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August 18, 2016

Getting Digital Supply Chain Management Right

By Special Guest
Avi Freedman, CEO of Kentik

Manufacturers and distribution companies focus a lot of time and money on their supply chains, and rightfully so. Supply chains provide the staging grounds and storage areas for all the raw materials, in-progress inventory and finished goods that must move from the point of origin to point of consumption.

In recent decades, supply chains have powered the global economy via shipping lanes over land, sea and air. Modern intermodal shipping containers have given rise to logistics management practices, ERP software empires and vast warehouses filled with high-tech packing robots.

In turn, lean supply chain concepts such as Kanban have greatly influenced information technology methods by providing a conceptual framework for the current DevOps movement. But how many IT organizations really understand their digital supply chains?

Companies that were built from the ground up as digital enterprises must stay hyper-vigilant about their digital supply chains because their businesses depend on providing a positive user experience without any network glitches or software crashes. Amazon simply cannot afford to have any website downtime.

However, many non-digital native companies have given scant attention to managing the digital supply chains that power their own online operations. These digital “supplies” include a wide variety of web applications and online services that are contained in data packets, which can be compared to the goods inside shipping containers for physical supply chains.

An application may be a program used by consumers, such as Expedia for travel plans, or a business program such as accounting software from SAP (News - Alert). Services are slightly different because digital companies like Expedia generally do not charge for the information they provide. They make money by serving up advertisements, or offering coupons or reservations. These kinds of third-party services are provided from elsewhere on the Internet, so they must be integrated into the web application’s user interface.

Online services such as mapping and payment processing are also critical for e-commerce sites. Content delivery networks (CDNs) from firms such as Akamai (News - Alert) are needed to cache and replicate website content for other regions, just as cybersecurity protections are needed to guard the network perimeter. In short, the digital supply chain represents a complex tangle of hardware and software integrations.

Planning Out Your Digital Supply Chain

Digital-native businesses structure their operations to maximize the performance of their digital supply chains. Streaming media and gaming companies often create proprietary, optimized versions of the Internet due to the mission-critical nature of their web properties. By building in failsafe layers of redundancy, they can guarantee that their digital content always reaches the eyes, ears and trigger fingers of their globally distributed audiences.

Unfortunately, most non-digital native organizations have not yet internalized this concept of managing their digital supply chains with built-in redundancies to ensure that their users get the best possible online experience.

The fact is that all companies today operate online businesses that rely on a mesh of digital supply chains. Nearly all departmental applications have been shifted to the cloud, including significant investments in sales and marketing technologies. Most application development is now done through a distributed model, with testing and deployment done on virtual machines running on public cloud infrastructure-as-a-service. Add in the need for e-commerce web stores, and an abundance of internal and customer-facing mobile apps, and it’s clear that every company must quickly become a digital business or soon go out of business.

CIOs should develop a strategic plan to manage the complexity of their digital supply chains. Such a plan requires creating a map of all digital trading dependencies, from end users to API calls.

In addition, instead of simply trusting one or two expensive major telcos to carry all of a company’s digital traffic, it makes sense to assess the cost and feasibility of executing direct Internet connectivity with some external digital trading partners. In this way, non-digital natives can begin playing the Internet connectivity game like owners, rather than merely renters of their own digital destinies.

Lastly, building an effective digital supply chain requires the adoption of cloud-scale, big data tools to build a data-driven operation, rather than relying on guesswork to identify network problems and priorities.

By mapping out all the end points and integrations of the digital supply chain, IT leaders can create efficiencies that transform their companies by making their online operations much more nimble, responsive and robust. Only in this way can digital businesses satisfy the fast-changing needs of their supplier partners, business customers and everyday consumers.




Edited by Alicia Young
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