The emergence of computers and the internet has considerably transformed the manner in which businesses are conducted. This is especially with regards to communications. Popularity of the internet has resulted in many businesses becoming purely online businesses, meaning that they lack physical presence (Information Resources Management Association, 2013). This is one of the factors that make understanding the difference between traditional supply chain and digital supply chain for physical products (Graham & Manikas, 2013).

It is worth noting that the traditional supply chain system is usually very straight forward in that all of its processes starting from the procurement of raw materials, manufacturing, storage and warehousing and distribution of the products to wholesalers, retailers, and consumers is usually physical in nature and the processes are majorly conducted by the organization or third party logistics providers (Graham & Manikas, 2013). On the other hand, the digital supply chain system usually leaves the functions of transportation to third party logistic providers and a majority of the businesses that use the digital supply chains usually ensure that their products are directly transported to the consumers.

One of the main differences between the traditional and the digital supply chain systems of physical products is that the digital supply chain systems have omitted some aspects of the supply chain in their systems, particularly storage and warehousing (Ayers, 2013). A notable aspect of the companies that use digital supply chain systems is that they are highly interactive with their clients. They usually make their productions based on specific consumer needs and demands. They as a result produce quantities of the product that they already have a ready market for (Ayers, 2013). This makes the distribution of products to the consumers quicker and simpler. Most importantly, it reduces the costs that the organizations incur when compared to the traditional supply chain system where storage and warehousing is a key feature of the supply chain system (Ayers, 2013). It also reduces transportation costs because the products are either transported directly to the consumers or to retailers when the consumers can easily access them.

Another difference between the digital supply chain system and the traditional supply chain of companies trading in physical products is that the digital supply chain system does not involve having excess inventory (Ayers, 2013). This is related to the aspect that digital supply chains make it possible for companies to produce only what is demanded, and having them transported directly to the customers. With appropriate levels of inventory, the digital supply chain system ensures that businesses do not incur inventory carrying costs. Therefore, it eliminates several costs that are present in the traditional supply chain (Graham & Manikas, 2013). As a result of eliminating warehousing and excess inventory, digital supply chain systems as opposed to traditional supply chain systems have reduced risks of products being damaged or stolen while in storage (Graham & Manikas, 2013).

An example of a company that uses digital supply chain in its operations is Apple. The company’s iPhones are arguably the most competitive smartphones in the global market. However, the success would never have been achieved if the company did not have an effective global and digital supply chain system. The company has integrated all aspects of the supply chain process (Ayers, 2013). It is able to engage in effective data management for all of its processes starting with the procurement of supplies from suppliers, to the manufacturing process and distribution of its iPhone products across the globe.

In line with its digital supply chain, Apple first makes forecasts of the demand for its product. This is followed by receiving adequate supplies from its suppliers who it has favorable relationships with (Graham & Manikas, 2013). The relationship that it maintains with the suppliers allows it to scale its production to meet the specific demands of the consumers. The company then works with supply chain partners who ensure that the products are delivered to retailers and consumers who had pre-ordered, in a timely manner (Ayers, 2013).