he declared.

The results suggest that many companies have failed to put a solid foundation in place in their digital strategy and have only jumped straight into digitization and digital transformation without a clear vision. This has caused them constraints to get the most out of the technology.

To execute digital strategies, however, companies have made a number of technology investments to improve operations management, quality management and warranty management (34%), improving procurement, procurement and inventory management as well as investments in product design and order setup.

Top technology investments are Internet of Things (IoT) and sensors (47%), cloud computing (45%), collaboration platforms (27%), alternative digital sales and marketing channels (21% ) and big data and analytics (20%). percent).

Others include connectors and APIs (20%), virtual or augmented reality (7%), AI (5%), robotics and cognition (5%), distributed ledgers (5%), the others (4%) and 3D printing (3%). percent).

Benefits from digital transformation were profitability for 49% of companies surveyed, improved employee engagement (35%), improved product quality (32%), improved customer satisfaction (26 percent), revenue growth (22 percent), none of the above (20 percent) and other (six percent).

“Companies need people who understand how to fix a broken supply chain. And this staff must be aware of the latest technologies. Manufacturing needs IoT so data can be leveraged even outside of the normal supply chain,” Hunter said.

“You can get better market predictions using machine learning. The more you do this, the more experience you gain. If a machine is fed more accurate data, it becomes smarter. And that reduces costs and gives you better clarity on how to improve your business.

According to the SYSPRO report, digital transformation plans over the next 12 months among retailers and enterprises include optimizing business processes at 66%, improving resource efficiency and reducing costs (54% ), improving customer service (53%), improving employee performance (44%). percent) and increased internal collaboration (44 percent).

The survey further indicates that the biggest disruption in the automotive parts and accessories industry was supply chain and handling disruptions at 83%, followed by customer and customer engagement at 58%.

“This can largely be attributed to the fact that a large proportion of automotive parts are derived from the Far East,” the research notes.

To address these challenges, 42% invested in alternative sales and marketing channels such as e-commerce, while 41% injected resources into IoT and Industrial Internet of Things (IIoT), big data and analytics (25%) and in collaboration technologies. (eight percent). The food and beverage industry also saw 77% disruption on customer and supplier engagements.

Due to the industry also having to consider new pandemic-related hygiene requirements and the ripple effect of supply chain disruptions, 45% of businesses experienced major disruptions to their operations internal, according to the report.

“A lot of people started using online e-commerce platforms to buy food and household. Even supermarkets and stores got online because all the consumers were now there. This led to minimal usage of cash and a big shift to cashless societies,” Hunter said. .

However, the report says one of the barriers to digital transformation was the over-reliance on outsourced short-term advisers.

“To implement their digital strategy, 71% of companies used outsourced external service providers without a real understanding of the key business challenges or the day-to-day reality of what affected the business,” says the report. investigation.

Another challenge was the lack of senior management support and a large skills gap. The true champions of digital transformation within companies were middle managers (60%), while only 44% of C-level executives supported digital transformation.

For businesses that have yet to get back on their feet due to the disruption, the report shows they have been slow to embrace modern technologies in running their businesses because they feel it is not necessary .

“At the same time, some companies feel that digital transformation is unnecessary because the way they manufacture their products hasn’t changed in years,” says Roger Landman, head of product management at Syspro.

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