ACT now to take your supply chain into the future

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One message came through loud and clear during Gartner’s recent Supply Chain Executive Conference; you must ACT (aspire, challenge, transform) now if you want to have any hope in taking your supply chain profitably into the future. The conference’s theme of Aspire, Challenge and Transform in a Disruptive World featured prominently in the opening keynote address by two of the research firm’s VPs, Debra Hofman and Michael Burkett, who urged attendees to re-imagine their roles and ask how they will meet the future. The pair talked about how disruption is the new norm. I would argue it always has been, but agree the explosion of interconnectivity and digital disruptors is causing an immediate impact on supply chain—even if the supporting technology behind it has individually been around for years. I’d also agree that to be successful it’s time to re-define the very notion of supply chain.

Providing an experience, not just a product

With more than $16 trillion exports moving between countries annually, the new reality isn’t just focused on getting the right product to the right people at the right time. As Hofman and Burkett put it, it’s about creating an experience-focused supply chain, which will force you as supply chain managers and leaders to gain a better understanding of your customers than ever before. You have to be able to solve the problems your customers didn’t even know they had, provide personalization and offer smarter products—ones that can grow and adapt and change in unexpected ways. One example highlighted during the Gartner conference was the creation of smart toothbrushes, which when connected to a mobile app can guide you in improving your brushing technique by recognizing (via sensors) areas you may be missing. You can even share the data with your dentist for a more complete picture of your overall oral health habits. But just having a connected toothbrush isn’t enough. Through APIs, other vendors can enhance the product further, like connecting your Spotify playlists so you can brush your teeth to your favorite beat. That’s how you start to build an experience. Hofman and Burkett talked a lot about defining a vision for the future and aspiring to expand the definition of supply chain beyond its current confines. They focused on customer experiences and the notion of how virtual ecosystems can power them. In this context, Gartner defines ecosystems as “interdependent business networks offering innovation and productivity benefits to members through electronic interchange.” Orchestrating this new virtual ecosystem requires collaboration with partners, suppliers and customers. An easy example of this type of working relationship is what’s happened with connected cars. Automakers build the product, but leverage relationships with other manufacturers to offer enhanced services and experiences such as GPS, satellite radio and even telecommunications options like Apple’s CarPlay. The end result is creating an overall driving experience—not just selling a car. Another less expected case study is what’s happened in agriculture and the emergence of a new virtual farming ecosystem that’s delivering innovative solutions to a centuries old industry. Agricultural producers like Monsanto are working with equipment manufacturers like John Deere to provide real-time information about seed quality and equipment efficiency to help farmers maximize crop yields. Now imagine commodities traders got involved in this ecosystem. They could provide added data around market trends to help determine which crops will be most profitable to plant and when. Farmers would be able to maximize for financial gains and crop yields. But that only becomes a possibility if these partner relationships continue to grow, and more importantly, succeed.

Managing digital capabilities

Another aspect to envisioning the future is recognizing the impact digital capabilities have on the supply chain. They’re finally starting to deliver real business value. While artificial intelligence (AI) has been around for years, Hofman and Burkett say it’s only now that it’s approaching a stage that will disrupt supply chains as we know them. Advanced algorithms, machine learning, big data, deep learning, neural networks, natural language—all are coming into play in creating a dynamic and self-adapting supply chain that functions much like the human brain. This reality is a lot closer than you may think. Gartner’s research shows 20% of companies in their supply chain top 25 are already piloting or in production with augment reality or AI. That’s because with the amount of data, rate of change and number of IoT devices, things have expanded beyond the ability for humans to keep pace. No matter how much of a math genius you are, you can’t make the necessary calculations and corrections fast enough. P&G is experimenting with AI for exception planning, using it to prevent and resolve not only known exceptions, but new types of exceptions as well. KTM is playing with augmented reality, using it to help any service technician repair any motorcycle no matter that technician’s experience level. However getting to a point in your organization where these types of experiments are not only approved but encouraged means tackling some pretty big organizational challenges.

Overcoming barriers

There’s no doubt we’re entering a disruptive era, but to assess how prepared you are to boldly lead your supply chain into it, you need to ask yourself a few questions: Do you have a vision for the future of your industry? Is yes, do you as a supply chain practitioner have a voice in making that a reality? According to Gartner, 40% of chief supply chain officers (CSCOs) say their CEOs still see them as just a cost center. Speak up. Are you close enough to your customers? It’s not enough to identify who your customers are. You have to know them, as intimately as possible. Providing that expected exceptional customer demands it. Learn more. How fast can you innovate? You need a bimodal supply chain—one that’s driving toward sustainability and innovation simultaneously to be able to innovate at a pace that can effect change. Explore possibilities. Does your team have the right skills? The future is leaning toward humans and machines making decisions jointly. Work will look and feel different and offer a better mix of optimizing time and labor. You’ll need more data scientists to model based on advanced algorithms and folks who can teach and train the machines running them. Recruit talent. Once you’ve conquered those challenges, it becomes about designing your future.

Create a digital platform

The customer appetite for experiences is there and so are the required digital capabilities. Next you’ll need a build a digital platform to manage and deliver them. Hofman and Burkett warn architecting it shouldn’t just be left up to IT. Your digital platform needs to encompass customers, ecosystems, connected devices, intelligence and IT systems. It has to lead to the creation and alignment of your company’s digital path. Unfortunately, that’s easier said than done. Gartner’s research shows 76% of digital projects aren’t aligned under a single governance. Your supply chain technology model needs to align to your supply chain operating model, and that has to align with your business model. If you let IT dictate what this new digital platform will look like, you’re giving them the power to define how your supply chain will be structured in the future, because ultimately it will have to align with the rest of the digital path. Once you’ve built this new digital platform, then all you need is a strong leader and the right team to take you down that digital path.

Build the right team

Burkett said it best, “True leaders will take us to places we didn’t know we needed to go.” You’ll need a leader who can bring both sides of the bimodal supply chain together seamlessly. You want someone with experienced hands, who knows how things traditionally operate, but with a beginner’s mind, meaning they’re open to new ideas and processes. That will give you the ability to blend best practices with new ideas.

"The beginner's mind sees many possibilities, while the experienced mind only sees few.” —Shunryu Suzuki

You’re also going to need to diversify—not just across gender or cultural lines, but also across cognitive lines. Build teams that have a blend of analytical and emotional personalities. While fireworks may sometimes ensue, it’s through this diversity of thought, guided by unity of purpose, that you’ll see the biggest breakthroughs. Just make sure your leader has the skills to manage such an explosive team dynamic.

Embrace the excitement

Chaos isn’t going away anytime soon. It’s always been there in shades, but more recently seems to have burst forward again in its many splendid colors. But you can adapt to it and use it to drive supply chain excellence and growth. As Hofman and Burkett noted in their presentation, you just need to be bold!

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