Exploring the Journey to Digital Excellence in Supply Chain

By James Lisica | July 23, 2019 | 0 Comments

Supply ChainPower of the Profession

The digital age is radically changing the way corporate leaders think about the supply chain. With disruption rife in many sectors, many are now understanding the technology investment required to modernize the organization’s supply chain capabilities is insignificant compared to the revenue that could be lost to emerging competitors.

With this newfound urgency, they are now challenging their heads of supply chain to come up with a roadmap for digital. However, many supply chain leaders are struggling to define what the journey toward digital excellence actually looks like — and which technologies they should focus on and when — in order to select the right approach.

What Types of Technologies are Organizations Focusing On?

With the unrelenting and ever increasing pace of technological innovation across the industry, an effective roadmap needs to cover development of not only established technologies, but also exploration of those that are new and emerging.

  • Established Supply Chain Technologies — Technologies utilized by the majority of supply chains today that have already been proven in the market to provide cost, operational performance and/or integration benefits. Examples include enterprise resource planning, transportation management systems, warehouse management systems and business intelligence tools.
  • Emerging Supply Chain Technologies — Technologies that are still emerging and not yet adopted by the majority of supply chains. Their overall cost, operational performance and/or integration benefits are yet to be proven. In saying this, many appear set to revolutionize the industry, and provide substantial competitive advantages for early adopters who can implement and scale them successfully.

Some further examples of each in the supply chain execution space are shown in the hype cycle below.

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What Does the Journey Toward Digital Excellence in Supply Chain Look Like?

Gartner’s maturity research shows that organizations step through five distinct stages as they develop their digital capabilities. As outlined below.

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The Five Stages of Digital Supply Chain Maturity:

Stage 1 (Predigital Supply Chain Functions) — Highly fragmented portfolio of established supply chain technologies with a large number of stand-alone solutions from multiple vendors/sources. Limited opportunities to explore, pilot or scale emerging technologies.

Stage 2 (Digital Supply Chain Functions) — Established supply chain technologies are rationalized and scaled across individual functions, but not integrated across the internal supply chain. Emerging technologies are explored in isolation within functions and pilots are ad hoc.

Stage 3 (Digital Supply Chain) — Established supply chain technologies are integrated across internal functions and support end-to-end processes automation, data rationalization and operating efficiencies. Emerging technologies are explored at an enterprise level and pilots include multiple functions.

Stage 4 (Digital Value Chain) — Established supply chain technologies are integrated with key external value chain partners and support multi-enterprise connectivity, process automation and data rationalization. Emerging technologies are regularly explored and piloted in conjunction with key value chain partners and starting to be scaled where appropriate.

Stage 5 (Digital Value Chain Ecosystem) — Established supply chain technologies are continuously extended across the value chain ecosystem and regularly maintained/upgraded to ensure reliable multi-enterprise orchestration. Emerging technologies are scaled across the value chain ecosystem, well-integrated with established system and deliver ongoing competitive advantages.

Established or Emerging? Which to focus on and when?

An organization’s level of maturity has a major impact on the types of technology it focuses on in its roadmaps and the way it approaches their development. Companies lower on the curve are typically conservative, and those higher on the curve are increasingly aggressive and more open to the risks associated with exploring emerging technologies. Our research shows that most organizations still need to build out their foundation with established technologies first, to support the levels of integration and master data required to successfully explore, test and most importantly scale new and emerging solutions.

The chart below outlines the different ways organizations approach technology development in their roadmaps at each maturity stage.

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Low Maturity (Stages 1 & 2): Organizations at the lower end of the maturity curve display cost-focused behaviors, have little or no technology in place and lack integration within individual functions. Culturally, they are usually unwilling to invest in or explore technologies that are not well-proven to reduce costs and drive basic operational benefits. Their digital roadmaps predominantly focus on implementing and scaling established technologies across functions in isolation of each other. Most at this stage do not have the foundational systems architecture, integration and master data required to explore, pilot or scale emerging technologies effectively.

Mid Maturity (Stage 3): Organizations at Stage 3 are typically focused on driving internal operating efficiencies. Culturally, they are willing to invest in established technologies having already seen the benefits of implementing them within individual functions. Their roadmaps focus heavily on integrating their existing systems architecture across the end-to-end supply chain. In parallel, at an enterprise level, they begin exploring emerging technologies having built out the foundational systems, integration and master data required to effectively run pilots across multiple functions.

High Maturity (Stages 4 & 5): Organizations at the highest levels of maturity look to deliver ongoing customer value, leverage competitive advantages and increase market disruption. Culturally, they are often more open to calculated risks when exploring emerging technologies and driving continuous innovation. Their digital roadmaps focus on continuous extension of established technologies across the value chain ecosystem while maintaining the integrity of core systems and/or upgrading them. In unison, they are also equally focused on scaling emerging technologies validated through pilots, testing bleeding-edge solutions and/or building partnerships with innovative startups.

James Lisica, Senior Director Analyst, Gartner Supply Chain

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