For years, the shifting needs of the customer — and how to serve these needs — have been top of mind for the supply chain profession.
More choice, faster delivery and flexible service models have long been the mantra of the consumer sector, while solution and performance-based models are the pursuit of the industrial sector. What has changed, however, is the increasing ability of competitors to deliver on the extremes of these preferences, such as delivery anywhere and highly personalized products in virtually no time.
Digital giants (including Alibaba, Amazon and Uber) and emerging startups are especially good at that. They are not only entering markets and turning business models upside down, they are also changing how organizations are designed and how technology is leveraged. While traditional organizations are being designed for sheer strength and power, non-traditional organizations are designed for speed, agility and flexibility. Their power is an ability to take many more decisions, faster and better. Rapid and accurate decision making is, in fact, essential for successful supply chain organizations in today’s fast-paced, risk-prone and hypercompetitive marketplace.
However, it is alarming to see so many traditional organizations unable to use data to make good decisions. Over 50% of supply chain organizations (see chart) aren’t always able to use data to make better decisions for the most critical, strategic and cross-functional processes, including new product introduction/product life cycle management, sustainability/corporate social responsibility, control tower and network design. For consolidated, functional-specific processes — such as supply planning, demand forecasting, logistics and customer fulfillment — over 25% of organizations are only able to use data to make better decisions in some cases, rarely or not at all.
Alarmingly Little Ability to Make Good Decisions
As the majority of supply chains are prioritizing digitalization initiatives to improve decision making, they often overlook two essential capabilities:
Supply chains are sitting on piles of data. However, most of them are struggling to leverage it. For the majority of organizations, supply chain data is difficult to integrate as it is siloed in a number of different reporting tools and systems. Additionally, data accuracy and timeliness are key data challenges.
Data quality issues undermine many supply chain organization efforts to digitalize their supply chain. It often happens that chief supply chain officers (CSCOs) overlook the importance of aligning data foundation strategy with digital strategies. CSCOs intent on digital transformation must take the data quality issue seriously. Most CSCOs we talk with agree on the importance of data quality. However, many often push back on taking direct ownership of data decisions, perceiving data as an “IT thing.” CSCOs and their teams must master the discipline of supply chain data quality to ensure that data is “fit for purpose” in the context of existing supply chain operations and emerging investments in digital supply chain.
CSCOs who are digitalizing their supply chain are embracing a decision-making model directed by data insights. They must recognize their transition to a more collaborative, agile, mobile, analytical, innovative and creative way of working. The availability of real-time, end-to-end supply chain data and insights — delivered to everyone in the organization and the supply chain — can enable self-forming teams to spot and manage any unanticipated changes across the supply chain, as they happen.
The notion of self-forming teams is fascinating, yet difficult to achieve. The willingness of supply chain practitioners to adapt their culture to this new way of working is a critical success factor, as is their ability to develop the necessary skill set. However, many workers are not engaging in this transition. Cultural readiness is the top roadblock to making a company a digital business. CSCOs should foster a culture where everyone feels comfortable in an open and collaborative environment. However, it is not just a matter of culture. It’s often also a matter of supply chain organizational design.
CSCOs who fully grasp just how different the new ways of working will be when all levels within the business have access to accurate and real-time data have a significant opportunity to outperform their competitors. Broadening access to data means moving decision making to the operational level, with a significant impact on the traditional decision makers — senior executives — and their line of command.
Future data-driven digital supply chains will move away from creating value by making a small number of big decisions each year, and then diligently executing on those decisions. They will create value by making a huge number of little decisions every day, navigating across a highly dynamic value chain with speed and agility. This is thanks to their data and their people.
Gartner Supply Chain