Evaluation of the Return on Investment (RoI) of Digitalization in Supply Chain


Master's Thesis, 2021

92 Pages, Grade: 2


Excerpt

Table of Contents

Acknowledgement

Table of Contents

List of Tables

List of Figures

Chapter 1: Introduction
1.1 Research Background
1.2 Research Problem
1.3 Aims And Objectives
1.4 Contribution Of Study
1.5 Thesis Structure

Chapter 2: Literature Review
2.1 Introduction
2.2 Overview of supply chain process and capabilities
2.3 Digital transformation of supply chain
2.4 Benefits of digital supply chain
2.5 Digitization of supply chain and business performance
2.6 Return on Investment (RoI) analysis of supply chain management
2.7 Research Gap
2.8 Conceptual framework
2.9 Hypothesis

Chapter 3: Research Methodology
3.1 Introduction
3.2 Research Paradigm
3.3 Research Approach
3.4 Research Design
3.5 Data Collection Method
3.6 Population and Sampling
3.7 Data Analysis and Interpretation
3.8 Ethical Considerations
3.9 Summary

Chapter 4: Data Analysis

Chapter 5: Results And Discussion
5.1 Introduction

Chapter 6: Conclusion And Recommendation
6.1 Major Findings
6.2 Recommendations
6.3 Limitations
6.4 Further research

REFERENCES

Appendix 1

Appendix 2 - Tree Diagram for the Questionnaire

Acknowledgement

Throughout the writing of this master’s thesis, I have got received an excellent support and assistance.

I would initially thank my tutor, Professor Pirayesh Amir, whose insightful feedback pushed me to hone my reasoning and carried my work to a more elevated level. He continuously guided me in right directions while doing thesis.

I would moreover want to thank the experts who were included in the validation survey for this thesis. Without their vigorous support and input, the survey could not have been successfully led.

Likewise, I would wish to precise my true appreciation my parents for counsel and supporting me throughout the study.

In conclusion, I was unable to have completed this thesis without the assistance of my companions, who gave stimulating conversations furthermore as cheerful distractions to rest my mind outside of my research.

List of Tables

Table 1 : Frequency table (based on Gender)

Table 2 : Frequency table (based on Gender)

Table 3 : Frequency table (based on Age)

Table 4 : Frequency table (based on Position)

Table 5 : Frequency table (based on Industry)

Table 6 : Frequency table (Do your supply chain management teams document and monitor all relevant exchanges of inventory?)

Table 7 : Frequency Table (Do you forecast lead times?)

Table 8 : Hypothesis Testing (Capabilities of Supply Chain process management vs Position)

Table 9 : Hypothesis Testing (Digital Transformation of Supply Chain processes vs Position)

Table 10 : Hypthesis Testing (Benefits associated with digitalization of Supply Chain vs Position)

Table 11 : Hypothesis Testing (Impact on RoIdue to the Digitalization of Supply Chain vs Position)

Table 12 : Percentage Analysis (Understand the capabilities of supply chain process management)

Table 13 : Percentage Analysis (Examining the digital transformation of supply chain processes)

Table 14 : Percentage Analysis (Identifying the benefits associated with the digitalization of the supply chain)

Table 15 : Percentage Analysis (Analyzing the impact on the Return on Investment (RoI) due to the digitalization of the supply chain)

List of Figures

Figure 1 : Conceptual Framework

Figure 2 : Bar Chart ( Frequency distribution based on Gender)

Figure 3 : Bar Chart ( Frequency distribution based on Age)

Figure 4 : Bar Chart ( Frequency distribution based on Education)

Figure 5 : Bar Chart ( Frequency distribution based on Position)

Figure 6 : Bar Chart ( Frequency distribution based on Industry)

Figure 7 : Bar chart (Do your supply chain management teams document and monitor all relevant exchanges of inventory?)

Figure 8 : Bar Chart (Do you forecast lead times?)

Chapter 1: Introduction

1.1 Research Background

Supply chain and digitalization in the supply chain

The Supply chain process is an integrated business process that organizes and manages the flow of goods and services from the manufactures to the end-users. It and streamlines the supply chain activities by establishing linkage between suppliers, dealers, manufacturers, service providers, and end-users. The concept of supply chain management is adopted by different industries such as healthcare, retail, food, manufacturing, construction, and textile to enhance the working process and optimize customer value (Simchi-Levi, Kaminsky, & Simchi-Levi, 2000). The working of the supply chain process could be enhanced by adopting advanced technologies and digitalization in its working. While focusing on digitalization in the supply chain, it includes the introduction of digital technologies such as Big Data, the Internet of Things (IoT), Artificial Intelligence (AI), cloud computing, predictive analytics, and blockchain into the supply chain process. The technologies enhance the supply chain management system by coordinating and synchronizing the different supply chain parts such as order, raw materials, production, finished products, warehouse, logistics, packaging, delivery, retailer, and end-user (Pagani and Pardo 2017). For instance, the adoption of the blockchain process into the supply chain management process helps in simplifying the complex supply chain work process and transferring paper-intensive work processes into digitalized formats. On the other hand, the introduction of the robotic process helps in digitizing the back-office process by 50% to 80% that helps in faster movement and précised tracking of products (Bughin, Catlin, Hirt, and Willmott 2018). Predictive analytics is based on advanced analytics that facilities the supply chain process by streamlining internal and external demand variables such as social media trends, sensor data, and demand plans. It helps in improving demand prediction accuracy and lowering prediction errors by 30% to 50%. It increases industry and business to adopt digitalization in supply chain process to experience technology maturity and accelerated functionaries.

Digital technology such as Big Data is included in the supply chain process that synchronizes the different processes such as promotion, procurement, stockroom, and haulage. For example, big data helps in the marketing process by acquiring valuable customer information from different databases and upstream the information in the supply chain network. Due to the availability of accurate customer information, customer expectations are met properly by providing them value-added products. It also helps the firm to market successfully, gain a return on investments, and acquire an edge in the competitive market (Rozados and Tjahjono 2014). Additionally, the introduction of digital technologies such as IoT and Radio Frequency Identification (RFID) helps in managing the global supply chain processes cost-effectively. On the other hand, Big Data Analytics inclusion in the supply chain process enhances the deliverance directions, analyzes lead times by considering climatic conditions, and promoting intelligent transmit activities. Predictive analytics coordinates the previous and present data with the help of computational algorithms and provides real-time information so that the firm manager takes a rightful business decision (Siegel 2013). Thus, it can be said that the adoption of supply and digitalized supply chain processes is essential for the growth and progress of the company as it helps in enhancing communication channels, delivery, and tracking mechanisms.

Effects of digitalization of the supply chain process

The digitalization of the supply chain process lays both positive and negative implications on the supply chain process in the organization. While focusing on the positive implications, the digitizing of the supply chain facilitates the organizational process by promoting faster and accurate supply chain networks. Due to the adoption of advanced technologies such as predictive analysis, there is an analysis of both internal and external data that makes the supply chain process faster, flexible, and accurate. For example, Amazon implements a predictive shipping process that helps in coordinating the customer orders and delivery mechanism effectively. Technologies provide a flexible solution to the firm in the form of real-time planning and provide feasibility to outsource supply chain operators from external sources. It helps the manufacturers to directly reach the end-consumers by following the path lines that have already been established by retailers, vendors, and suppliers (Alicke et al. 2017). Additionally, digital technology such as IoT is also used by the firm to identify defects and promote business-to-business (B2B) and business-to-customer (B2C) transactions effectively. It also creates numerous business ideas such as bike-sharing and Airbnb applications so that market bureaucracy is reduced (Konecranes 2018).

While focusing on the negative aspect of the digitalization of the supply chain process, it includes challenges that are faced by managers or executives while implementing a digital supply chain process. The major issue is related to the restricted mindset of the individuals which resists them from changing the traditional means and adopting modern means of supply chain process. Another issue is associated with the uncertainty of the success of the digitalization process. As per the survey conducted by KPMG and Harvey Nash Group, 2017, it was found that 88% of the businesses confirmed that they are yet to realize the benefits of the digitalized supply chain process. It negatively impacts the adoption of digital technologies in the supply chain process and reduces its practice within a firm. The technology gap is another reason behind the non-acceptance of digital tools in the supply chain process. The major issue is that technology adoption within the supply chain helps in enhancing the process but does not bring transformation in the entire supply chain mechanism. For example, a healthcare firm tried to enhance its supply chain process by introducing upgraded Enterprise Resource Planning (ERP system). However, there was a major improvement in the supply chain process because the demand-predicting techniques were old and did not support the new ERP system. Thus, enhancing the supply chain process through digitalization requires upgrading of all the company operations which increases the costs significantly (Gezgin et al. 2017). Thus, it can be said that the digitalization of the supply chain process lays both positive and negative impacts on the firm performance which modulates its acceptance by the firm.

Factors related to digitalization leading to a better return on investments in the supply chain process

The digitalization of the supply chain process is highly beneficial for the firm as it enhances the efficacy of the firm, facilitates asset exploitation, and provides quick consumer response. While focusing on efficacy, it benefits the company by saving Cost-of goods (COG), reducing process cost, and enhancing output. The digital supply chain process increases plant productivity and makes better utilization of the warehouse resources. It promotes faster inventory turns that enhance throughput and reduces the overhead expenses of the firm. Thus, there is the effective utilization of resources, less generation of waste, and better adoption of technology that increases the performance and productivity of the firm resulting in a better return on investments. The digitalized supply chain process promotes the effective implementation of the Warehouse Management System (WMS) and Inventory Management System (IMS) that helps in lowering the operational costs and enhancing the output. It also promotes vendor evaluation and selection process, determines the project cost accurately, and makes efficient utilization of technology-based resources that helps in gaining a better return on investments in the supply chain process. However, when the digitalized supply chain process was implemented by software company INSIGHT, it experienced an increase in the cost of transportation due to the upgrading of inventory and other related departments or supply networks. Thus, the adoption of the digital supply chain process did not produce high returns on investment to the firm owing to the rising cost of upgrading and updating the prevailing operating system of the firm.

As per the survey conducted by the Centre for Global Enterprise (CCE) research 2016, it was found that the digital supply chain is highly effective in reducing the costs associated with procurement by 20%. The study also provided that digitalization of the supply chain process helps in reducing the supply chain management cost by 50% and contributes towards an increase in the revenue by 10%. The digitalization of the supply chain process is essential as it helps in increasing the visibility of the product and firm and delivers products to consumers with high customer experience. Digital technologies such as big data, IoT, and robotics provide greater efficacy, value, and pace to the supply chain process. It enhances the capability of the firm to provide better services to consumers in real-time by meeting their expectations. It creates goodwill for the company in the market and provides it a brand image. As a result, there is an increase in sales, productivity, and profitability of the company. Thus, it can be said the success, growth, high efficacy, better customer response, and reduction are different factors related to digitalization leading to a better return on investments in the supply chain process.

Digitalization in diverse operations and specific to the supply chain segments with different settings

Supply Chain Management is mainly associated with streamlining of business supply activities with markets so that increased value products are received by consumers and competitive advantage is gained by the firm. The digital supply chain process is adopted by different firms belonging to different industries such as healthcare, automobile, retail, and food to enhance their operating procedures. For example, the digital supply chain process is adopted by the automobile industry to channelize its production process by establishing coordination with suppliers and channel partners. It helps in eliminating redundant activities and providing a seamless mechanism for the flow of goods, services, and information (Bhattacharya, Mukhopadhyay & Giri, 2014). For example, the digital supply chain process is adopted by Mahindra and Mahindra (India) to enhance its prevailing supply chain system. It includes the adoption of cloud computing and blockchain application adoption so that uninterrupted production and delivery benefits are received by the firm.

The healthcare industry also adopts the digital supply chain process into its operating system to optimize cost, reduce unnecessary variation, enhance patient care, and address new value chain creation aspects effectively. For example, the implementation of expense management software in the supply chain process in the healthcare sector helps in saving both time and cost by establishing critical links with organizations and functions. The introduction of the digital supply chain in healthcare enhances the working of the ERP system by synchronizing the planning, sourcing, delivering, and supporting procedures. It also helps in easy access to information and related facts about inventory, demand prediction, and recall administration that reduces healthcare costs considerably. Additionally, the digital supply chain process is also adopted by the food industry to enhance its supply chain networks so that the products are received by the customers earnestly. The digital supply chain process includes the adoption of different advanced technologies such as 3D printing, augmented reality, robotics, virtual reality, 5G, drones, and automation into the supply chain network so that the value of products is enhanced and quality services are provided to the customers. As per the survey conducted by LogisticsIQ, it was found that digital penetration such as big data, blockchain, and AI is expected to rise in the supply chain process and reach $ 75 billion by the year 2030. The digitalized supply chain is highly beneficial for the shipping industry as it helps in synchronizing the entire shipping procedure such as loading, unloading, haulage, storing, vessel management, and throughput effectively. The digitalized supply chain provides visibility to the production and supply chain process and enhances other functionaries such as procurement, production, logistics, sales, and after-sales effectively. Thus, it can be said that the digital supply chain process is used in diverse operations and specific to the supply chain segments with different settings in the automobile, shipping, and healthcare industry

Logistics/ supply chain department of the company

The logistics supply chain department is associated with differential tasks and responsibilities such as warehouse activities, inventory maintenance, document arrangement, selecting, negotiating, and implementing supply orders. The logistics supply chain management plays an important role in performing the different logistics supply chain management activities by implementing cost reduction strategies, establishing contacts with sub-contractors, and supporting supply chain activities. The logistics supply chain manager is also monitors and oversees the working of machinery, transportation activities, and ensures that resources are available for production all the time. The logistics supply chain manager also performs the duties of the negotiator and selector when ordering materials and ensures that tasks are performed as per the company policies and standards. The responsibilities related to reviewing and developing warehouse procedures and frameworks are also performed by the logistics supply chain manager. Additionally, the logistics manager must possess oral and written communication skills so that there is a flow of information at all levels of the organization. The spread of information in all the sections will help in developing and maintaining association with different departments such as planning, purchase, ordering, packaging, and delivery. It will be highly beneficial for the company to synchronize its operations that increase a firm’s productivity. The logistics supply chain manager also adopts a team-building and problem-solving attitude when any logistics or supply chain issues are faced by the employees. By applying sound knowledge related to different logistics and supply chain functionaries such as ordering, transportation, warehousing, and inventory management, the logistics supply chain manager ensures that there is systemization in daily firm operations.

Challenges faced by the company in implementing logistics supply chain management

While implementing the logistics and supply chain management process in the firm process, the logistics supply chain manager faces issues related to increasing costs. Logistics management includes transport and conveyance activities which increase fuel consumption and costs. The transportation of resources from one place to the other (storehouse to production) (manufactured goods from the production unit to supply unit) is essential so that there is the conduction of proper work activities. However, the movement of products from one place to another increases the cost of the company in the form of excessive use of fuels for transportation. Another challenge that is faced by the firm is related to customer service. Logistics supply chain management is mainly associated with the provision of the right product to the right consumer at the right time. Under such conditions, it becomes difficult for the company to perform diligently and provide précised services all the time. Issues related to the retention of employees are faced by the firm while performing logistics supply chain activities. The conduction of different job roles related to warehousing, inventory management, and transportation is not easy. It includes continuous involvement of the workforce so that there is the delivery of the right product to the right individual. Performing such tasks is not easy and requires a lot of attention and dedication towards the completion of tasks. Thus, retaining employees to perform core activities becomes a tedious task as many employees leave because of increased work stress.

1.2 Research Problem

The digitalization of the supply chain process is beneficial for promoting new business ideas and introducing innovative methods. It is also responsible for developing interactive connections within the supply chain networks and developing constrictive associations with them. However, the implementation of the digital supply chain process is not an easy process and requires the active participation of other departments and associates for effective digital acceptance in the supply chain process. Several issues are faced by firms while implementing digital supply chain processes such as lack of interest of managers to adopt changes, increasing cost because of technology upgrading, and uncertainty about the digital supply chain success. The other issues such as lack of skilled labor, lack of adoption of any standardized performance management system, lack of integration, lack of technology, and absence of performance assessment procedures, and absence of standardized regulatory authority are faced while implementing digital supply chain process into company workings (Charan, Shankar, and Baisya, 2008).

1.3 Aims And Objectives

The specific objectives of this study are:

- To understand the capabilities of supply chain process management.
- To examine the digital transformation of supply chain processes.
- To identify the benefits associated with the digitalization of the supply chain.
- To examine the effects of the digitalization of the supply chain on business performance.
- To analyze the impact on the Return on Investment (RoI) due to the digitalization of the supply chain.

1.4 Contribution Of Study

The current study which is related to the evaluation of the RoI of digitalization in the supply chain is highly beneficial as it provides valuable information about supply chain and digitalization in the supply chain. The study also discusses facts related to the effects of digitalization on the supply chain process and provides important insights about factors related to digitalization leading to a better return on investments in the supply chain process. The facts related to digitalization in diverse operations and also specific to the supply chain segments with different settings have also been included in the study. The study examines that the supply chain process is beneficial for the different industries such as healthcare, retail, food, manufacturing, construction, shipping, food, and textile, as it helps in reducing variability and synchronizing the production and supply procedures. The study identifies that the digital supply chain is useful as it resolves the issues that are faced by a firm by providing innovative technology solutions to reduce delivery time and costs.

1.5 Thesis Structure

- Chapter 1: Introduction

-his section of the chapter will include a brief description of the topic that the researcher is going to conduct the study. This will also discuss the different parameter that is included in the research study like problems and significance of the study.

- Chapter 2: Literature Review

-his section will include all the information which is collected by the researcher related to the various past study research studies. It will help to provide a general understanding of the research study topic.

- Chapter 3: Research Methodology

-his section will include all the processes and approaches that will be used by the researcher to collect and analyze the facts and figures in a proper manner (Ahmad, Rezaei, Tavasszy & de Brito, 2016).

- Chapter 4: Data Analysis

-his section will present all the collected data by the use of thematic presentations in the form of bar graphs, pie charts, etc. In addition to this, various kinds of statistical tools will be used to analyze and determine accurate results.

- Chapter 5: Discussion and Interpretation of Results

-his section will effectively analyze the different facts and figures that have been collected by the researcher.

- Chapter 6: Conclusion and Scope for Future Work

This section will include all the results and outcomes that have been acquired after conducting the effective examination of the data collected by the researcher.

Chapter 2: Literature Review

2.1 Introduction

According to Bozarth & Handfield, (2016)the supply chain is defined as a process that is associated with the flow of goods and services from the production unit to the consumers. It includes the active participation of different supply chain members such as suppliers, dealers, manufacturers, wholesalers, service providers, and end-users so that products are reached to the end-users. In the current times, the supply chain process is digitalized by using advanced technologies such as Big Data, the Internet of Things (IoT), Artificial Intelligence (AI), cloud computing, and blockchain so that the entire supply chain process is streamlined. Return on Investment (ROI) of digitalization in the supply chain is an important aspect to be taken into consideration as it helps in estimating the efficacy of technology in the supply chain process. The current section provides an overview of ROI, its methods, supply chain process, and digital transformation of the supply chain. The other facts such as benefits of the digital supply chain, business performance, and digitalization of the supply chain process are also discussed in the research.

2.2 Overview of supply chain process and capabilities

According to Hugos, (2018) supply chain management includes different processes such as manufacturing, designing, and delivery so that the finished products are received by the consumers. It includes different processes such as setting supply plans, product manufacturing, demand analysis, sales plan, and supply management. Supply chain management has both positive and negative implications throughout the business process that impact ROI and consumer satisfaction.

Chow, Madu, Kuei Lu Lin, and Tseng, (2008) examined that supply chain process capabilities include five major components which are demand administration, product portfolio administration, sales and operation plan, supply administration, and capacity building. Demand administration includes forecasting demand, performing merchandise planning, and retailing process so that there is optimizing ROI. The proper execution of demand forecasting by adopting a systematic approach, forecasting revenue, aligning inventory, and displaying fixtures help in driving short-term customer demand and enhancing the profitability of the firm.

Boon-Itt, Wong & Wong, (2017) examined that supply administration includes balancing demand and supply processes, collaborating with suppliers, and scheduling production. It synchronizes the manufacturing, inventory, capacity, supply, and distribution process that facilitates the commercial and financial activities of the firm. Additionally, sales and operations planning is associated with an integrated business administration process that empowers management to make key decisions related to new product design and production. It also includes streamlining supply chain drivers, sales, inventory, order, and demand so that the managers make informed business decisions.

Brusset & Teller, (2017)analyzed that product portfolio administration includes margin analysis, brand planning, commercialization planning, and end-of-life planning that helps in providing value-added products to the consumers. Capacity building is an important aspect of the supply chain process which is majorly associated with optimized utilization of resources. It identifies and assesses the overall capability of assembly, machinery, and workforce. Capacity planning helps in reducing operational costs, providing a competitive edge to the firm, and facilitates the achievement of long-term organizational goals.

Lenuwat & Boon-Itt, (2019) examined that due to the adoption of the supply chain process there is synchronizing of different departmental activities which helps in increasing the business performance. It also improves purchase conditions and delivery time that enriches the customer experience and develops a strong customer base. As a result, the company gains an edge in the competitive market, builds a brand image, and establishes itself as a market leader.

The digitalized supply chain process is adopted by Uber to provide enriched services to the customers. The company has introduced an online platform of transport services that are impacting the traditional taxi and cab business. The company established ties with different taxi drivers, auto-rickshaws, cabs in different regions and connected them to the consumers looking for transport services in their locations by using the internet. Uber implemented new technologies and layered modularized systems so that the waiting time of the consumers for cabs and taxis reduce. It includes developing mobile-based applications through the cab drivers and consumers can track their moves and reach each other in a short travel time. The provision of all these services not only benefits the company in terms of revenue but also reduces the transport and commutation issues that were faced by travelers during peak travel time. On the other hand, if the supply chain process is not implemented properly, there is a conflict between the different departments such as production, purchase, sales, technology, and distribution. Inadequate supply chain process also causes weak leadership as there is an increased intervention of different departments. Other issues such as slowness in reach, compliance, and collaboration issues are faced which need to be resolved appropriately for better execution of the supply chain process.

2.3 Digital transformation of supply chain

According to Malyavkina, Savina & Parshutina, (2019) digital transformation is referred to as the automation of the process and converting it from manual and paper-based application to machine and virtual-based application. It includes the adoption of advanced technologies into the working process so that the entire system is upgraded and automated. A digital transformation framework includes a holistic approach that facilitates the business process by focusing on technology and output. The transformation aspect of digital transformation includes modernizing the organizational process so that there is an increase in internal and external capabilities. The digital transformation also includes a response, innovation, value, and enterprise that help in addressing the known and unknown needs of the customers by adopting digital platforms and tools.

Oliver, & Webber (1982 ) examined that digital transformation in the supply chain process is related to digitalization of the supply chain mechanism so that there is an improvement in production, marketing, order, logistic, inventory management, and customer management. It includes the adoption of different technologies such as 3D printing, blockchain, robotics, and logistics platforms so that there is the creation of new products and new revenue streams.

Malyavkina, Savina & Parshutina, (2019) examined that the decentralized approach of blockchain helps in streamlining the supply chain activities by developing interaction between the supply chain members. It also provides transparency, safety, data variance, and security that enhance the trust between the consumers and producers. It reduces transaction costs by creating a systemized supply chain process that facilitates the functioning of the firm. The other benefits such as a simplified warehousing process, synchronized audit amid associates and reduction in intermediaries are also gained by the organization. As a result, there is the elimination of risks, integration of control systems, and high-speed processing of transactions. if blockchain is not implemented properly, there will be a reduction in the scalability of the supply chain process. Moreover, there is a lack of standard regulatory mechanisms regarding the use of blockchain technology which creates issues related to the security and standardization of the entire supply chain process.

Wang, Han & Beynon-Davies, (2019) examined that companies such as Walmart, Maersk, British Airways, UPS, and FedEx have adopted blockchain technology in their supply chain process to improve their production and sales capacity. For example, by using a blockchain-based supply chain process, Walmart consumers can access the products from their root delivery or manufacturing units. The consumers could acquire full information about the product from its place of manufacturing to its storage place and entire product movement. As a result, by availing rightful information, the consumers can restock the essential in an organized manner. On the other hand, British Airways use blockchain in the supply chain process to manage flight data between different regions such as Miami, London, and Geneva. Thus, it can be said that the digital transformation of the supply chain process is beneficial as it helps in maintaining transparency, logistic management, unifying data, systemizing the ordering and delivery framework.

2.4 Benefits of digital supply chain

According to Agrawal & Narain, (2018) globalization and electronic commerce activities are major factors that contribute towards the adoption of a digital supply chain process by firms. Due to the extensive use of the internet and digital platforms such as social media, blogs, websites, and emails, there is an increased awareness among consumers. It is increasing pressure among the business-to-business (B2B) segments and business-to-customers (B2C) to provide quality services to consumers. The implementation of the digital supply chain process will help in reducing the issues that are faced by the B2B and B2C by synchronizing the supply chain processes.

Farahani P et al. (2015a) examined that adoption of digital technologies such as cloud computing, big data analytics, Internet of Things, social media, user interface, robotics, 3D printing, and nanotech help in enhancing the supply chain process by improving the interaction between the suppliers, manufacturers, associates, partners, and customers. For example, in the use of social media use in the supply chain process, all the supply chain members avail rightful information about shipment details, delays, and pick-up details. As a result, there is transparent business conduction in which all the associates are well informed about the product cycle and delivery.

Wade and Marchant (2014) analyzed that due to the adoption of the digital supply chain process, there is effective execution of tasks, reduction in inventory management issues, and clear visibility in warehousing owing to the integrated system in the overall supply chain process. It also helps in reducing delivery times by decentralizing the warehousing process and improves supply chain flexibility by eliminating risks associated with loss of products. For example, due to the adoption of the digital supply chain process, there is the creation of a balance between tradeoff risks by managing disruptive events and stimulating supply network functioning. The digital supply chain process promotes a global manufacturing process that helps in reducing carbon footprint in all levels of product development, flow, and management. Thus, there is a reduction of environmental risks that are caused because of supply chain activities globally.

Accenture, (2015) examined that the digital supply chain helps in developing high levels of de-risking and optionality. These features prepare the organization for any financial crisis and economic downturn aspects. As a result, there is optimizing supply chain activities with limited risks as the firms are already ready for economic and environmental risks. The digital supply chain process also helps in reducing costs eliminating risks, augmenting visibility, and enhancing supplier efficacy by developing end-to-end supply chain processes. It helps in reducing risks associated with supplier management and increasing transparency in the supply chain activities.

Digital supply chain is adopted by business and industry to transform their traditional business practices and bring improvements in the supply chain management process. For example, digitalized supply chain process is adopted by Amazon in the form of an Oracle-based ERP system. It is an automated system that matches the order placed by the customer to the nearest vendor or distribution center. It helps in expediting the order fulfillment procedure and eliminating the risks associated with distribution errors. Big Data Analytics is adopted by Amazon in its supply chain process that helps in recording customer purchase patterns. Based on the analysis of consumer preferences and shopping patterns, personalized recommendations are provided to the customers. It helps in developing predictive supply chain models and expediting the delivery mechanisms. Thus, it can be said that the adoption of the digital supply chain is beneficial for the firm as it helps in developing strong bonds with consumers, increasing sales and profit margins of the firm.

2.5 Digitization of supply chain and business performance

According to Lee & Whang,(2001) digital technologies have helped companies in improving the supply chain process by increasing their performance. As per the survey conducted by McKinsey, it was found that 43% of the firms have adopted digital technologies in the supply chain process. The survey also revealed that the companies that have aggressively adopted the digital supply chain process received 3.2% of increased profits in their annual revenue. As per the study, the digital supply chain helps in meeting technology gaps by making effective utilization of innovative technologies such as 3D printing, blockchain, and social media.

Oettmeier & Hofmann, (2016) examined that the adoption of 3D printing technology in the supply chain process helps in maintaining inventory and consolidating the supplier activities. It also restructures the entire supply chain process and promotes additive production capabilities. As a result, there is a reduction in overall inventory costs and improvement in product quality, and enhancement in the supply chain process.

Farahani, Meier & Wilke, (2017) analyzed that while performing commercial activities, many companies overlook changes that are occurring in the operational activities. However, due to the adoption of digital technologies in the supply chain process, there is the upgrading of the Enterprise-Resource-Planning (ERP) system. It helps in enhancing the supply chain process by reworking on-demand management and forecasting analytics.

Alicke et al. (2017) analyzed that the digital supply chain process is adopted by Amazon in its shipping process. It included the adoption of a predictive analysis process so that there is coordination between manufacturing, processing, order, warehouse, logistic, packaging, last-mile delivery mechanism. The adoption of digital technologies helps in increasing the efficacy of the supply chain process by raising its flexibility. Thus, due to the adoption of the digital supply chain process, the performance of the company improved as it streamlined the supply chain process with each supply chain member. The company was also befitted as the digital supply chain process helped in reducing delivery times, lowering costs, and maintaining a competitive advantage.

There are different organizations such as Walmart have been investing in different technologies such as cloud computing to leverage its supply chain process and strengthen its position in the competitive market. The adoption of Microsoft-enabled cloud technology helped Walmart to enhance its supply chain to sales processes. It includes improving customer service, marketing, and store operations cost-effectively by using an omnichannel strategy. The digitalized supply chain process helped in renovating the traditional supply chain management system which was inefficient in serving the changing requirements of the customers. The cloud technology-based digitalized supply chain mechanism helped Walmart to pursue its omnichannel strategy of reaching customers and increasing sales effectively. It helped in gaining better outcomes by tracking customer orders and managing inventory across different centers. It also helped Walmart to gain a competitive edge in the current Covid-19 pandemic conditions and strengthen its growth in the international markets. Thus, it can be said that the digitization of supply chain processes enhances business performance by introducing an integrated system throughout the value chain process.

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Details

Title
Evaluation of the Return on Investment (RoI) of Digitalization in Supply Chain
Course
Supply Chain
Grade
2
Author
Year
2021
Pages
92
Catalog Number
V1030856
ISBN (eBook)
9783346432575
ISBN (Book)
9783346432582
Language
English
Tags
Supply Chain, Logistics, Digitalization, Return on Investment (Rol), business performance, supply chain process and capabilities, Return on Investment (RoI) analysis of supply chain management
Quote paper
Amit Raj (Author), 2021, Evaluation of the Return on Investment (RoI) of Digitalization in Supply Chain, Munich, GRIN Verlag, https://www.grin.com/document/1030856

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