Digital Supply Chains

Digital supply chains: Maximum control in complex systems

Whether Pacemaker or Control Tower: thyssenkrupp Materials Services is increasingly using smart tools to create value with data and shape the material supply chains of the future. This is no coincidence. In the context of our transformation toward “Materials as a Service”, the digitalization of supply chains plays a crucial role. It is the key to meeting the challenges in global trade. The digital supply chain model provides solutions to many of these challenges:

1. Predictability and resilience

Just a few years ago, the logistics industry believed that there was hardly any optimization potential left in global trade routes. At the operational level, warehousing and transportation ran smoothly for the most part and, above all, saved costs. With the war in Ukraine, the chip crisis and the pandemic, as well as the Suez Canal traffic jam, that has changed. In a world of increasing disruption, where local events have a global impact and new requirements, such as those imposed by the Act on Corporate Due Diligence Obligations in Supply Chains, the industry has to adapt its way of thinking.

Optimizations today, consider more than just cost and quick availability. Rather, they identify alternative sources of supply, transport routes and means of transport in order to avoid disruptions or at least be well prepared. The ideal is the resilient, resource-saving supply chain that uses real-time information and intelligent algorithms to enable rapid action. Digital supply chains enable us to predict disruptions more accurately, to prepare, to respond with pinpoint accuracy, and to keep track of emissions.

2. Network over sequence

The network idea has replaced the notion of sequential supply chains. So, we no longer look exclusively at how a product gets from the manufacturer to the consumer, but see the whole picture.

In such a network, we are no longer exclusively a distributor or supplier. Due to our central position in our customers' value chain, we are increasingly becoming the orchestrator of the network, integrating and guiding partners, creating new synergies and optimizing the entire network. This enables our customers to focus more strongly on their core business.

Networks are more flexible than sequential supply chains, but also significantly more complex. Without data-driven systems like Digital Supply Chains, they are almost impossible to manage.

3. Overall view or individual task?

Customers set different priorities when it comes to optimizing their supply chains – and we act accordingly. For example, medium-sized companies with manageable logistics systems often forego so-called "end2end visibility", i.e., data transparency across the entire supply chain. The focus is then more on mechanisms to identify bottlenecks at an early stage and prevent interruptions. OEMs, on the other hand, are already using complex systems in many cases and are interested in a holistic view, e.g., tracking the CO₂ emissions of their activities.

Interesting for us: Collecting and analyzing data along supply chains usually helps – at least if the goals are clear. However, it is almost never the case that all processes in supply chains are already fully digitalized. For us, this means that when developing solutions along digital supply chains, we focus on our customers, their needs, and their level of maturity.

Digital Supply Chains – what’s next?

For the future, we expect digital tools and solutions for supply chains to develop and become more important. This is no longer just about cost optimization, but increasingly about risk management and resilience.

Sustainability is also a relevant concern for many companies, but initially mostly limited to scope 1 emissions reduction and emissions tracking. The next step, in addition to strong growth in "green products", will certainly be to reduce CO₂ along the entire supply chain. That means Scope 3 will come into focus as we start to develop fully circular supply chains. This opens up a wide range of opportunities for us to develop new business models. With a digitalization strategy that already has "bits will replace tons" in mind today, we are ideally prepared for this.