The Supply Chain dilemma: which Digital Supply Chain Strategy?

Blockchain, automation, IoT, robotics, big data, artificial intelligence, connected supply chains… the concept of supply chain digitization is often hard to translate into reality for Supply Chain executives: the words “digital transformation” have been used and overused to the point where it has become almost meaningless. So how to deal with digitization and translate this concept into a realistic and achievable digital supply chain strategy?

 Why a Digital Supply Chain strategy?

The world has changed and will continue to change. The speed of change will continue to accelerate supported by ever-smarter technologies.

Companies are overwhelmed by:

– Growing uncertainty: how to take the right decisions at the right time to anticipate or at least minimise the impact of unpredictable demand, external events, geopolitical, economical or environmental risks? A good example is the spare parts shortage experienced by car manufacturers globally in the wake of the tsunami that hit the Fukushima nuclear plant in 2011: global supply chains were disrupted by a local and unexpected accident. As a result, automotive suppliers have changed the way they produce and source the 30,000 parts required to assemble a single car. But it took time when agility is now a definite requirement when it comes to supply chain planning and execution.

– Exponential data growth: business models are becoming more complex when it requires integrating huge amounts of real-time data. To be able to manage efficiently these new and complex business models, companies have to create ecosystems that include massive amount of data and collaborative environments between business partners. When this amount of data is not properly managed, the complexity becomes a barrier to achieving innovation and expected efficiency. In addition, advanced analytics without any enterprise data strategy shall end up companies to follow mistaken paths.

– Shorter life cycles: this is true both for products, processes and supply chain networks. With such uncertainty and because of unpredictable fluctuations of demand, there is almost no supply chain network nor logistics scheme that will remain the same during 5 years. It requires a continuous effort to adjust quickly the existing organisations to market fluctuations and new trends.

More complex business models require higher agility and ability to adjust almost real time supply chain planning and execution using an overwhelming amount of data: businesses have to enter the digital age by implementing connected supply chains and using technology to support strategic and tactical decisions real time: when it comes to digital supply chain strategy, it is not a question of “if” but “when” and more important of “how”.

Define the scope of digitisation

How? Digitisation is not about data only. Designing a digital supply chain strategy means to review the entire business processes (not only supply chain) to identify the level of digital change that will be required.

Technology is the platform that will facilitate and support the execution of the digital supply chain strategy, it is not the end game. So, it is useless to speak about automation, blockchain, AI, robotics before knowing exactly:

– What is the data’s business utility? What kind of data do I need as a business and to achieve what? Most of the companies are trying to capture and store significant amount of data but what is the ultimate goal of such an approach? Consider first which data is needed to support the business. Let’s try to simplify and standardise big data first and define a true data management strategy. Once done, it will be time to evaluate what are the right technologies to provide this data real time (IoT, blockchain, machine learning…).

– Why starting the “process digitisation journey” from the technology angle? Let’s go back to basics first and review the entire supply chain framework to identify and implement process improvement by eliminating waste in the operations and focus on the opportunities to better integrate siloed functions: for example, let’s bridge first the information gap between sales and operations or improve forecasting accuracy before considering moving to e-S&OP (another new concept heard on the market). It is critical to optimise already any process or practice before starting the process digitisation journey. This initial phase is also key to identify the opportunities for further digitisation. In other words: eliminate (streamline current operations), then automate (digitise the entire supply chain).

– Schedule digital technology investment: many supply chain organisations will be looking for improving existing operations (the “eliminate” phase) to get the low hanging fruit but will postpone the investment needed to support tomorrow’s growth. It is critical to build the future supply chain that delivers a customer experience and not a product only: this is the “automate” phase where different technologies will be selected to fulfil the company’s supply chain needs.

– Digital supply chain project governance should not be underestimated: going digital is a significant transformation project and it must start with the wider organisation alignment to a single digital business vision. The digital supply chain strategy is one element of the company’s vision. However, in a 2017 Gartner survey of 318 supply chain organisations worldwide, 75% reported concerns about the governance of digital projects. And just 25% of supply chain organisations say digital projects across their companies are aligned under a single governance process.

Designing and implementing a digital supply chain strategy is a transformation journey.

Because the technology investment is one element of the strategy (and not the end game), our consultants at Tokema Consulting implement our methodology with our clients to proactively challenge the vision, support the strategy definition and monitor the implementation of the digital supply chain strategy across the organisation with supply chain teams.

We are available to provide further information and discuss your digital supply chain project. Contact us!