The times they are a changing - May 2019

Let’s face it: it’s a new dawn. Supply chain is on the brink of wholesale change. Users now expect real time knowledge, tailored solutions- delivered digitally, with structural operations simmering as a result. I have had lots of conversations with supply chain Directors and CEO’s over recent months, and one thing that could not be ignored, was everyone who is anyone, is talking digital. From trying out new solutions to getting to grips with new, ultra-diverse user demands. Asking themselves trick questions like Does my supply chain need to be agile, lean or a hybrid? (The answer? None. With self-segmenting and self-auto-tuned supply chain structures, you don’t need one). 

AI, machine learning, blockchain, lights out – people are willing to try new technology to help them deliver in the digital age. They have no intention of being left behind. But – many companies are still lacking one key aspect– a hard, over-arching digital strategy that is going to examine and change the overall organisational structure of their business. Without this the sophisticated new technology will not actually deliver the wholesale change required.

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A change is gonna come

I get it. Perhaps it’s such a sea change – supply chain’s music industry moment of the early 2000s – make it hard to look at it in its enormity. But we must begin, and forward-thinking businesses want to be ahead of the curve- not behind it, so where do we start?

We are all continuing to experience an explosion in demand on the supply chain, driven by the increasing diversity in both markets and customer demands. The resultant penetration of the central supply chain into local markets means that products have to be managed, manufactured, sold, delivered and then paid for across locations, in many different ways, both online and offline. And, all this needs to be profitably accomplished in a way that provides flexibility to handle all the market conditions and customer requirements.

Ok, we all know that, so what?

Companies can no longer use a historical statistical approach, for demand streams, or to design different supply chain structures and ways of working. Simply looking at product volume versus volatility to decide where you need to be lean and where you need to be agile, is never going to be the answer-because there is no answer. What sort of agility is needed, agility to respond to erratic demand, or agility to launch new products? Agility to configure products to individual customer requirements, or agility to flex the physical supply chain in response to changing costs? Each of these different types of agility require different skills, measures and solutions.

So, how can you work through all the factors to identify the techniques along the supply chain that best meets the requirements of product or customer groupings? 

You can’t. Every customer, every order needs to be treated differently- via a unique, never to be repeated, self-configured path through the supply chain.

It’s a difficult concept to get your head around, a future supply chain world where ‘as is’ and ‘to be’ process maps simply don’t exist, as cognitive supply chains constantly adapt and learn to find the best way to most profitably serve customers. We are moving from ‘sense and respond’ to ‘predict and act’ and now ‘perceive, act, and learn.’

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This is where the robots come in

Undoubtedly this demand is way beyond human capacity. The typical supply chain in 2020 is likely to be accessing 100 times more data than those in 2010, as data becomes more available from multiple sources in the moment. Harnessing this and analysing it in real time to drive digitised supply lines and replenishment processes, that think for themselves and configure their own flow paths, is becoming more of a reality day by day. AI and cognitive technologies, augmented by human resource, are being applied to daily operations and are anchored around advanced planning systems giving the ability to uniquely manage demand volatility, as well as supply constraints, production scheduling and replenishment. Robots and AI will soon be an essential part of your supply chain workforce. You need to build them into your organisation structure now and early adopters are already starting to feel the competitive advantages. You simply cannot afford to be left behind.

Yeah, yeah ,yeah. Okay-But what’s the cost?

Despite its revolutionary sounding change, it does not need to be a multi million-pound exercise in immediate supply chain re-invention. A bite size pay-as-you-go, approach is possible; targeting rapid ROI’s to prove value and create the catalyst for more widespread application.

So, what should we do?

We have to set aside any feelings of discomfort about such drastic, futuristic change. We need to accept it and plan for it. Us supply chain folk are pretty risk adverse – but there simply isn’t time to sit back, dabble and hope it’s not happening. That’s like trying to order a taxi the old fashioned way whilst everyone else is booking an Uber. The industry has changed fundamentally and so must we. We need to get our heads around this change and fast.  Digitalisation needs less barriers, new talent, new ways of working. The planning starts yesterday… or tomorrow isn’t going to happen.

 

 

-Dave Alberts, Partner, Crimson & Co

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