Digital Supply Chain 101

Contents

Digital Supply Chain 101

Executive summary

3

What is the digital supply chain?

4

Key benefits of the digital supply chain

5

Enabling technologies

7

Top use cases for the digital supply chain

10

Getting started

12OpenText delivers digital supply chains

14

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Executive summary
COVID-19 related supply chain disruption in 2020 cost $4 trillion according toresearch from GEP.1 This cost was not just due to disruption to the delivery ofphysical goods but also the need to pivot between product lines and to introduce
new supply relationships to meet entirely new business models.
The pandemic highlighted a fact that many had known for some time: traditional
supply chain structures and operations lack agility and resilience in a world where
disruption is becoming increasingly commonplace.
In fact, in 2022, IDC found that 64 percent of organizations expected their businessto be disrupted by competitors with more resilient supply chains, while 19 percent
said it had already happened!2
Traditional supply chain models do not have the visibility, flexibility and adaptability
necessary for success in modern business. Recent events have shown just how
much they can limit speed and innovation. This is expected to lead to accelerated
digital transformation, with the digital supply chain market poised to reach $13.68
billion by 2030.3
The digital supply chain enables a shift from traditional, linear supply chain
processes into a collaborative network that constantly optimizes operations basedon timely insights shared across the connected ecosystem. It is based around a“digital backbone” that integrates new disruptive technologies—IoT, digital twin,
AI and machine learning—with established supply chain solutions to automate
processes and improve their quality. Where traditional supply chains plan and react,the digital supply chain is designed to predict and prescribe the actions to take.
Traditionally viewed as a cost center, digitally transforming the supply chain helps
make it a profit center, driving business value through increased information
sharing, collaboration and innovation. Despite these benefits, many organizations
are still on their journey towards a truly digital supply chain. According to IDC, only
6.7 percent of supply chains in North America4 —and only 4.1 percent in Europe5 —operate at the highest stage of digital maturity.
How can an organization, whether small, medium or large, take full advantage of thedigital supply chain? What are the key use cases? What technologies underpin thetransition to a digital supply chain?
This Digital Supply Chain 101 paper answers these important questions.

1 Supply Management, Total cost of supply chain disruption in 2020 'was $4tn. (2021)
2 IDC, Supply Chain Survey. (2022)
3 Allied Market Research, Digital Supply Chain Market. (2022)
4 IDC, MaturityScape Benchmark: Digital Supply Chain Resiliency in North America. (2022)
5 IDC, MaturityScape Benchmark: Digital Supply Chain Resiliency in Europe. (2022)

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What is the digital supply chain?
Today’s most successful companies have all reached a higher level of digitalsophistication and maturity within their supply chains. In fact, Gartner foundthat 61 percent of supply chain professionals perceive technology as a source ofcompetitive advantage for their organization.6
Traditional supply chains are mostly linear with steps that are disconnected andlargely independent. These supply chains function on legacy systems and are
guided mainly by historical transactional inputs. Supply chain digitization is theprocess of fully or partially automating manual supply chain processes using
digital technologies.
Unlike traditional supply chains, digital supply chains function in real time, aredynamic and can adapt to changing circumstances. Relying on ecosystems ofinterconnected and integrated partner and supplier communities, they connect
internal systems and data with external information to facilitate information sharing
and collaboration and deliver end-to-end visibility (See Table 1).
Digital supply chains require a “digital backbone” that enables all supply chaintransactions to occur digitally and facilitates efficient and effective collaboration
between supply chain partners. This creates a central foundation, whichorganizations can then extend with diverse technologies to pursue business goals
and seize new opportunities.
The real power of the digital supply chain lies in its ability to deliver insights toimprove decision-making to ensure business effectiveness, reduce costs,
better manage supply and demand and, perhaps most importantly, improvecustomer experience.
Table 1: Traditional supply chain vs. digital supply chain models
Traditional supply chain

Digital supply chain

Orchestration

LinearNetworked

Administration/KPI tracking

Highly manual, slow and inaccurate

Highly automated, realtime
and accurate

Communication/transactions

Highly manual with heavy reliance on
telephone, fax and email

Highly automated with broad use of
EDI/B2B integration, portals and/or
automated data capture

Nature of collaboration

Reactive, periodic

Proactive, continuous

Visibility

Limited, historicalEnd-to-end, near realtime

Decision-making

Based on incomplete,
historical information

Based on end-to-end,
realtime information

6 Gartner, Emerging and maturing supply chain technology is a major source of competitive advantage. (2022)
GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. andinternationally and is used herein with permission. All rights reserved.

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Digital supply chains overcome some of the most pressing challenges fororganizations and help them achieve strategic goals by:• Replacing paper documents with digital information processing.
• Complementing or replacing manual data entry with highly automated data entry
and management.
• Enabling efficient data sharing and collaboration between previously
disconnected business departments, such as procurement, logistics, planning,accounting, etc.
• Improving visibility and transparency across the entire supply chain.
• Enabling increased and more efficient information sharing and collaboration
across the external ecosystem, including suppliers, customers and partners.
• Increasing supply chain adaptability and resilience by improving trading partner
onboarding and performance management.
• Supporting more effective supply, demand and inventory planning and fulfillment.
• Enabling better tracking of inventory and assets throughout the supply chain.
• Reducing supply chain risk by facilitating better information security, regulatorycompliance and risk insights.
As a result, organizations with highly effective digital supply chains can manage
their assets, employees, resources and trading partner communities more
effectively. They gain an advantage over their competitors and can better serve
their customers.

Key benefits of the digital supply chain
Digitization of the supply chain enables better use of resources, optimized
production, stronger supplier relationships, increased visibility and a healthierbottom line. Key benefits include:
Reduced cost and improved revenue
By virtually eliminating manual tasks, the digital supply chain dramatically reduces
human error and input time while freeing staff for higher value activities. According
to one study, the average annual cost for organizations to manually enter data into
ERP and back-end systems alone was more than $1 million.7 At a strategic level,
improving the speed, quality and accuracy of tasks, such as demand forecasting,inventory management and order fulfilment, directly drives revenue and profitability(See Table 2).
Increased supply chain visibility
In a recent survey, only six percent of organizations reported full visibility acrosstheir supply chain.8 The problem is the vast number of disconnected legacy
systems used to address each stage in the traditional supply chain process.
This includes a lack of integration between information technology (IT) andoperational technology (OT) systems.

7 Supply Chain Management Review, Study: 85 Percent of CFOs Expect Digitization to Improve Cash Flow,
Profitability and Revenue. (2021)
8 Zippia, 17 stunning supply chain statistics. (2022)

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Digitizing the supply chain creates opportunities for breaking down these barriersand connecting disparate systems both internally and externally. As a result, data
can pass quickly and securely across the entire supply chain, enabling near realtime
visibility. Employees can instantly see the current status of any activity and makeinformed decisions.
Improved decision-making
For most businesses, decisions need to be made quickly, and agility is vital.
Basing decisions on historical reports and spreadsheets is far from optimal.
Research has shown that more than two thirds of supply chain managers still use
Microsoft® Excel® as an inventory management tool.9 This is simply not tenable in
the world of big data.
A digitized supply chain allows organizations to gather and analyze massive
amounts of data with far less effort and in far less time. The ability to gain insightfrom realtime data generated anywhere in the supply chain offers significant
benefits in every aspect of the business, from product development to sales andmarketing to customer experience.
Building supply chain resilience
The COVID-19 pandemic revealed serious and systematic weaknesses in supply
chains. Global supply chains had become extended and complex to take advantage
of low-cost sourcing, lean inventories and manufacturing practices, such as“Just in Time.” When supply chains became disrupted, organizations found it
difficult to maintain logistics routes or switch to alterative suppliers.
IDC found that diversifying their sourcing strategies, along with improving supply
chain visibility, were the most important focus areas for organizations to mitigate
the impacts of disruption.10 Digital supply chains allow for deeper connections
between trading partners, as well as an ecosystem of suppliers, which makes
alternative sourcing arrangements faster and more effective. Overall, digitization
helps build resilient and sustainable supply chains that increase mobility andaccountability while enabling proactive responses to emerging problems.
Supply chain automation
Automation improves overall supply chain performance by eliminating friction andchoke points between functions. In addition, it creates new business opportunities
and better customer experience through enabling innovative self-service options.
However, most organizations have still not experienced the full benefits of supply
chain automation. Research has found that most supply chain functions are still far
more manual and paper-based than digital and automated.11
Driving collaboration and innovation
The digital supply chain enables multi-enterprise collaboration by breaking down
data silos between organizations. It allows seamless and secure integration
between the systems of the organization and its suppliers, customers, logistics
and other partners.

9 Zippia, 17 stunning supply chain statistics. (2022)
10 IDC, Rethinking the supply chain to enable a more resilient business. (2020)
11 Raconteur, Supply chain automation. (2020)

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Through digital enablement, data becomes actionable; workflows are streamlined;
and critical information such as order milestones and inventory statuses canbe shared securely and instantly. Organizations and their partners can quickly
establish shared responsibilities and accountability and track them in real time.
As organizations look towards their partners to improve their competitiveness in themarket and drive increased collaboration in product design and development,a digital supply chain is the foundation of success.
Enhancing sustainability
With consumers increasingly favoring companies and products they perceive assustainable, brands are seeking external partners with good sustainability records
and may require their existing partners to address identified gaps.
The digital supply chain has a major role to play in helping businesses reduce theirimpact on the environment through efficient management of stock and avoidance ofwaste. Digitization enables improved inventory and materials management, ensuresaccurate tracking of goods in transit and helps avoid materials shortages, all ofwhich leads to more efficient use of resources. It also improves visibility into the
supply chain, which helps organizations to better identify and address risks related
to sustainability and ethical business practices.
Table 2: In figures: Key benefits of the digital supply chain
Benefit

Improvement/Increase

Cost reduction

Up to 20%

Revenue growth

Up to 6%

Customer satisfaction improvement

Up to 30%

Perfect order rate improvement

Up to 40%

Inventory turns improvement

Up to 40%

Plant productivity improvement

Up to 25%

Supply forecast accuracy improvement

Up to 60%

(Sources: BCG12 and Bain & Co.13)

Enabling technologies
An organization will increase revenue, save expenses, reduce risk and boost
customer experience by developing digital supply chain capabilities toimprove operations and make smarter decisions faster. There are a number ofcomplementary digital technologies that enable this approach, including:Multi-enterprise cloud networks
Crucial to any effective digital supply chain is what Gartner describes as theMulti-Enterprise Supply Chain Business Network (MESCBN).14 These cloud-based
networks act as a central, end-to-end platform that connects the enterprise with its
customers, suppliers, distributors and other partners.
12 BCG, Digital supply chain. (2022)
13 Bain & Co., Supply chain lessons from Covid-19. (2020)
14 Gartner, What are Multi-Enterprise Supply Chain Business Networks? (2022)

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Cloud-based networks allow organizations to quickly and securely scale assupply chain operations change to meet new market conditions or expand into
new sectors. A multi-enterprise platform—such as OpenText™ Trading Grid™ —allows individuals and organizations to make use of shared data infrastructure
to facilitate and drive improved information sharing, collaboration anddecision-making within a unified, flexible ecosystem. With multi-party platforms,
an organization can easily build resilience and agility into its digital supply chain.
IDC research found that multi-enterprise cloud networks are the most important
technology for supply chain executives in 2023, with 92 percent seeing them asimportant for their business—up from 74 percent three years earlier.15
Internet of Things
Internet of Things (IoT) benefits the supply chain through increased visibility,
realtime tracking of assets and shipments, better collaboration and enhanced
customer service. It provides an important link between the physical and digitalworlds through tags and sensors that can monitor a wide range of goods andassets as they pass through the supply chain.
For example, using the OpenText™ Internet of Things Platform integrated with amulti-enterprise cloud platform, data from IoT devices can be aggregated andshared with employees along the supply chain for improved operations anddecision-making. IoT enriches and complements traditional supply chains,
allowing the right information to reach the right people to help them to collaborate
on potential supply chain issues and bottlenecks.
AI and machine learning
AI and machine learning, through solutions such as OpenText™ Magellan™, build on
analytics capabilities to inform realtime decision making. Their ability to analyze
huge volumes of data, understand relationships, provide visibility into operations
and support better decision-making makes them a potential game changer forthe supply chain. Effective AI-enabled systems rely on high degrees of control
over data management to identify, aggregate and harmonize the data so that
AI capabilities can be successfully applied.
McKinsey research suggests that companies that have adopted AI-driven
supply-chain management have improved logistics costs by 15 percent, inventory
levels by 35 percent and service levels by 65 percent.16 IDC found that after
multi-enterprise networks, AI was seen as the most important supply chain
technology for executives in 2023—a rise at the fastest rate of any digitaltechnology, from 63 percent in 2020 to 89 percent in 2023.17
Digital twins
A digital twin uses IoT, AI and other technologies to construct a virtual modelof a physical product or a process. It allows the enterprise to run scenarios andsimulations based on real world—and realtime— data to perform predictivemodelling and make recommendations on how to respond to the changing
conditions of supply chain activities or assets.

15 IDC, Rethinking the supply chain to enable a more resilient business. (2020)
16 Forbes, Artificial Intelligence: Not A Panacea For Supply Chain Issues, But Extremely Helpful. (2022)
17 IDC, Rethinking the supply chain to enable a more resilient business. (2020)

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For example, supply chain digital twins can provide instant and actionable insights
into both planned and accomplished work and sales orders, demand and supply,
product lifecycles and much more. With digital twins, businesses can build a clearer
picture of their internal and external operations, reimagine supply chain processes
and enhance communication across their entire ecosystem of trading partners.
Supply chain control towers
The supply chain control tower essentially centralizes all tactical and logistics
functions to better manage the complexity of modern, global supply chains.
According to the Association for Supply Chain Management (ASCM), a control
tower will “better monitor transaction flows throughout the supply chain to increase
supply chain transparency, resiliency and agility and remove risk from the entire
supply chain.” 18
However, a supply chain control tower is not a single solution, it is a toolkit of data
and analytics solutions that help solve supply chain problems, sometimes even
before they arise. According to IDC, 89 percent of companies say that control
towers are important or very important to the future of their supply chains.19
Blockchain
Blockchain technology can be used to record sequential transactions to track
the progression of assets through the supply chain or electronically initiate andenforce contracts. It acts as a public, immutable ledger to provide high levels oftransparency and integrity in operations and fast, secure and low-cost transactions.
Each stage of the transaction is created as a separate block in the chain so it can betracked and monitored in real time.
Blockchain can also help remove intermediaries from supply chain processes.
For an organization with multiple manufacturers and carriers across the globe,
blockchain technology can replace the need for costly third parties to control theprovenance and track goods and assets in the supply chain. For example, it canrecord essential information of conditions, such as temperature and humidity,
under which a product is transported and delivered, as well as location and otherassociated shipment information.
Identity and access management
As complexity and use of digital technologies increase, robust identity and accessmanagement becomes a central tenet of the digital supply chain. An organization
can have thousands of users accessing data and millions of IoT devices embedded.
Governance over activity and security must be pervasive, covering both internal
personnel and external partners to enable fast and effective provisioning andde-provisioning of access.
Some cloud-based identity management systems—such as OpenText™ Identity andAccess Management—include “delegated administration” to allow authorized third
parties to manage their own access requirements. This can improve performanceof identity management in the digital supply chain and greatly reduce theadministrative burden.

18  T he Association for Supply Chain Management (ASCM), The Resilient Supply Chain Benchmark: Ready for
Anything? Turbulence and the Resilience Imperative. (2021)
19 IDC, Rethinking the supply chain to enable a more resilient business. (2020)

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Top use cases for the digital supply chain
The digital supply chain is evolving into an interdependent ecosystem with a strongemphasis on co-creation and collaboration across a large and diverse range ofsuppliers, customers, logistics providers and other partners. Deploying disruptive
technologies enables the development of innovative use cases across the extended
enterprise, including:Financial management
Digital supply chains have the power to considerably reduce wait times andfacilitate the execution of orders, invoicing and payments to increase financial
performance. Both the accounts payable (AP) and accounts receivable (AR)processes can be optimized by automating many financial tasks and gaining
visibility into realtime supply chain data. For example, electronic invoicing reduces
costs by more than 60 percent20 and speeds up the cash settlement process.
By accelerating payments, organizations can take advantage of attractive
incentives, such as early payment discounts. For buyers spending millions orbillions of dollars on goods and services each year, these discounts can represent
significant cost savings.
Inventory management
The first step in inventory optimization is to reliably establish what assets theorganization has. That means how much is in inventory, where it resides and its
status. Previously, inventory management revolved around inefficient and errorprone paper forms and spreadsheets. This led to under-utilization and poor
maintenance of assets, production bottlenecks and unplanned downtime.
With a digital supply chain, organizations can automate manual processes andprovide realtime visibility into their entire asset portfolios. Driven by data from
IoT devices, digital inventory management systems help decrease costs, reduceinventory levels, improve inventory turns and decrease time to cash.
Logistics/asset tracking
Effective track and trace capabilities are becoming increasingly vital fororganizations in a wide range of industries. Realtime location—and in some cases
condition—information from IoT sensors and devices allows all assets to be tracked
as they move within production spaces, warehouses and delivery routes. This helps
optimize inventory, reduce time wasted to locate missing assets, reduce shrinkage
and theft and increase workplace safety while minimizing risk.
This information can be combined with other sources of supply chain data within adigital twin to optimize performance and minimize disruption. For example, weather
and travel data can help optimize logistic route planning and even delivery vehicle
selection to help control conditions for food or pharmaceuticals in transit.
Supply/demand forecasting
Organizations had to rely on incomplete or inaccurate historical data in the past to
conduct supply or demand forecasting and planning. A digital supply chain provides
organizations with realtime data on the amount of inventory needed, the amount of
inventory currently in transit and where that inventory is. Organizations can use thisinformation to not only optimize inventory levels but also to quickly identify demand
signals for new or existing products.
20 Billentis, The e-invoicing journey 2019-2025. (2019)

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The recent pandemic showed the pressing need for these capabilities. In fact, U.S.
retail operations have a supply chain accuracy of only 63 percent, meaning a thirdof the time they do not know their stock levels or where it is.21 Research suggeststhat only about one-fifth of organizations have the digital supply chain capabilities
to effectively address shifts in supply or demand before they become critical.22
Supply chain risk management
Companies operating global supply chains face a compliance and regulatoryenvironment that is complex and constantly changing. For example, the German
Supply Chain Due Diligence Act requires businesses to monitor their entire supply
chains for human rights violations and compliance with environmental standards.
Penalties can be as severe as two percent of annual turnover.23
The scale of legislation and regulation has never been so broad or impactful.
The EU is planning for similar due diligence legislation, and it is not just aboutsustainability. There are now more than 180 jurisdictions that have or are planning
to introduce e-invoicing mandates to improve efficiency and address problems withtax evasion. Digitizing their supply chain is essential for organizations to have thevisibility and control needed to meet compliance requirements and reduce risk.
This is equally true in the sphere of cyber security, where supply chain attacks are
increasingly common. Hackers target third- or fourth-tier suppliers and use theirconnected networks to gain access to the target company. According to research,
85 percent of organizations report at least one attack on their supply chain every
year.24 Building digital security throughout the supply chain takes collaboration andcoordination that extends beyond the enterprise and involves identity management,
as well as cyber security solutions.
21 Procurement Tactics, Supply chain statistics. (2022)
22 Ibid.
23 Forbes, Supply chain compliance is about to get a whole lot tougher. (2022)
24 Supply Chain Digital, The importance of managing risk in the supply chain. (2022)

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Getting started
Digitally transforming supply chains is now crucial for most organizations. It is anincreasingly important step to ensure long-term business success, drive efficiency,
deliver sustainability and, most importantly, create better customer experiences.
However, this is no simple undertaking. It is unlikely that any business canimplement a “rip and replace” strategy when digitizing their supply chain. Instead,an incremental, planned approach designed to produce tangible benefits early ismore appropriate.
How can an organization begin its journey? Here are some key questions to ask:
Do I have a clear vision guiding my digital supply chain?
The first step in the journey to a digital supply chain is to align desired supply chain
capabilities with the organization’s overall vision and strategy. This must extend
beyond the supply chain organization and encompass leaders from across thebusiness to define goals and targets. It is important that the initial vision is flexible
to accommodate a rapidly changing business environment and future developments
in planning, technology, operations and customer experience.
Do I have a clear view of my current situation?
To effectively apply the digital supply chain vision, the organization needs to fully
understand the current state of its supply chain. It needs visibility into its resilience,
flexibility and risks. It is important to start by identifying where there are issues with
supply chain performance and understand where digital technologies can lead to
improvements. By objectively evaluating digital capabilities, it becomes clear where
gaps exist and how best to bridge them.
Do I have the right skills?
In almost every case, a digital supply chain will require new skills that are lacking in
the current organization. More than half of organizations say a lack of staff with newtechnology skills, such as software design, data integration and AI and analytics,
is holding back their digital transformation initiatives.25 This challenge isexacerbated in the supply chain, where there is also a need for new skills to meetchanges in processes across different functional areas. Organizations need to audit
their skills base, identify where new skills are required and ensure that they fully
understand how applying these new skills will help deliver their business goals.
Do I have the right people involved?
It is clear that digital transformation of the supply chain will span—or affect—
virtually every functional area within the organization. It is essential that all
relevant staff are involved from the outset. Everything must be driven by functional
requirements and knowledge.
Organizations can start by ensuring high levels of competency and performancearound basic, traditional supply chain functions. This must encompass suppliers,
customers and other partners as well. The organization must also be aware that one
goal for any digital supply chain is to break down traditional functional silos, suchas those between procurement, planning and operations, to transform businessperformance. These functional silos reach beyond the four walls of the organization.

25 Computer Weekly, Lack of tech skills is delaying projects. (2022)

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What is the role of my suppliers and customers?
Suppliers and customers are key participants, but they are also much more. Digital
supply chains will increase information sharing and collaboration throughout the
new ecosystem. It is essential to understand the process, structures and technicalinfrastructure that suppliers and customers are using and identify how best to
integrate with them. These participants also provide valuable sources of supply
chain data, which the organization can use to identify improvement areas andoptimize performance. It is worth remembering that suppliers and customers areexperiencing digital supply chain transformation movements from multiple partners.
How should I involve my technology partners?
There are so many facets to digitally transforming a supply chain that, even where
the organization can recruit the necessary skills, it is still challenging to properly
staff each element of the program. Working closely with technology partners canhelp develop a successful and sustainable supply chain strategy that meets the
specific goals of the enterprise.
Technology partners not only bring a digital solution toolkit but also industry
expertise and vast experience in transformation program delivery. The best
partners offer proven solutions but also understand where the organization canwisely innovate to bring maximum results with minimal risk.
How should I prioritize projects?
Technology programs are often driven by identifying the lowest-hanging fruit thatwill produce quick wins. While it is important to establish early momentum, it isequally important that the program does not get locked into short-term thinking.
Digital transformation of the supply chain will not happen overnight and it isessential that the projects selected at each stage form a recognizable part of thelong-term strategy. Working with the right technology partner can help identify
projects and accelerate program elements.

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OpenText powers digital supply chains	Learn more about
digitizing supply chains

Related solutions:	Business Network
Cloud Enterprise	Business Network

OpenText is a recognized leader in delivering supply chain solutions that help
companies digitize information flows across their supply chain operations.
OpenText™ Business Network integrates people, systems and things across a securecommon platform that can underpin digital transformation initiatives.
In addition to automating internal and external processes to drive greater process
efficiencies and business optimization, companies can leverage a powerful suiteof cloud applications, which allows internal and external participants to gain
visibility and collaborate across the supply chain. They can also control access to
information and applications across the business ecosystem with advanced identityand access management capabilities.

Cloud Foundation
Active Orders
Active Intelligence
Active Access	Active Invoiceswith Compliance

Connect once, reach anything with OpenText Business Network
With OpenText Business Network, companies can power their digital supply chain
with a scalable integration platform that meets changing business needs, provides
insights to automate and optimize processes and supports regional and industry
compliance requirements.

About OpenText
OpenText, The Information Company, enables organizations to gain insight throughmarket leading information management solutions, on-premises or in the cloud. For
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