In today’s fast-moving, interconnected world, businesses are turning to digital supply chains to stay competitive, resilient, and customer-focused.
By leveraging advanced technologies like AI, IoT, and blockchain, digital supply chains offer a smarter, faster, and more efficient way to manage operations—from procurement to delivery.
In this blog, we explore eight powerful benefits of supply chain digitization and how it can transform your business for long-term success.
What is the digital supply chain?
Today’s most successful companies have achieved advanced levels of digital sophistication and maturity within their supply chains. Research from IDC shows a strong correlation between digital maturity and superior business performance, including higher revenue growth and profitability.
Unlike traditional supply chains—which are often linear, fragmented, and reliant on outdated systems—digital supply chains operate in real time, adapt dynamically to changing conditions, and foster stronger collaboration. They are built around ecosystems of interconnected partners and suppliers, linking internal systems with external data sources to enable seamless information sharing, responsiveness, and end-to-end visibility.
At the heart of a digital supply chain is a digital backbone—a foundational infrastructure that allows all transactions to occur digitally. This enables efficient, transparent collaboration across stakeholders, including suppliers, customers, logistics providers, and financial institutions. The digital backbone serves as a platform on which companies can deploy advanced technologies to pursue strategic goals and seize new opportunities.
The real power of the digital supply chain lies in its ability to collect accurate, comprehensive, and timely data—and transform that data into actionable insights. These insights lead to better decisions, improved operational efficiency, reduced costs, and more resilient supply networks.
Supply chain digitization vs. supply chain digitalization
While often used interchangeably, supply chain digitization and supply chain digitalization represent two distinct stages in the evolution of modern supply chains.
- Supply chain digitization is the process of converting physical documents, such as paper-based records, into digital formats. This foundational step improves data accessibility and enables more efficient handling of information.
- Once data is digitized, companies can move to supply chain digitalization, which involves using digital tools and technologies to automate workflows, enhance visibility, and improve process efficiency. Digitalization is about transforming operations—not just making them digital, but also smarter, faster, and more integrated.
Together, these steps lay the groundwork for building a fully connected and intelligent digital supply chain.
Key benefits of the digital supply chain
Digitalization of the supply chain enables better use of resources, optimized production, stronger supplier relationships, increased visibility, and a healthier bottom line. Let’s dive into the key benefits of the digital supply chain.
1. 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.
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.
2. Increased supply chain visibility
In a recent survey (Reuters Events, The state of European Supply Chains 2024) addressing supply chain visibility gaps was prioritized as a top area for investment, reported by 68 percent of the respondents.
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) and operational technology (OT) systems.
Digitizing the supply chain creates opportunities for breaking down these barriers and connecting disparate systems both internally and externally. As a result, data can pass quickly and securely across the entire supply chain, enabling near real-time visibility. Supply chain visibility makes it possible for staff to instantly see the current status of any activity, enabling them to make informed decisions.
3. 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. In the world of big data, this isn’t ideal.
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 insight from real-time data generated anywhere in the supply chain offers significant benefits in every aspect of the business, from product development to sales and marketing to customer experience.
4. Building supply chain resilience
The COVID-19 pandemic revealed serious and systematic weaknesses in supply chains. Global supply chains have become extended and complex to take advantage of low-cost sourcing, lean inventories, and Just-in-Time manufacturing practices.
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.
Digital supply chains allow for deeper connections and improved collaboration between trading partners, as well as an ecosystem of suppliers, which makes alternative sourcing arrangements faster and more effective.
Overall, digitalization helps build supply chain resilience and more sustainable supply chains. This enables increased mobility and accountability while driving proactive responses to emerging problems.
5. Supply chain automation
Automation improves overall supply chain performance by eliminating friction and choke points between functions. In addition, it creates new business opportunities and a better customer experience through enabling innovative self-service options.
However, most organizations have yet to realize the full benefits of supply chain automation. As the use of AI expands and more complex processes are targeted for automation, the effectiveness of these efforts increasingly depends on robust process transformation, high-quality data, and strong digitization and digitalization capabilities to deliver desired outcomes.
6. Driving collaboration and innovation
The digital supply chain enables multi-enterprise collaboration by breaking down data silos within an organization and between external partners. It allows seamless and secure integration between the systems of the organization and its suppliers, customers, logistics, and financial institutions.
Through digital enablement, data becomes actionable; workflows are streamlined; and critical information such as order milestones, inventory statuses, and payments can be 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 the market and drive increased collaboration in product design and development, a digital supply chain is the foundation of success.
7. Enhancing sustainability
With consumers increasingly favoring companies and products they perceive as sustainable, 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 their impact on the environment through efficient management of stock and avoidance of waste.
Digitalization enables improved inventory and materials management, ensures accurate tracking of goods in transit, and helps avoid materials shortages, all of which 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.
8. Enabling technologies
Organizations can increase revenue, save expenses, reduce risk, and boost customer experience by developing digital supply chain capabilities to improve operations and make smarter decisions faster.
There are several complementary digital technologies that enable this, including:
- Multi-Enterprise Collaboration Networks
These cloud-based platforms connect all supply chain partners on a single network, enabling seamless collaboration, real-time data sharing, and greater agility across the ecosystem.
- Internet of Things (IoT)
IoT devices provide real-time visibility into assets and shipments, linking the physical and digital worlds to improve tracking, operations, and decision-making.
- AI and Machine Learning
AI/ML analyze large volumes of supply chain data to enhance forecasting, optimize operations, and automate decision-making for improved efficiency and cost savings.
- Digital Twins
Digital twins create virtual models of physical products or processes using real-time data, allowing predictive simulations and better insights into operations and supply chain scenarios.
- Supply Chain Command Centers
Supply chain command centers centralize and analyze supply chain data to enable proactive monitoring, issue resolution, and faster responses to disruptions and changing conditions.
- Blockchain
Blockchain secures and tracks supply chain transactions in an immutable ledger, enhancing transparency, reducing fraud, and eliminating intermediaries.
- Identity and Access Management (IAM)
IAM systems control and secure access to supply chain platforms and data, ensuring only authorized users and devices can interact with sensitive systems in real time.
Digital supply chain transformation: How to get started
Today, digitally transforming supply chains is crucial for most organizations. It is an increasingly 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 can implement a “rip and replace” strategy when digitizing their supply chain. Instead, an incremental, planned approach designed to produce tangible benefits is the best way to get started.
To take the first step toward a smarter, more connected supply chain, organizations need the right partner and platform. OpenText Digital Supply Chain Collaboration provides tools to digitize operations, enhance visibility, and drive seamless, secure collaboration across your entire ecosystem. Learn how OpenText can help you accelerate transformation and unlock the full value of your supply chain.
