8 Steps to Accelerate Your Digital Supply Chain Transformation

Business outcomes matter, but the process to reach our destination is arguably just as important. After all, our process determines whether our outcomes are repeatable and sustainable. Therefore, the process to execute our strategic vision must not be overlooked because it frequently determines our ability to reach our desired outcome, and nor should your digital supply chain transformation.

Today, Lean management methods in tandem with Agile processes are optimizing daily tasks for added supply chain resiliency, newer Industry 4.0 cloud software tools are compressing execution timelines by increasing team collaboration productivity, and organizations are not only realizing results within, but also with their extended enterprises (suppliers, partners, etc.).

Crafting a digital transformation, or “digitization”, strategy for your supply chain sounds daunting, but we’re here to tell you it doesn’t have to be. By embracing proven Lean principles and boosting your productivity with collaborative Agile processes and Industry 4.0 tools, you’ll build a crawl-walk-run foundation for digitization success. Approaching your company’s transformation this way with an Agile Lean Supply Chain mindset will build in supply performance capabilities over time.

Expect Lean Results More Quickly

Lean works, but if it has an Achilles Heel, it’s that results can take time. Today, it’s possible to shorten this duration. You still need to put in the work, because again, the process is as important as the journey, but from our experience, leaders can expect to see Lean results like the following:

• Up to 33-percent people productivity
• Up to 25-percent inventory cost reduction
• Up to 25-percent lead time reduction
• Up to 20-percent packaging cost reduction
• Up to 15-percent delivery cost reduction   
• Up to 10-percent material route cost reduction  
• Up to 10-percent part cost reduction  

Where an organization is on its Lean journey will determine where the results will fall. Also, one thing to note would be that as a conservative best practice, initial business cases should assume baseline results on the lower end.

8 Steps to Accelerate Your Digital Supply Chain Transformation

Below are eight Agile Lean Supply Chain process steps that you can utilize to accelerate your digital transformation journey to produce business outcomes more quickly. Practical use of Industry 4.0 purpose-built collaborative productivity software tools like a Supply Performance System (SPS) can further accelerate your efforts.

1. Select Initiative Value Stream

Identify a part, product, division and/or plant supply challenge or opportunity, “initiative,” that’s worth addressing. An ideal initiative generates measurable cost savings, cost avoidance, or ROI that advances the business forward.

The initiative shouldn’t be too easy or difficult; however, if you’re early on in your Lean journey, error on the side of easier to build momentum with quick, low-risk wins. If your initiative is estimated to take longer than one month to complete, break the initiative down into smaller project waves. Lastly document your needs and inputs that should be considered to address your supply initiative.

2. Empower People Productivity

Form a team and be sure to map out the people, along with their roles and responsibilities, that’ll execute the initiative and ensure the desired business outcome is met. Break your waves into smaller three- to five-day Kaizen events.

Documenting your tasks in Agile Project Management software is an excellent way to track your teams progress working toward your initiative. Assigning task leads, points, priority levels and due dates will go a long way to reducing project management waste, and your team will spend less time trying to share data and more time executing on it.

3. Stabilize & Standardize

The surest way to delay your strategy is working to digitize an out-of-control value stream. Again, embracing core Lean principles is key here. Execute a Kaizen event to stabilize the core underlying process that will lay the foundation for continuous improvement.

It may be necessary to perform a 5S of the process up front to organize relevant information and remove clutter. Supply chain processes, like manufacturing processes, can be filled with data or actions that don’t apply. Removing unnecessary process noise at the start is a key to success. Once distractions are removed, you can document the current state with basic work instructions and Plan For Every Part (PFEP).

4. Digitize Current State Data

Once the process is stabilized and standardized, expand the Current State process documentation with collaborative Automated PFEP Software. Focusing your prior efforts to include only the stabilized and now standardized process will avoid rework and accelerate your initiative. 

Ensuring your data is documented within a collaborative software environment allows for you and your team to concurrently edit data which will accelerate your initiative. Further, initiatives that extend outside your four walls can now include real-time collaboration between buyers and suppliers.

5. Develop Project Charter KPIs

Document your desired future state – e.g., your problem/goal statement, project in/out scope, KPIs, and risks. During this step it’s important to incorporate industry best practices, benchmark data, and third-party perspective. Astute leaders will compare multiple points of view with their strategy to ensure their plans are well grounded.

Leverage both internal and third-party benchmarking data wherever possible. Studies such as the Association For Supply Chain Management’s (ASCM) Salary and Career Survey Report on labor costs can prove powerful in supporting your business case internally and lead to a higher probability of your budgets getting approved.

6. Optimize Supply Chain Area

Map your process value stream and adjust input data in Automated PFEP software to enable future state results. Much of a company’s initial effort is to standardize for productivity, which is ok, and frankly, often needed. Digitizing your supply chain data into collaborative environments allows for multiple team members to adjust key input data variables more frequently as our environment continues to evolve around us.

This approach empowers teams to make small, frequent input-data-variable updates. The net result is a more agile supply chain that continuously adjust variables to optimize supply performance.

7. Update Plan of Record

Now that our supply chain process is optimized, it’s important to update our future state to our plan of record. Update the “physical world”, like line side packaging, to align with the future state, “digital twin,” or software record.

These changes may need to take place in multiple information systems such as Enterprise Resource Planning (ERP) and Transportation Management (TMS) systems. Your PFEP can serve you well here as it’ll outline the master record data source that’ll need to be updated. Today, many teams are automating these data changes using Application Programing Interfaces (APIs) to push and pull data from SPS’s and a multitude of other systems to save time.

8. Share Lessons Learned

It’s critical that we share project results and conduct a wrap up meeting with our extended team. The lessons learned are the organization’s oxygen that enable future successes. Further, a company’s supply chain digital transformation effort involves many workstreams on an ongoing basis. Thus, the small wins along the journey are key toward lasting supply digitization and performance results.

Industry 4.0 software tools are playing a key role in enabling future change. Teams are documenting lessons learned in Agile Project Management software and changes are automatically date stamped within PFEP. This approach lays an important foundation layer that can be tapped for future continuous improvement predictive insights.

Digitize Data to Win the Future

It’s tempting to want to jump into the deep end of the supply chain predictive analytics pool. Yes, you can get there in the near term; however, the journey, and underlying processes and tools of your digital transformation are just as important as the goal. Our supply chain data is growing more quickly while our global business environment is changing constantly. As leaders we must continue to utilize proven Lean methods while embracing new Agile processes and Industry 4.0 technologies to digitize our supply chains for maximum efficiency, allowing us to improve team output, reduce costs, and produce better products in the future.