What I took away from the Gartner Supply Chain Executive Conference… Supply Chain Management is a relatively young practice, though many of the core principles go back many decades and are based on Operations Research concepts. These have focused on optimization and efficiency. Undoubtedly the world is a better place because of this focus on manufacturing and distribution efficiency over the past 50 years, resulting in large gains in productivity and therefore standards of living, initially in the West, but more recently around the world. All of this productivity gain was achieved in the analog phase. We are now entering the digital phase of business. Even if we discount a great deal of the hype for what it is, hype, the reality is there has been a significant shift to digital. The title of the recent Gartner Supply Chain Executive Conference, "The Bimodal Supply Chain: Tackling Today, Preparing for Tomorrow", says it all. It was focused on the manner in which companies can adapt to the digital world while still operating in the analog world. Hence bimodal. As outlined in the diagram below, the bimodal approach advocated by Gartner is about innovating on top of a stable platform. Once the value of the innovation has been captured and stabilized it can be drawn into the stable platform.“Disrupt or Be Disrupted — Defining the Bimodal Supply Chain”, 30 December, 2015 Analyst(s): Dana Stiffler | Jane Barrett | Debra Hofman | John Johnson The keynote, delivered by David Willis of Distinguished Analyst at Gartner, describes the bimodal shift as:
The shift requires a new approach to investment in technology, leadership and talent, taking a more agile approach. The bimodal supply chain combines stable best practices with innovation-seeking behaviors to keep your organization competitive.
I have no question that Gartner is correct in their assertion of the need for a bimodal approach to the adoption of digital technology, whether more broadly to the business in general or specific to supply chain processes. Industry 4.0 is a reality. The Internet of Things is a reality. The only question is how quickly companies will absorb these innovations and adapt processes to accommodate them. My opinion, however, is that the bimodal approach has little to do with technology and everything to do with talent and operating models, especially in supply chain. Put more correctly, technology is the forcing function, talent and operating models are the barriers. As a practice we are a bunch of engineers who have been trained and taught to value precision, efficiency, and repeatability over approximation, effectiveness, and agility. The manner in which our practice is measured and organized emphasizes functional excellence at the expense of end-to-end effectiveness. In fact Jane Barrett of Gartner makes this point in a blog titled “Build a Bimodal Supply Chain and Take Charge of your Digital Future!” by stating that
In mode one Supply Chain must continue to focus on efficiency and operational excellence – the traditional operational caretaker. In mode two, in parallel, you must be able to experiment, fail (fast), innovate and embrace new crazy ideas. This needs different people, incentives and culture. You must hire data scientists and sociologists, experiment with drones and other smart machines, harness unstructured data and design e2e connected processes like never before. Analytics must become embedded and mainstream.
Change will come from people in their late 20’s and early 30’s, such as Mathilde Drouin who presented at the Gartner Supply Chain Executive Conference on Schneider Electric’s strategy for customer co-planning, the next generation CPFR, requiring deeper cooperation between trading partners. My generation, in their late 50’s and early 60’s, needs to provide space and opportunity for the millennials to flourish and teach these old dogs a trick or two. As evidence of the need for fresh talent, I refer to a senior executive in a pharmaceutical company. She told me that a few years ago she got tired of being told by senior supply chain people that certain analysis could not be done, and that processes had to remain as they are and had been for some time. She hired a bunch of interns from a local prestigious MBA program and told them to spend the first half of the internship trailing the senior supply chain people in order to understand the type of decisions they were trying to make on a daily basis and the difficulties they were having in analyzing their options. Their task in the second half of the internship was to show the senior supply chain people that the data required for the analysis was available, but that the senior executives did not have the skills to gather and analyze the data. After the exercise a number of the senior people chose early retirement. Just a few weeks ago one of our CPG customers went through a major reorganization of their supply chain planning organization. At the top are two men in their late 50’s, one in business, and the other in IT. Reporting into both of them is one person, in their mid-40’s, who is both business and IT, but comes from IT. Below him are a bunch of people who come from business and IT. I couldn’t tell from their titles whether they were business or IT focused. And in that statement I am capturing the transformation that is taking place. The new generation is coming through for whom “IT” skills are as normal and as requisite as financial skills. What we had to learn, they know. We need to give them the space to redefine the practice of supply chain. This isn’t just about technical skills. More importantly it’s about a more collaborative and cooperative way of working. I love it. I hope you do too.