5-common-challenges-along-the-digital-supply-chain

Digital Supply Chain

5 Common Challenges

5 Common Challenges Along the Digital Supply Chain

Digital Supply Chains have become a popular way to augment traditional supply chains. On a base level, there are very few differences between a traditional supply chain and a Digital Supply Chain (DSC). Both involve sourcing materials, turning the material into a product, distributing the product, then selling the product. However, Digital Supply Chains can track and complete these tasks through automated, digital processes that enable greater efficiency.

An effective Digital Supply Chain helps organizations keep up with increasing business demands – but many are having trouble creating and optimizing their Digital Supply Chain. According to McKinsey, only 43 percent of supply chains are digitized, which creates a host of missed opportunities. The same study found that companies who digitize a majority of their supply chain can boost their earnings by 3.2 percent, and their annual revenue growth by 2.3 percent on average.

With a Digital Supply Chain, your organization is supposed to enjoy increased revenue, improved decision making, and more agile processes. Unfortunately, organizations are often met with an assortment of challenges once they begin digitizing their supply chain. Let’s take a closer look at a few common roadblocks, and determine how to best prevent them.

Outdated Catalogs & Poor Visibility

Plenty of organizations begin implementing their Digital Supply Chain without a clear plan that encourages visibility and the timely capturing of data. As a result, many organizations lack a single, global software catalog that is frequently updated with accurate information – and this is especially true for pricing information. It’s important that pricing figures are accurate, available in multiple currencies, and easy to access.

If information within your supply chain is outdated or difficult to find, teams within your organization will find it challenging to estimate their technology expenditures. Furthermore, if a user finds outdated and inaccurate information within the Digital Supply Chain, it will diminish their confidence in relying on the supply chain as a planning resource. It can also cause IT teams to miss important renewal dates, which deprives them of the ability to negotiate with the software manufacturer or cancel unnecessary licenses.

The best solution for this is improved record keeping. For larger businesses, this often means acquiring a Digital Supply Chain solution that will automate basic administrative tasks, like recording and integrating all purchasing-related data. In addition to this, it should be able to break down the expense of each application in the Digital Supply Chain.

Waste & Unauthorized Software

When a Digital Supply Chain has subpar visibility, poor internal processes, and improper user integration, unauthorized software and subsequent waste become an inevitability. To compound the issue, SoftwareONE found that only 29 percent of IT teams monitor their Digital Supply Chain to find and root out unauthorized software. This promotes the growth of Shadow IT, which causes a massive amount of software waste.

The statistics on wasted software spending are stunning – it’s predicted that 37 percent of all software spending is wasted. However, this wasted software spending presents an opportunity to identify and enjoy savings by tidying up your supply chain. Experts at We have estimated that when 10,000 desktops are cleared of unneeded or unauthorized software, the organization stands to save $2.1 million.

To find and neutralize unauthorized software, make sure that your Digital Supply Chain is centralized and accessible to every user within your organization. This means breaking down business silos so every department can view and contribute to the Digital Supply Chain. Then, provide integration with invoicing or a department’s databases. This will help you import and export data in a simple, timely manner.

Excessive Risk & License Infringement

Many organizations don’t regularly review their Digital Supply Chain to ensure they’re meeting proper use rights, agreement terms, and risk aversion measures with new and existing contracts. This can grow into formidable problems such as license infringement, waiving fundamental property rights, and violating access or security guidelines.

Preventing security risks and license infringement in your Digital Supply Chain requires a software license management evaluation, preferably conducted by a third party. This will help your organization determine areas of risk, find over/underutilized software, and prevent the acquisition of unapproved software.

Disjointed Systems & Poor User Experience

Many Digital Supply Chains don’t follow a simple, user-friendly system. Instead, the supply chain exists in disjointed fragments that are taxing to maintain on an ongoing basis. This issue is widespread among organizations – less than 1 percent of companies have integrated software fulfillment that seamlessly ties together ordering, ticketing, procurement, contract management, and delivery systems.

This lack of integration causes a poor experience for users, which can have a widespread ripple effect on the organization. For example, a user may request software and not receive a license for weeks due to a lack of agility. In the meantime, they may download unauthorized software which causes its own host of problems.

By creating a unified, centralized method of management for your Digital Supply Chain, users will enjoy a better, more agile experience. This saves on a variety of costs, and makes work more efficient for users.

Inability to Manage Entitlements

The biggest problem with the Digital Supply Chain is an IT team’s inability to manage existing and upcoming license entitlements. Many organizations have no mechanisms in place that auto-capture and normalize entitlements – and many don’t even have proper entitlement processes in place at all. We follow an 18-step process that ensures proper entitlement. When we begin working with new clients, we find that almost half of all businesses failed to properly complete at least one step.

Improperly managing your license entitlements comes with a slew of consequences, such as missing versions and editions, incorrect license types, improper application linking, and the slow, manual creation of accurate license information. A consultation with our SLM experts will help you fully take control of entitlements within your Digital Supply Chain and ensure that no mission-critical information is missing.

Final Thoughts

In reality, these challenges are opportunities in disguise – by confronting these problems in a systematic manner, organizations are able to discover new opportunities to boost revenue and improve business outcomes. However, with the sheer breadth of the average Digital Supply Chain, it’s best to enlist the help of specialized Digital Supply Chain software, or receive advice from third-party experts. This will help you create an effective Digital Supply Chain from the outset, creating a competitive advantage over the many organizations whose supply chains fall short.

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Author

Darryl Sackett

Darryl Sackett

Global Leader Software Lifecycle Management (SLM)

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