Digital feedback loops amp up the intelligence of the supply chain
Manufacturers, retailers and growers have everything to gain from unlocking data in the supply chain – from field to fork – and sharing that data with each other: it’s a win-win for everyone involved. Consumers too are increasingly clamoring for more transparancy about the origin, authenticity and CO2 footprint of the products on the shelves.
Unlocking the data in the food supply chain for all partners involved and for the shopper: in times of decreasing consumer trust in the food industry, it really is a strategic advantage. And it’s happening as we speak: forward-thinking food manufacturers are extracting and sharing data across the entire chain. They do so by setting up what we call ‘digital feedback loops.’
In this blog, we will briefly explain what digital feedback loops are about, and we’ll illustrate this by means of a few examples. Feedback loops enable all parties in the supply chain to continuously improve operations. Put differently: digital feedback loops have the capacity to create a learning effect in the supply chain, to everyone’s benefit.
Digital feedback loops: continuous data streams in all directions
We already touched upon the subject of digital feedback loops in this blog. In short, it revolves around a vision on digital transformation in which data is the key to everything. In order to be able to turn that key, businesses need a platform that:
- Creates one centralized, single version of the truth …
- … across all systems and tools, internal and external, on-premise or in the cloud
- Is able to detect patterns in those data (streams) …
- … so the supply chain gets increasingly smarter, to everyone’s benefit
Digital feedback loops allow manufacturers to get feedback straight from the consumer. They can help farmers and growers have better output with less insecticides or fertilizers. They have the power to make sure that retailers don’t run out of stock, nor lose money by overstocking. They enable manufacturers to greatly improve production planning. And so on.
Digital feedback loops: real-life examples
- Let’s take a look at feedback loops between supplier and retailer.
- Inventory data exchange (Vendor Management Inventory):. Thanks to VMI, suppliers have insight into the retailers’ inventory: they see how much stock is extracted, so they can automatically replenish it and forecast sales more accurately. The idea behind VMI is that retailers should not be concerned about running out of stock or overstocking: the supplier takes care of it.
- Exchanging sales data is taking Vendor Managed Inventory a step further. VMI shows that stock was taken out of the warehouse. But it doesn’t say how much of that stock got sold. Nor in which quantities, when and where, or during what kind of weather conditions. This sales data can also be combined with other data, such as sports events (take the World Cup schedule for example). Data combinations like that help manufacturers discover meaningful patterns, hence make more accurate forecasts, hence improve production planning and so on.
- Here are some examples of feedback loops between manufacturers and growers
- Growers can register quality data on the field, and share them with the manufacturer. As a result, the latter can better predict the quality and output he will receive, and thus optimize his own supply chain. Growers can also share crop protection data with both consumers and manufacturers.
- Manufacturers have the power of the data volume: they can collect and analyze data from multiple growers regarding crop evolution, protection, quality etc. They can then share their insights with the growers, thus helping them maximize quality and output.
- Finally, some examples of feedback loops between manufacturer and consumerk
- Consumers increasingly clamor for information about the products on the shelves: where do they come from, how and by whom are they processed, how (un)healthy are they really, what’s their ecological footprint and so on? Consumers want authenticity, not marketing hocus pocus. Forward-thinking businesses already work with this by means of Smart Label technology.
- Manufacturers are searching for ways to capture consumer feedback via other means than panels. This can be done with an app that allows shoppers to scan a Smart Label first – so the manufacturer knows which lot we’re talking about here – and send in feedback. With this data, manufacturers can then tweak products to match consumer requirements more closely.
Conclusion: the idea behind digital feedback loops is that everyone in the supply chain – and that includes the consumer – gets smarter. That’s why we talk about the ‘self-educating supply chain’ or ‘intelligent data’.
Setting up a smart supply chain requires a platform that is powerful and flexible enough to support digital feedback loops. Microsoft Dynamics 365 for Food is such a platform.
Dynamics 365 for Food: digital feedback loops in action
Microsoft Dynamics 365 for Food is sometimes described as an ERP, CRM and BI system all rolled into one. While this is not incorrect, Dynamics 365 goes way beyond that.
Dynamics 365 is a platform that unifies your business—from data to people to processes—with modern, intelligent business applications that adapt to the changing needs in your industry.
Since it is built on a unified data model, Dynamics 365 is designed to help users set up and use digital feedback loops that are based on data that are uniform, correct and up-to-date.
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