Themes from the 2018 SCM World Leaders Forum

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“Thick data” vs big data, the power of the supply chain profession, and cybersecurity

I just returned from a very inspiring 2018 SCM World Leaders Forum in London. While I attend several supply chain conferences in any given year, SCM World is a favorite of mine for a couple of reasons. For one, this is a power-packed forum with the who’s who of supply chain in attendance. The executives in charge of supply chains for some of the most admirable companies from around the world were in attendance. With approximately 200 professionals in attendance the event is rather exclusive, which provides plenty of one-on-one networking opportunities. Here are the major themes from the forum:

1. Complement big data with “thick data”

In a very provocative presentation, Tricia Wang, a tech ethnographer made a compelling case on why organizations shouldn’t hang their hat on big data alone when it comes to decision making. Instead, she suggested they should complement it with “thick data”. If big data is about numbers and analysis, thick data is about bringing human intuition into decision-making. To bring home the point, she relayed the story of Roger Boisjoly, an engineer who predicted the failure of the space shuttle Challenger based on his intuition that that the O-rings on the rocket boosters would fail if the shuttle launched in cold weather. He repeatedly sounded the alarm by writing multiple memos to his bosses, all of which were ignored. After the explosion of Challenger and the death of seven astronauts, here is what Boisjoly said – “I said I couldn’t, I couldn’t quantify it. I had not the data to quantify it, but I did say I knew that it was away from goodness in the current data base.” While most day-to-day supply chain decisions may not deal with life and death, the potential loss of value from ignoring human intuition can be substantial. Wang shared her personal story of how, while working at Nokia, her field work as an ethnographer led her to intuit about how the market for smart phones was set to take off. However, Nokia’s leadership focused on quantitative data, which predicted steady growth of the feature phones they were leading the market with at the time, ignoring Wang’s advice. Of course, those were the early days of the iPhone and there were plenty of naysayers. But we all know what happened after that! Wang contrasts big data vs thick data as follows:

  • Machine intelligence vs Human intelligence
  • Content vs context
  • Scale vs depth
  • What vs why
  • Knowns vs unknowns

Supply chain data in most organizations is either of questionable quality or is full of holes. Machine intelligence is still at a stage where it can, at best, augment human intelligence in certain narrowly defined use cases. So, the art form of supply chain management will continue to stay for the foreseeable future, enabled by thick data. On a related topic, another executive commented that while “data is the new oil” became the mantra of the times, hoarding tons of data is meaningless unless one can effectively process it into information. To this effect he commented that, “While data is the new oil, information is the new petrol.”

2. Supply chain executive’s role in the corporate leadership - Is the “Power of the Profession” visible?

In his opening remarks, Kevin O’Marah, Chief Content Officer at SCM World, introduced the event’s theme, “Power of the Profession”. In doing so, O’Marah shared statistics related to the supply chain executive’s place in the corporate hierarchy. O’Marah noted that the role of a Chief Supply Chain Officer (CSCO) is still not a very common role in many corporations. The head of supply chain role is typically behind the CFO and CIO in terms of corporate standing in the vast majority of organizations. The statistic that surprised me the most came from the question, “Are you treated as an equal among other executives?” In 2012, 59 percent of surveyed supply chain leaders answered yes. In 2017, the number fell to 48 percent. In an executive panel discussion, several heads of supply chain did concur with Kevin’s findings. One of the executives in attendance hypothesized that it could be that most CEOs are focused either on demand creation or new product innovations, and that for them supply chain is perhaps the level of detail that they need not be bothered with. There was some concern that the role of supply chain gets elevated only when a crisis hits and product cannot ship. The chief product supply officer of a large global company encouraged attendees to think in terms of shareholder return, by mapping financial metrics to supply chain operating metrics such as on time in full (OTIF), and inventory turns. In addition, supply chain leaders should translate those metrics into frameworks for daily decisions at individual DC, plant, and production line levels. The essence of the message is that supply chain executives should communicate in terms of the KPIs that the CEO and board can understand and relate to while translating them to those in the trenches!

3. Cybersecurity and why it should matter to supply chain executives

Here’s something I didn’t expect at this conference – an hour and a half dedicated to cybersecurity. At first, I thought this was an odd fit for a supply chain conference; however, when a question was asked about how many companies could not ship product on time because their systems were down due to ransomware attacks, dozens of hands shot up! Many in the audience at the leader’s forum commented that their systems were down last year for days and weeks due to ransomware attacks, resulting in loss of tens to hundreds of millions of dollars in some cases! Another factor is, as IoT devices proliferate and software gets embedded into products that get shipped, the products themselves could be vulnerable to hacking, thus exposing supply chains to additional risks that organizations did not previously have to deal with. This led one of executive to comment that, “digitalization is the arch rival of cybersecurity.” So true indeed! In the world of IoT and distributed systems, potential security vulnerabilities grow exponentially. One of the cybersecurity experts present recommended to have a recovery firm on retainer just so organizations can cut through the scramble to get through contract procedures, as it’s not if but when, they get hit with ransomware. While this may sound like good business for cybersecurity experts, it is reasonable insurance for corporations. Another attendee made an intriguing observation that his organization encourages “employee hackers” to find system vulnerabilities. There were several other very interesting sessions and executive huddles in a schedule that is dense in content while allowing for one-on-one networking with peers. The surprising announcement during the event was that Kevin O’Marah, who has been the public face of SCM World will be leaving the organization. Kevin’s outstanding contributions to the supply chain community were appreciated by one and all. However, many in attendance felt that SCM World missed an opportunity by not announcing a replacement. Whoever it is will have big shoes to fill and I am sure an announcement will come through soon. Kevin – while the SCM World family will miss you, I know you have much more to give to the supply chain community. I have no doubt you will continue to do that regardless of where your next adventure takes you. All the very best!

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