The digitally enabled supply chain: Separating the leaders from the laggards
Digital business models are priorities for enhancing customer service. But they must be strategically aligned. A recent Gartner supply chain report states that “understanding the CEO's priorities and view of digital business is essential for supply chain to support those priorities.”
Expectations around availability, speed, convenience, and trackability have spilled over from the B2C space into B2B. Supply chains are on the front lines in customer service excellence. And they’re seeking digital solutions to keep up and gain control.
Gartner calls out that “The challenge for the head of supply chain strategy is to deliver upon the company's new digital business model by aligning the supply chain operating model (SCOM) and digital investments to that digital business model.” Digital supply chain technology investments are necessary for feeding this operating model. IoT, cloud, mobile and API investments are aplenty as businesses aim to excel in data and analytics. This investment will only increase along with the speed of business. Gartner calls out in a 2017 Gartner digital supply chain survey that “62% of supply chain practitioners reported that they anticipate digital business will drive more than half of their revenue within two years.”
Digitization initiatives are essential to future growth. And with growth in IoT, the volume of data is exploding. According to E&Y research, the world’s total digital data volume is doubling every two years. It stood at 4.4 zettabytes (trillion gigabytes) in 2013 and is projected to reach 44 zettabytes by 2020. This means that organizations and individuals are drowning in data. The inability to filter out the good from the bad, or the relevant from irrelevant, is a major hurdle. But just as pressing is the issue of current data investments occurring in silos. Gartner calls out that only 25% of supply chain practitioners say digital projects across their companies are aligned under a single governance process.
This places supply chain practitioners in a difficult spot, summed up in a few observations:
- The speed of business is only increasing. Greater demands around service, quality, shipment windows, etc. are being placed on supply chain teams.
- Current supply chains and solutions are not equipped to keep up. Practitioners lack the data insights and tools to deliver on customer expectations while balancing cost, quality and cycle time. They’re overloaded with data but can’t filter out the noise.
- Data investments are being made in pockets and silos. Information being shared is questionable and unreliable. Investments in AI and machine learning have limited value due to lack of sufficient volumes of quality data.
- Organizations at multiple levels still need to call/email external trading partners to really know the state of business.
- There is a burning need to break down silos between internal teams and external parties to cultivate end-to-end supply network data. Having the right information in-hand, with context and intelligence to make smarter decisions, is an unattainable vision for supply chain leaders until they operate in a networked environment that empowers individuals with data intelligence.
Supply chains are networks of organizations and people. Processes and flows within the network are constantly changing and evolving, just as customer demands and market conditions are. Connecting all trading partners in a network where data flows smoothly and process flows are seamless has proven a challenge. But the real power to improve supply chain service levels, productivity, and profitability lies outside of the business’s four walls, with suppliers, logistics providers and other partners. An estimated 80% of data used to run the supply chain resides with external partners. Supply chain leaders who empower their teams and partners with collaborative tools and resources where everyone can optimize execution, while acting in the customer’s best interest, will be miles ahead. Doing so requires a shift in mindset – to an outside-in approach. A hyperconnected network approach where all parties are “live” fosters an environment of live data and live action. A supplier or manufacturer plugs in to receive orders, amendments and payments in the system – and can alter plans to execute direct shipments if the end-customer demands change. In a networked supply chain, everyone can act in the customer’s best interests. Opportunities arise across the network for proactive action that generates value, productivity and efficiency. Supply chain leaders shift from reactive firefighting to proactively delivering new forms of value.
According to IDC, by the end of 2018, 90% of manufacturing supply chains will use B2B commerce networks as the dominant collaboration tool for demand, supply, service, and new product development. By 2019, 50% of manufacturing supply chains will have benefited from digital transformation with the remainder held back by outdated business models or functional structures.
A clear line is being drawn between leaders and laggards. Supply chain leaders have big decisions to make in the near-future that will determine which side they land on.
Source: Gartner, Inc., “Guide to Aligning Digital Business and the Digital Supply Chain” January 17, 2018.
Source: IDC, The Digitally Enabled Supply Chain with Manufacturing Use Cases, 2017
- Click here to learn about Control Center