In a series of posts, Martin Friis and Magnus Mörstam describe and highlight concepts and terms associated with industrial digitization. First, digital value chains, why this is important and what differentiates these from more traditional value chains.
A digital value chain is a framework for integrating digital technologies and data throughout the entire value chain of a product or service, from the initial design phase to the delivery of the final product or service to the customer.
These technologies enable improved communication between companies by connecting people, processes, and data in real-time, all along the value chain. This helps to optimize and streamline industrial processes, reduce costs, increase efficiency, and improve product quality.
At each stage of the digital value chain, companies can use data to gain insights and make informed decisions with the aim of improving customer experiences and creating new value for their customers. For example, in the design phase, companies can use knowledge from their suppliers to create better products. In the delivery assurance phase, companies can better choose suppliers, specific materials and plan their production knowing more about the materials/components. In the manufacturing phase, companies can optimize production processes, reduce waste, and improve quality control. And in the delivery phase, companies can use data and analytics to personalize customer experiences and offer new services and solutions.
Overall, the digital value chain represents a significant shift towards more data-driven and technology-enabled manufacturing processes, which can help companies improve their productivity, reduce waste, and deliver products that meet the evolving needs of their customers.
The main differences between traditional supply chains and digital value chains are:
- Speed – Traditional supply chains rely on manual processes and paperwork, while digital value chains use advanced technology such as sensors, automation, and data analytics to track and manage inventory, production, and logistics in real-time.
- Integration – Digital value chains are more integrated than traditional supply chains, with greater connectivity between suppliers, manufacturers, distributors, and customers. This enables greater collaboration and coordination across the entire supply chain.
- Transparency – Digital value chains provide greater visibility into inventory, production, and logistics operations than traditional supply chains.
- Traceability – With real-time data companies can track and trace the movement of products or materials throughout the supply chain. Traceability helps to improve quality control, ensure compliance with regulations, and enhance transparency and accountability.
- Flexibility – Digital value chains are more flexible than traditional supply chains, with the ability to adapt quickly to changes in customer demand or supply chain disruptions. This is due to the increased integration, visibility, and agility provided by digital technology.
- Customer focus – Digital value chains are more customer-focused than traditional supply chains, with a greater emphasis on meeting customer needs and preferences. By leveraging data analytics and customer insights, businesses can create personalized experiences and deliver products and services that meet specific customer demands.
Digital value chains are an enabler of the manufacturing industry’s future competitiveness and Digitala Stambanan strengthens Swedish manufacturing industry’s digital journey!
Digitala Stambanan strengthens the Swedish industry through digitalization of value chains. The project is a collaborative project financed by Vinnova and participating companies. The work is now underway in two tracks through the strategic innovation programs PiiA (Processindustriell IT & Automation), which drives the Digitala Stambanan IndTech project, and Produktion2030, which runs the Digitala Stambanan Produktion project.