The Digital Age

Raj Rajagopalan's research shows that digitization in supply chain optimizes efficiencies, bringing operators around the globe in sync.

September 14, 2018

A recurring theme at this year’s Global Supply Chain Excellence Summit was the need to embrace technology, whether for efficiencies, communications, sustainability or risk management.

“If companies don’t innovate and accelerate, they’ll go away,” said keynote speaker Stephanie Hughes of the Mediterranean Shipping Company.

S. “Raj” Rajagopalan has known that for a long time. The USC Marshall professor of data sciences and operations is an expert on supply chain as well as operational performance and improvement. Much earlier than this summer’s conference, Rajagopalan recognized that, “Digitization is transforming supply chain,” he said, “and it’s only going to have increasing impact.”

Rajagopalan works on the innovation side of global supply chains, developing new operational tools to support industry practice. “Academics are working on aspects of supply chain that we can model to add value,” he said.

Predicting Product Returns

Rajagopalan’s recent work in this area is focused on high product returns and return rates in online commerce. Along with his collaborator Amy Ward and Marshall doctoral student Hailong Cui, he has developed a way for manufacturers to anticipate when and which products are coming back. 

“It’s digitization in returns,” he said. “Using predictive models that exploit increased availability of supply chain information, we can look at likely returns and plan accordingly. [Companies] can also use the models to optimize strategies to reduce returns. Companies benefit when they anticipate what’s coming, whether it is sales or returns.”

But, Rajagopalan said, many companies in certain industries are slow to step into the digital world. “Some freight forwarders are still faxing information about cargo to shippers and logistics firms. This is an area where things need to drastically improve.”

Progress in Global Supply Technologies

Lack of progress isn’t due to lack of resources. Technology in supply chain is advanced with cognitive computing, robotics, drones and predictive analytics just a few of the innovations now available.

 “We are moving from ‘doing digital’ to ‘being digital,’” said keynote speaker Regina Sanders of EY, the global services provider. “The eco-system is no longer linear, there are multiple layers.” New technologies not only have the capacity to handle multiple layers, they enable multiple layers. “Digitization allows supply chain to be even more global,” Rajagopalan said.

Still, according to Chris Poole, keynote speaker from Gartner Research and Advisory Company, only 20 percent of companies are investing in early-stage technology.

The variability leads to communications difficulties, integration issues and lack of transparency, among other challenges. Moreover, standards vary internationally and systems aren’t always compatible. As a result, efficiency is compromised because information doesn’t flow smoothly across the chain. “When IT systems don’t talk to each other, the benefits of technology investment are not realized,” said Rajagopalan.

Nonetheless, Rajagopalan does see progress. “Visibility into the supply chain is getting better,” he said. “There are challenges, but new developments such as blockchain show promise for helping improve supply chains.”