Eight Key Areas To Address For A Successful Digital Supply Chain Transformation
October 25, 2019
Every supply chain leader is struggling to improve operations, integrate new technologies and figure out how to obtain and use data from a vast array of options. Why? Because we now have the analytical knowledge and technical capability to build a Digital Supply Chain that stokes customer demand and minimizes costs. While the solutions will differ from company to company and industry to industry, there are common issues that every company has to address. Here are the eight things every digital supply chain leader should do:
1. Performance metrics that drive revenue. All companies have sophisticated ways to measure cost and delivery performance. Yet, few have developed metrics that reflect the importance of the supply chain in stimulating demand and revenue growth. As a result, opportunities to make customers happy, increase revenue and develop new business models are missed. If we had the right measures, we would see a massive shift in how market and customer data is managed, how supply chains create a special experience for customers, and how successful company executives work across internal silos that restrict innovation and growth. We suggest that the CEO and CFO help establish new metrics and inspect progress against them with rigor.
2. Give purpose to “collaboration with a purpose.” When is the last time your CIO, head of sales and marketing, and operations leader got together to build a killer experience for customers? When is the last time you felt that data flowed freely across departments? Yet we know that cross-functional collaboration should be the major source of great ideas that link customers to operations and drive customer loyalty. Make sure that executives, managers, and employees have a financial reason to collaborate.
3. This is what happens if you don’t make customers happy. Uber showed the taxi world what happens when your supply chain matches customers to products/services. Customers love the pricing transparency and delivery time information. The taxi industry, on the other hand, has been slow to give customers what they want, suffering rapid market share loss and declining profitability. A customer-focused Digital Supply Chain, like Uber’s, could enter your industry and upend your business model.
4. Start “data-trading” to get the information you need. Most supply chain leaders do not have the information they need to truly understand how to grow demand. So progressive supply chain leaders are not only better at using existing data, but they are also good at collecting new data. Sometimes this means installing sensors or using IoT devices, but often it means contacting companies (e.g. distributors) and trading to get the data you need. A new data model is a requirement of the Digital Supply Chain and data-trading is frequently the only way to get the information that you need. Take steps to identify and value the data that you need and assess the value of what you have.
5. Use Blockchain to create more customer value. Forget all the Blockchain hype about immutability and distributed ledgers. Blockchain should be used to make customers happy with the choices that your company has made about sustainable supply chains. The money-saving part comes in when you eliminate non-value-added parts of your chain and drive down the cost of things like paperwork and verification.
6. Make Algorithm Management a prerequisite for career advancement. Everyone knows that algorithms are the future of business. And we need software developers to create those algorithms. But even more, we need to get the managers in place that know how to work algorithms, prioritize Artificial Intelligence/Machine Learning (AI/ML) resources and work across boundaries. If you can’t manage algorithms you can’t advance.
7. Replace and retrain people so that digital transformation can happen. You can’t respray your executive team and have them come out looking like highly analytical, data-driven decision-makers. You will have to replace many of them with people who are more digitally savvy and understand analytics and algorithm management. However, you can improve the skill set of many of your management team and workers. Gather the nerds, put them in charge and train the rest!
8. Set impossible goals and help people reach them. I once had a client that told me that concept of an “organization” was invented to prevent people from getting things done. I have seen first-hand what people are capable of when they have the freedom to act and the incentive to perform. Set big goals for revenue growth driven by supply chain actions and customer happiness. Shift your culture so that people are encouraged to work with data and delight customers while making a profit.
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By George Bailey, Managing Director, DSCI