As global competition grows, customers expect faster and more transparent shipping than ever before. At the same time, environmental regulations add pressure to supply chains and make tracking carbon-equivalent (CO2e) emissions a must. And digital standards are rising, making user-friendly IT a real advantage in supply chain management.
To meet these challenges, businesses need modern supply chain technology. Digital solutions for transportation management provide transparency over all kinds of supply chain data; a fully mature digital supply chain brings data sources together and is the control center behind a well-orchestrated end-to-end network. Embracing digital transformation and advancing supply chain maturity unlocks significant advantages: businesses are equipped to increase supply chain efficiency, automate repetitive tasks, improve service level and save costs.
The five levels of digital maturity in transportation
Businesses may have different levels of maturity for different aspects of their supply chain and transportation networks. In general, however, the capabilities associated with lower maturity levels are important stepping stones to achieving overall higher maturity. No matter at what maturity level a business begins, growth is possible and brings a strategic advantage.
An evaluation of supply chain maturity is the basis for improvement. With this information, businesses can create a roadmap to focus on areas with the most improvement potential.
5 levels of digital maturity in transportation:
Reactive transportation operations
At this level, businesses rely on manual processes, which offer no visibility or optimization opportunities. Businesses at this level depend on many low-maturity logistics service providers (LSPs).
Optimized purchasing and execution control
Businesses at this maturity level have simple concepts for high transportation volumes and rely on one or a few 3PLs or LSPs. This enables improved on-time delivery rates, and businesses can focus on transportation cost optimization.
Standards and visibility
This level is characterized by supply chain segmentation and active management of the outbound network. Businesses use multiple carriers, who are selected based on competitive pricing. State-of-the-art processes and IT in core areas enable high visibility and partner integration, as well as strategic and tactical optimization.
Operational excellence and optimization
A total cost- and service-optimization approach is possible at this maturity level, thanks to a high degree of digitization. Optimization is instant, relying on automated workflows and synchronization to enable fast decisions and execution.
Agile and optimized supply chain
At this level, businesses have implemented concurrent supply chain planning and integrated S&OP processes that also consider shipment optimization. Decisions are made based on AI, and the supply chain is synchronized from end to end. Businesses at this level also enable self-service IT setup for their partners.
Authors
Niklas Gareis
Manager, Digital Practice
4flow consulting
Alexander Spangenberg
Principal, Digital Practice
4flow consulting
What’s your level of supply chain maturity? Find out with this self-evaluation.
Building a mature digital organization
As a first step to advancing their digital maturity, businesses need to set clear goals for their future transportation network and overall supply chain and align them with their strategy and targets. By prioritizing certain dimensions of digital maturity, businesses can make incremental, yet traceable progress.
Depending on a business’s as-is situation and objectives, digital transformation can use existing software and processes and slowly develop improved capabilities in a brownfield approach or start by determining a comprehensive software strategy and move toward implementing a new software suite, with a greenfield approach. Or businesses can focus on and exchange selected processes and/or software while keeping and improving on other areas – a bluefield approach.
From here, making a digital transformation roadmap determines project steps and ensures all stakeholders are aligned on the intended transformation. In the process, it’s important to ensure adoption of new processes and IT across the organization with change management. 4flow supports businesses throughout the digitization process with IT and supply chain expertise, from evaluation to strategy to roadmap to implementation.
Transportation management – an essential area of digitization
Because of its complexity, transportation offers significant potential for optimization and standardization. A transportation management system (TMS) is a key part of a digital maturity strategy and helps businesses advance digitization in this area significantly. As a platform to connect all stakeholders, a TMS enables efficient and standardized data exchange on one system. It also supports clear definition of processes, workflows and responsibilities, leading to fewer errors. And because of this process clarity, it’s easier to pinpoint optimization potential.
To select an appropriate TMS, businesses should consider the functions they need it to fulfill – for instance transportation planning, load building and ordering. Other capabilities to consider include track and trace, exception management, freight cost management, data analytics and more.
Best practices for digital transformation
In digital transformation projects, data is key. Master data that is accurate, accessible and fully digital gets projects off to the right start. Each data field should have only one source to avoid redundancies or contradictions. It’s worth investing in transparency and analytics – digital models, interactive analyses and customizable KPI dashboards speed up the process by providing a data-driven basis for quick decisions.
For the greatest impact, adapt best practices from best-of-breed software providers to optimize and standardize processes and systems. In our experience, a holistic approach to transportation management yields the best results; automation of freight auditing and payment (credit note processes) as well as facilitated spot tendering are good places to start.
With these best practices and a digitization strategy in mind, businesses are prepared to advance their supply chain maturity – and achieve new levels of automation, optimization and cost savings on the way.
Looking for a TMS to level up your digital maturity?