I’m not sure if anyone else has noticed, but the world has changed over the last few years, and it doesn’t show any signs of not springing new surprises and changing again. All businesses have been hit by disruptions, interruptions, shortages and cost increases. The trends we followed for several decades, that delivered the gains that our business leaders and shareholders demanded, have conspired to expose the fragility of many supply chains and associated operations.
It’s not to say that the decisions we made were necessarily wrong, it’s that the world changed faster than many could respond to.
If we consider four key areas of supply chain, we can ask questions of ourselves and use the frame of our current situation to define an outcome that could create competitive advantage regardless of disruptions.
A function that continues to be far too siloed, we’re not just talking sales and marketing not working with Production and Logistics to create a synchronised plan (S&OP). Procurement may have driven consolidation of suppliers and more cost based sourcing decisions, limiting the options for alternative supply when disruptions occur. Finance have supported supply chain to establish “Lean” practices which by their very nature decreased buffers, but what happens to the sales forecast when demand outstrips supply? In a period of “abundance” all these strategies are relevant and produced significant shareholder value. When times are tight, cracks can quickly appear.
We’ve moved from local to global, low cost supplier to lower cost supplier, outsourcer to outsourcer, from build to stock to build to order or just in time. Have we gained the business benefit, competitive advantage and customer experience value we predicated? Maybe. How many of us are now facing the uncomfortable position of having to re-invent processes, re-establish relationships, re-commit revenue, profit and customer delivery commitments on a monthly (if not more frequent) basis? Many I would surmise. Is near-shoring or reshoring the answer? For some industries, where production is dependent on large facilities (chemical, pharma etc), it is likely to take multiple years if not decades to re-adjust from the “bull whip” effects of multiple disruptions in such a short space of time. For the nimbler business, there is still the challenge of bottlenecks and competition for raw materials, but there is the option of localised “final build” and customisation which can reduce both the cost to serve and overstocking slow moving products.
Similar to planning and procurement, logistics has focused on preferred suppliers with promise of agility, visibility and reliability. There is an inherent efficiency of everything flowing through a single source, being able to establish consistent processes and scorecards and leveraging volumes to create cost reductions. All good business practices that have led to a significant growth in 3PL/LLP and 4PL capabilities. I have to admit, I’m on the fence on this element. Having spent 30+ years in environments where minimising the number of logistics suppliers was, at first, “radical thinking”, where outsourcing was a significant risk, to now this being the industry “best practice”. Have we swung the pendulum too far in minimising or single sourcing? The current challenges in multiple business sectors from hi-tech to automotive to retail and farming might suggest a rebalancing or more ecosystem approach could deliver the value we are seeking.
An opinion based on many years in this environment; we are still very much in reactive mode despite the promise of greater visibility, proactivity, data and analytics, AI etc. Tribal knowledge and subject matter expertise are still firmly enmeshed in day-to-day operations despite our best efforts to digitise the intellectual capital possessed by our call centres, logistics support centres and technical support centres. There are exceptions to these examples where digitisation of telemetry from IoT/networked devices is providing greater insights in one function, but it is still challenging to bridge the gap to an environment where data is democratised across multiple silos with an end to end, customer experience strategy in mind.
What is clear, and broadly agreed upon, is that “data silos” restrict every element of the supply chain and the broader operation from delivering on individual and/or corporate goals. What is required is a platform that is designed to ensure data is ubiquitous and moves in a frictionless way to where it is needed. One that is designed to not only store data, but utilise it to orchestrate and provide insights in a dynamic fashion across the circular supply chain.
The ability to synchronise planning activities across multiple silos, facilitated by an agreed-to data model creates the foundation of a new supply chain environment. Utilising a single, democratised source of data removes “discussion” about who’s data is accurate. Enabling this data to be as close to real time as possible ensures decisions and business rules reflect what is happening “now” rather than when the plan was put together or what we thought the forecast would be.
Creating business networks or ecosystems, where challenges can be shared, solutions based on how best to serve the customer outcome, balancing the capability of each member of the value chain or customer journey. Collaboration needs to be intrinsic in the culture of all participants and establishing the value to each party critical.
Productivity through automation allows each resource to be scaled and/or focused on creating added value to your customer. Removing repetitive tasks that could or should be delivered by RPA, built into business rules and workflows, utilising knowledge graphs to manage the relationship between data elements, create an environment where actions can be executed, next best action suggested and exceptions managed rapidly. Automation is not (necessarily) a headcount reduction exercise, it provides options to scale, utilise knowledge, re-train and develop employees and focus on the value-add components of our services that create differentiation.
Operationalise sustainability and resilience. This need has never been more prominent in supply chain or throughout our society. Barely a day goes by when an action, issue or request is handled by supply chain where a sustainability element has to be considered. From planning, through sourcing, delivery, recovery and reverse logistics to utilisation in repair/refurb cycles or disposal to recover precious metals or components, supply chain now has to build in and operationalise sustainable practices for environmental, social and economic benefit. It’s no longer about being seen to “do the right thing”, sustainability is a necessity to build a more resilient ecosystem. Building in “serviceability” to every product, sourcing ethically and responsibly, managing the customer and product lifecycle, recovering, reusing and recycling products should be central to every business. The site of e-waste in landfills (9.4m tons in the US alone), plastic being burned from electrical cables to recover copper wire, oceans clogged with single use plastic must become a thing of the past.
Many supply chains are already a competitive advantage when running efficiently, automatically and sustainably. Better data supports better decisions, ensures better outcomes and delivers a better world.
OnProcess Agora was designed with these challenges in mind. Why not contact us to arrange a demo and discuss how Agora could transform your supply chain?