Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Digital Supply Chain — Everything You Should Know

Key takeaways
  • Digital supply chains use technology to help stakeholders make better decisions in sourcing and demand forecasting.
  • Digital supply chains that are powered by IT systems are much faster and more efficient.
  • You should know your business drivers, adapt to new technology, and be ready to train teams to handle digital supply chains.

We are entering the digital age. Thus, many processes of each existing industry are going digital. It is not a surprise that the digital age has been adopted instantaneously due to the pandemic that shocked the world. 

In this article, we will discuss things about the digital supply chain. We will also show you the factors that you may want to consider before you create your own digital supply chain. 

Once you finish reading this article, you will have an in-depth knowledge of the digitalization of the supply chain. Thus, it will allow you to know if you are ready to utilize the digital supply chain.

TheDigital Supply Chain Explained

In the traditional process of the supply chain, the flow of goods involves designing a product, acquiring raw materials, forecasting the demand, taking orders, creating marketing plans, arranging logistics, and providing the customers with the visibility of their orders. 

While it may be a simple concept, each step is dependent on one another that has the same expected outcome. Thus, problems may only be discovered for days or weeks as there is a failure in one process. This often results in missed deadlines and dissatisfaction with customers. 

However, with a digital supply chain, companies are provided with more visibility into the workings of the chain. It adds real-time visibility of supplier performance and customers’ needs. Hence, supply chain owners can develop more complex relationships with their suppliers. 

A digital supply chain is a set of processes that utilize technology and insights to let each stakeholder along the chain make better decisions about sourcing the materials and forecasting their demands.

A digital supply chain’s foundation is established on web-enabled capabilities. Many supply chains use a mix of traditional and IT-enabled processes. However, a true digital supply chain to fully capitalize on connectivity system integration. 

The goal of the digital supply chain is to enable insights to improve efficiency, reduce waste, and facilitate more profits. 

Companies with digital supply chains move resources, assets, people, and inventory faster to where they are needed at any given time to reduce cost by proactively responding to manufacturing and transportation risks.

TheImportance and Benefits of Digital Supply Chain

A digital supply chain is significant to many companies as it can instantly adapt to the changing circumstances that may unexpectedly happen. 

It integrates information from IT systems and OT systems to optimize profit and service levels. It also allows companies to be ready for the risks without much pre-planning. 

The following are the benefits or advantages of a digital supply chain:

  • It is much faster as it is powered by IT systems and utilizes other technological tools
  • The digital supply chain is more flexible to changing demands due to its real-time data capabilities
  • It is more accurate as it uses transparent and reliable data
  • The digital supply chain automates some planning and physical tasks. Thus, it boosts efficiency along the supply chain.

Factorsto Consider Before Creating Your Digital Supply Chain

Before creating your digital supply chain, you need to make sure that everything is in line. Make sure to consider the following factors such as:

1. Business drivers

Before you even think of shifting to a digital supply chain, ask yourself what made you choose your decision to have a digital supply chain. What are your goals and how can the digital supply chain help you reach those goals? 

2. Afraid of technology

Digitizing your supply chain will inevitably introduce you to new technology that may help improve efficiency in your day-to-day business which might make you second guess your decision. You should be ready to adapt to new technology if you want to build your own digital supply chain. 

3. Your team

In order to make your digital supply chain effective, you must appoint team members who will be responsible for it based on their strengths. You will need to include in your team those who have experience in IT and those who can adapt to new technologies.

Creatingyour Own Digital Supply Chain

After considering the factors, it is time to truly create your own digital supply chain. For a seamless creation, follow the following steps:

1. Start with the basics

In order to build a digital supply chain, you must first identify the existing problems in your current supply chain setup. 

It is crucial for you to know what process needs improvement before you integrate it with new technology. 

However, it is important that you create a plan that assures you can continue your operation during the transition to a digital supply chain. 

2. Know the different functions of the processes in your supply chain

Instead of viewing the processes in your supply chain as different from each other, you should focus on how you will achieve your desired business outcomes with the various stakeholders of your company. 

You may want to think about deploying a survey to gather information about the needs and assess the awareness of your stakeholders. 

3. Identify your business objectives

Think about all the goals you want your business or company to meet. You have to ensure to track all your goals so that you will know if you are meeting them or not through the digital supply chain.

4. Collaborate with your suppliers

Here, you have to think about what your suppliers can share with you in an automated fashion. You should also think about the information you could share with them to improve your digital supply chain. 

5. Choose the right tools to help you

You can never go wrong if you will choose the right tools that can help you easily shift from a traditional to a digital supply chain. 

Supply chain risk management tools are created so that users like you can track and control your supply chain. The integration of AI and advanced analytics in the supply chain risk management tools can allow you to make more accurate predictions.


In conclusion, embracing the digital supply chain is crucial in today’s dynamic environment. It offers real-time visibility, flexibility, and efficiency. Before diving in, assess your business drivers, embrace technology, and plan for a seamless transition.

Frequentlyasked questions

What is Digital Supply Chain?

A digital supply chain is the implementation of a set of processes that use new electronic technologies in the supply chain.

Why do many companies adopt a digital supply chain?

Companies with a digital supply chain move their resources, assets, people, and inventory faster than the traditional supply chain.

What is the significance of the digital supply chain?

It is significant as it can instantly adapt to the changing circumstances that may unexpectedly happen.

About the author

My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

Marijn Overvest Procurement Tactics