Digital Supply Chain Leadership
Supply Chain is getting more and more complex. The requirement of increased visibility, agility, flexibility, risk mitigation, technological innovation and ever-growing expectation from customers for excellence is a huge challenge for supply chain managers and leaders.
The role of the supply chain leader is more important than ever given the impact of the supply chain in driving the success of modern organizations. In many respects, it can be argued that the future supply chain leader will be one and the same as the chief executive officer of the organization. Supply chain leaders today are at the cusp of having to oversee all aspects of the business of their organizations—from internal capacities and capabilities to external supply chain operations —and understanding how these serve evolving business models. We need to ensure we are developing the right supply chain leaders for the future—leaders who can deal with a high level of complexity, who understand different markets, both developed and emerging, and who can work efficiently and effectively across multiple cultures and nationalities.
List of the key skills and experiences that future supply chain leaders
1. Ability to understand end to end supply chain processes. In a manufacturing supply chain, it would refer to all processes from initial sourcing of raw materials through to product manufacture and value-adding activities that take place up to the point where the product reaches its destination. It is neither possible nor appropriate for any one organization to try to acquire and control a complete “end-to-end” supply chain—it is about collaboration amongst key partners that clearly understand their different value offerings and can align on purpose and objectives. Supply chain leaders of the future must recognize this reality and understand the capabilities, needs and objectives of each key supply chain partner so the supply chain operations continue to be effectively realized.
2. Experience across all major aspects of the end-to-end supply chain. In order to truly appreciate the value and role of each part of the chain, it is essential that future leaders have experience and knowledge across many parts of the chain. Future leaders will have spent periods of their careers in manufacturing, logistics/ distribution and retail. Such a broad level of experience and exposure will make them much better qualified to understand the full chain, identify potential risks and, therefore, address issues effectively as they arise.
3. Ability to foresee future market changes, to adapt quickly to new business models. When you consider how much markets and organizations have changed over the past 10 years as a result of the Internet and other technological developments, it is important that future leaders are thinking at least 10 to 20 years ahead. The idea is that your organization is either the one leading the changes or, at the very least, the one with enough visibility to spot them coming in order to react and adapt quickly. Future supply chain leaders will need to be able to drive the speed of change and put in place teams and capabilities to adapt and innovate quickly.
4. Continually question and assess markets and opportunities. If there is one thing that supply chain leaders will be required to do in the future, it is to continue to ask questions, provoke different thinking and assess opportunities based on their experiences as developed through the four key areas of development outlined above. The CEO of any organization in effect becomes the head of supply chain of that organization. He or she is always focused on the internal supply chain but also on the role the organization plays in an external supply chain. How may this supply chain change over time and where does the organization add the best value? Who should be the key collaboration partners and how should relationships develop? At the end of the day, future supply chain leaders need to create opportunities and ensure the organization continues to evolve.
5. Information Technology and Automation Knowledge. To be a supply chain leader, you will need to be familiar with the use of enterprise software applications like WMS, TMS, and ERP, not to mention analytics software, which is increasingly becoming a staple source of leadership decision support. There was a time when supply chain leaders could rely on subordinate employees to do the hands-on work with business information systems, and be content to receive reports and Excel spreadsheets containing data for decision-making. As a supply chain leader, your input into IT procurement will be crucial, and you must know enough about your company’s technology needs to discuss them with vendors. You’ll need to understand the relationship between ERP workflows and physical processes, for instance, to help prevent classic mistakes from being made, such as applying new technology to outdated, inefficient processes.
6. Understanding Cost-to-serve. If you understand the cost-to-serve concept and can apply it to your company’s supply chain activity, you’ll be able to identify unprofitable customers and products.
Supply chain leaders play a very active role in the profitability of their employing companies. If you’re running a supply chain operation, your decisions impact the costs involved in supplying your organization’s customers. You will have a huge advantage and the potential to shine as a leader if you can quantify how your supply chain leadership decisions affect your bottom line. For instance, too few companies focus on the real costs involved with serving customers.The result of this inattention is often a one-size-fits-all approach to service, inevitably leading to the over-servicing of some customers and the under-servicing of others. A single service offering can even impair profitability, perhaps creating a situation where logistics costs cause some sales to generate losses instead of profits.
7. Project Management Skills. Aside from flexibility, there are many other project-management skills that you’ll need as a supply chain leader. Of course, a lot depends on what leadership role you are in, but if you are headed to the top, you’ll probably hold several management positions on the way up, most of which will see you leading projects from time to time.
The Three C’s
Communication. Collaboration. Change. The three C’s of supply chain management and logistics are critical drivers for a manufacturing company’s success or failure in terms of their supply chain efficacy, but also for the planners and managers who oversee and deploy a company’s supply chain strategy.
Communication:
Communication is crucial to supply chain success and yet it is surprisingly one of the biggest areas in need of improvement. When it comes to cooperating with staff in other departments, many procurement professionals admit it is very difficult. And when it comes to communicating with those outside the organization, i.e. the suppliers, communications can become even further strained. The importance of communication both with internal stakeholders and external suppliers cannot be overlooked. With the right steps taken and changes applied it is possible to turn around poor communication and ensure supply chain success.
Collaboration: Collaboration between various touch points across the value chain is a core driver in creating a cross-organizational platform for sharing supply chain insights and fostering innovation and the development of new and existing operational models or methods. Supply chain leaders must make collaboration a core element of their operational philosophy in order to leverage competitive advantages over rival manufacturing companies.
Change: Disruptions, alterations, variations. These markers of instability are everyday elements in operating a global supply pipeline. But change can also mean turnover in personnel, variances in availability of raw materials, access to adequate facilities or production sites, or any number of other physical aspects of supply chain management. Successful supply chain leaders are not only able to respond to these changes, but they also work to plan for them by creating comprehensive safety nets to address the types of changes that could significantly impact production and supply logistics.
Digital Supply Chain Leadership
Strong leadership is necessary to drive the transformational change required to build and apply digital capabilities across organizations. Digital transformation in the supply chain is a leadership problem first and foremost. The benefits of a digital supply chain for firms can be summarized as uniquely reducing the amount of trade-off between costs and customer satisfaction. The challenges, complexity, and management involved in transforming to a digital supply chain have slowed many firms in their implementation. The key to unlocking this value and advantage is a new, robust, and digitally aware supply chain leadership mindset.
Skills for Digital Supply Chain
1. Demand Forecasting & Planning. Demand forecasting is the process of making estimations about future customer demand over a defined period, using historical data and other information. Proper demand forecasting gives businesses valuable information about their potential in their current market and other markets, so that managers can make informed decisions about pricing, business growth strategies, and market potential. Without demand forecasting, businesses risk making poor decisions about their products and target markets – and ill-informed decisions can have far-reaching negative effects on inventory holding costs, customer satisfaction, supply chain management, and profitability. Demand planning is a supply chain management process of forecasting, or predicting, the demand for products to ensure they can be delivered and satisfy customers. The goal is to strike a balance between having sufficient inventory levels to meet customer needs without having a surplus.
2. Supply Planning and Optimization. Supply chain optimization makes the best use of technology and resources like blockchain, AI and IoT to improve efficiency and performance in a supply network. A high-performing supply chain enables business efficiency and responsiveness, so customers get what they want, when and where they want it — in a way that is both profitable for the organization and contributes to supply chain sustainability.
There are three phases that occur within a successful supply chain optimization process:
? Supply chain design: Describes network design processes like where warehouse facilities are located and how product flows between them, and strategic objectives like demand forecasting, establishing supplies, and the planning and scheduling of manufacturing operations.
? Supply chain planning: Includes the creation of a strategic supply chain deployment plan, inventory planning, and the coordination of assets to optimize delivery of goods, services and information from supplier to customers — balancing supply and demand.
? Supply chain execution: Focused on execution-oriented applications and systems: warehouse and inventory management, transportation management, global trade management, and other execution applications, such as real-time decision support, supply chain visibility and order management systems.
3. Supply Planning and Optimization. inventory optimization is the practice of having the right inventory to meet your target service levels while tying up a minimum amount of capital in inventory. To achieve this, you need to account for both supply and demand volatility. Inventory optimization is the next level of inventory management for warehouse and supply chain managers and buyers.
4. Production and Capacity Planning. In a production environment, capacity is a combination of the capabilities and limitations of your equipment and machinery, your employees and their skills, management and logistics. Logistics begins with getting adequate supplies into your facilities, moving them through the production process and then getting them to your customers. Properly monitoring your capacity, managing it and effectively planning changes to your output capacity has numerous benefits for your company. Not only does it maximize your utilization of available resources, it can be used to increase the efficiency of your operations. Managing your capacity allows you to increase output when needed while minimizing the risk of having excess inventory. All of this put together will decrease costs while giving you the ability to respond to spikes in demand.
5. Sales & Operation Planning. Sales and operations planning is an aspect of supply chain planning whose goal is the creation of a unified, consensus-based business plan. It draws input from an organization’s key functional areas, including sales, marketing, manufacturing, distribution, and finance. Cross-functional collaboration results in plans that all stakeholders understand and are committed to supporting.