Navigating the Bookends

When I wake-up, I view the news of the day on my phone. Today, two articles caught my eye. The first was Gartner's prediction of the SCM market. In a nutshell, Gartner sized the "SCM Market to Reach $19 Billion by 2021. It is up 11% from 2016." The CRM market is 38% larger. The procurement market is much smaller. Procurement is 25% of the SCM market. (The Supply Chain Management (SCM) market is the combination of ERP, Supply Chain Execution and Supply Chain Planning technologies.)

The second was John Hagel's interview of Tom Freidman on the definition of work. In this article, Tom argues that jobs are being separated from companies to be managed by platforms. This is the uberization of labor argument. The article advocates that we are moving to a world of flows. John Hagel's point of view is that processes and technologies need to be radically open.

Let me explain why I think that these two articles represent two bookends of thinking. One is rooted in the past, and one in the future. How do we navigate? This is a challenge.

Let's start with the Gartner article. I worked with the author, Chad Eschinger of Gartner for many years. I respect his work. However, it is important for the reader to know that the Gartner methodology uses history to predict the future. It does not analyze market potential. I believe that the market potential of the supply chain management market with the combination of cognitive computing, blockchain, and open source is 2.5-3X the size of today's market. The new technologies offer great potential. However, seizing the opportunity requires companies to replace current systems. This is a conundrum for many. While the new technologies are new and promising, the adoption has not reached critical mass. We are still in an early adopter test phase. The winners in this paradigm shift will be the new best of breed, small/focused technologies not the large ERP vendors.

Reflection

In the 1990's when 64-bit architectures limited in-memory processing, software was chunked into applications to automate the vertical silos within an organization--CRM for sales and marketing, SRM for procurement, SCE for order execution and APS for supply chain planning. In this process, supply chain management became a very limited set of applications focused on the automation of logistics, customer service and manufacturing planning. As a result, today, there are no flows across the enterprise or the company's value chain. There is no platform to enable work.

Building Flows

This week, I am speaking at a conference on the rise of Digital Manufacturing. Digital is the new buzz word. There are many variants of the digital supply chain. Companies that I work with across verticals are watching Amazon and Google transform traditional industries. The "scare factor" is rising. It is approaching the frenzy of Y2k. However, beware: the number of talking heads with opinions is also increasing. The frequency of venture capitalists pitching new supply chain start-ups to me on my calendar is accelerating. In many of the briefings, I laugh. The knowledge-level of Silicon Valley on supply chain management is low.

A digital strategy for me needs BIG Feet and BIG Wings. The wings represent aspiration, hope and drive, and the feet are grounded in goals. Often I find that the organization focuses on either the wings and flys nowhere; or focuses on the feet, and gets only incremental results. A digital innovation strategy should transform value network and align flows from the customer's customer to the supplier's supplier. It makes many of the applications of today obsolete.

Promising Technology Shifts

It will be a confluence of technologies, not one. The promising technologies that could unleash new potential in supply chain management:

1. Additive Manufacturing. Recently, I visited Jabil and toured their 3D printing lab. On display was a showcase of how their thinking changed for digital manufacturing as they moved from machining (taking off materials) to 3D printing (adding layers onto a piece.) This shift is transformative for many industries like spare parts and medical device.
2. Blockchain. Blockchain is an immutable ledger between parties. It has the potential to become the multi-tier database infrastructure of multi-tier processes. However promising, it is only one piece of the architecture. The role of nodes and publish and subscribe architectures are evolving.
3. Cognitive Computing. Today's supply chains operate with fixes and rigid rules. With the evolution of cognitive computing, we no longer have to operate with limited and inflexible rule sets for processes like allotment, allocation, available-to-promise, inventory management, deduction management or warehouse put-away. With cognitive computing, these rules become adaptive and flexible. In addition, master data issues are resolved and decision support solutions answer the questions that we don't know to ask.
4. Hadoop and Open Source. The paradigm shift of scheme on read complimented by massive parallel processing mans that supply chain processes are no longer limited by the limitations of traditional relational architectures. The architectures are now able to use unstructured data and have the flexibility to assemble data based on need. We are no longer limited to having to define data models before we understand the requirements.
5. Internet of Things and Streaming Data Architectures. Today's supply chains don't sense. They respond. The current latent processes are largely batch and cannot operate at the speed of business. While not all data needs to fly first class, the use of real-time data is transformative for many business processes including demand planning, replenishment, transportation visibility, digital manufacturing and cold chain management.

So, as you read your news, avoid the hype, but rise above tradition. This is the challenge for all. Invest in understanding what is possible form the confluence of technologies. No company has all the answers, and the greatest progress happens when companies invest in learning and process innovation. It is exciting and confusing at the same time. (The Supply Chain Insights team will be exploring many of these topics at the Supply Chain Insights Global Summit on September 5th-8th in Greensboro, GA. We hope to see you there!)

Article References:

Press Release. Gartner Says Supply Chain Management Market Will Exceed $13 Billion in 2017, Up 11 Percent from 2016, https://www.gartner.com/newsroom/id/3747517, 8/5/2017

Blog. Radically open: Tom Friedman on jobs, learning, and the future of work, Deloitte Review, issue 21, https://dupress.deloitte.com/dup-us-en/deloitte-review/issue-21/tom-friedman-interview-jobs-learning-future-of-work.html, August 5, 2017