Digital supply chain transformation: What was once disruption is now strategy

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The debate over whether technology is required to run supply chains is over. It has been for a while now. In the next five years, we’ll see more innovation than the last century, and that’s staying a lot given in those 100 years we put a man on the moon, invented aerosol spray cans and saw the world revolutionized by personal computers, the internet and mobile phones. Looking around on day two of the Gartner Supply Chain Executive Conference in Phoenix, AZ I see evidence of the world’s past innovation everywhere. From the phones and tablets in fellow attendees’ hands to the wireless earbuds and smart watches they’re wearing to the very screens presentations are being shown on. Innovation is everywhere. It’s inescapable. Even in the confines of your Excel-driven supply chain. As Amber Salley and James Lisica, senior director analysts for Gartner, so poignantly put it during their keynote presentation on converging the physical and digital supply chains—if you’re still operating on the back of an Excel spreadsheet, it’s time for a reality check.

Don’t build your digital supply chain on a faulty foundation

Here’s the thing. There’s a heck of a lot of hype around buzzwords like digital transformation, artificial intelligence (AI), machine learning, big data, advanced analytics and the Internet of Things (IoT). At many organizations, CEOs are cottoning on to those terms and demanding action. But not all organizations are ready. It’s okay to start with building the basics first. In fact, it’s kind of mandatory for success. You don’t just jump to stage four or five maturity overnight. It’s a cumulative sort of thing. According to Lisica, in the short term, most companies are focused on mainstream technologies with capabilities like integration, automation and optimization. But over the next five years, that will shift, with more and more companies looking to adapt ecosystem-wide collaboration, autonomous decision-making (both for planning and execution) and synchronization across the end-to-end supply chain. Gone are the optimization heydays of the past. Optimization is no longer the best path to supply chain efficiency. More than two-thirds of CEOs and CFOs anticipate a business model change within their organizations. Half of Chief Supply Chain Officers (CSCOs) say their roadmap is a big roadblock to supporting that. So it’s unsurprising that 83% of supply chains find implementing digital initiatives a challenges.

Remember that your most important intelligence isn’t artificial

Salley and Lisica stress that the way forward is to focus on converging digital foundational capabilities with emerging digital strategies. Digital strategies aren’t just about the latest and greatest technology. In fact, that’s the last step of the transformation. It starts with aligning the business and operating models with your vision for the future. Then looking at the people and processes behind them. You need to develop a digital culture—one that allows for democratized decision-making based on facts and data, is adaptable to rapid change, and recognizes that change as a competitive advantage. Supply chains have become a competitive weapon for businesses, driving savings and fuelling efficiency from all sides. The people running those supply chains are just as much of a competitive advantage, and will only become more valuable as future innovations take hold.

So what do you do with employees facing potential displacement due to artificial intelligence in supply chain, along with machine learning and autonomous decision-making? You nurture them, that’s what. If you aren’t already struggling with the great supply chain skills gap, look out, it’s headed your way. Salley has some sage advice on this front. Step back, assess your talent gaps and work with HR to redesign the roles of the future to prep talent for today and recruit for tomorrow.

Be bold, but be calculated with your investments

Supply chains are evolving. There’s no stopping it now. So don’t let this golden opportunity pass you. Think about your digital strategy—for your business, for your supply chain and for your talent. Invest in the right areas. Be bold, but be calculated. And remember to invest in a solid foundation first. Innovation and emerging technology isn’t a disruptor anymore. It’s a strategy—and the key to your future supply chain success.

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