Impact of Digital Transformation on Supply Chains: Real-time Responses are Required

The ripple effect of digital transformation on global supply chains has created a groundswell of opportunities to deliver improved customer experiences through more seamless communications and faster decision making. The kind of responsiveness enabled by digital tools and technologies has altered supply chain strategies dramatically.

Our data center customers, for example, must respond to rapid market growth and escalating demand for capacity with lightning speed. Likewise, customers across Molex’s automotive and healthcare industries increasingly need shorter-term insights to complement their long-range planning and demand forecasting.

Simply put, companies worldwide are seeking a level of responsiveness that is measured in days and weeks, not months and quarters. And in times of sudden disruption or major expansion, business decisions often need to be made in hours, so up-to-the-minute insights are critical. It’s not surprising that the electronics supply chain is strategically aligned to deliver the real-time responses needed—providing a business-to-consumer (B2C) experience in a business-to-business (B2B) world.

What does this new level of responsiveness mean for companies interacting with supply chain partners? In short: Requirements for improved transparency, tighter lead times, more flexibility and greater agility.

Connectivity of information represents one of the biggest changes in the supply chain world over the last decade—empowering us to share data across the ecosystem to streamline demand and supply decisions. By closely following the digital data thread from beginning to end, we can produce predictive analytics and actionable insights that optimize each part of the supply chain network.

Each data attribute has DNA that offers input, enabling us to create various scenarios to improve the customer experience from the onset. While price will always be a major factor, we must look closer at other issues that impact supply and delivery decisions. What roles do local, regional and global supply chains play in increasing responsiveness? How can we leverage data to amplify alignment with distribution partners and respond faster to customers?

Every business and industry deals with market volatility, risk and disruption. But, it’s the degree to which these factors impact go-to-market strategies that really drive the challenges. End-to-end visibility across the supply chain network provides clarity to anticipate and mitigate those risks. An agile supply chain needs “the plumbing”—the tools and technology that provide a conduit to move information—as well as an ecosystem of rich data. Armed with both, there is an opportunity to be borderless, which COVID-19 has proved out.

The global pandemic, more than any other crisis in recent history, has given all business sectors an opportunity to rethink how best to serve customers. In fact, the pandemic is emerging as a major impetus for digital transformation. According to a recent McKinsey global executive survey, COVID-19 has pushed many companies over the technology tipping point, with temporary solutions enacted in the spring of 2020 leading to long-lasting business transformations.

Specifically, organizations are accelerating the digitization of their customer and supply-chain interactions and internal operations by three to four years.

Molex is no different. A host of capabilities  Molex put in place to address demand surges and supply shortages during the pandemic will help inform supply decisions on behalf of our customers going forward. Among the lessons learned was the value of partnership and collaboration, best represented in an example of excellent teamwork with longtime collaborator Jabil.

Amid well-reported PPE and ventilator shortages, a well-known PPE manufacturer came to Jabil asking to dramatically increase the volume of key parts on a legacy ventilator. After decades of working with Jabil, we were able to quickly engage an integrated team to assess risks and develop contingency plans involving alternate materials and fast-ramp manufacturing once factories reopened. In rapid-fire fashion, we secured alternative sources for materials and used our collective engineering prowess to identify new components within more recent technologies.

Molex significantly scaled ventilator component production from a purchase order history of around 2,000 parts yearly to 20,000 parts in about six days. A week later, Molex delivered another 16,000 pieces to support this extremely important product build.

Our “unprecedented speed of urgency” was applauded by Jabil’s Chief Procurement Officer Frank McKay. “Molex reacted extremely quickly,” he added. “They provided us with priority once facilities came back online while ensuring we had the components needed to build the ventilators. Molex reacted in a way that gave us and the customer confidence we could meet the need as quickly and efficiently as possible.”

Over the past year, we have re-examined our supply chain strategies while leveraging data to improve customer experiences. We are rethinking our traditional logistics network, which is leading to an increase in regional and local production capabilities.

As the electronics supply chain community begins 2021 with restocked supply lines, we are turning to digital transformation of our supply chain to respond to customer needs with heightened speed and precision. Leveraging digital information for actionable insights is key to ensuring resilient, responsive customer service—from the first mile of ordering a component to the last mile of getting the goods to the end-customer.