Creating a Supply Chain that Keeps in Step with the Times

Stephen DeAngelis

April 09, 2018

To remain relevant, advises an old idiom, one must keep in step with the times. Generally speaking, that’s pretty good advice. Companies failing to adapt over time have filled history’s dustbin. Going out of business probably wasn’t their goal; but, they discovered change is seldom easy. Today’s organizations are facing rapid change and they must adapt with the times if they are going to survive. A new challenge facing organizations is data. They are drowning in data — oceans of data. Nobel laureate Bob Dylan got it right when he wrote:

Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone.
If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’.

Current times have been variously described as the Digital Age and/or the Information Age. To survive in the Digital Age, business consultants often advise companies to transform into digital enterprises. Since supply chains lie at the heart of every business, they too must digitize. Richard Sherman (@guruofscm), a Senior Fellow in the Supply Chain Center of Excellence for Tata Consultancy Services, writes, “Supply chain management has been undergoing fundamental transformation from ‘chain’ management to ‘network’ management.”[1]

Drivers of supply chain transformation

Sherman notes, “With the availability, affordability and convergence of digital technologies such as mobility, pervasive and cloud computing, the Internet of Things and Big Data, Cognitive Analytics and Artificial Intelligence, and Robotics, companies are transforming to systems thinking to re-imagine their digital supply network. In the digital economy, everyone and everything in the market ecosystem is always on and always connected.” Lora Cecere (@lcecere), founder and CEO of Supply Chain Insights, points to many of the same technologies as drivers of digital transformation and adds things like blockchain and 3D printing. She writes, “I define the digital supply chain as rethinking the atoms and electrons of the supply chain to drive new levels of value. For example, do we need orders with the evolution of blockchain as the system of record? With additive manufacturing, do we need inventory? With software robots and rules-based ontologies, can we redefine a more effective and autonomous process for customer service? With Amazon owning 40 planes and 300 warehouses do we need traditional 3PLs? Can a retailer print products in their store? Or a hospital use additive manufacturing to produce/print organs for transplant? The answer is yes. The question is when. The shift takes courage, leadership and vision.”[2]

According to a recent DHL study, organizations understand these drivers and many enterprises are beginning to leverage them. Concerning the DHL study, Kate Patrick (@katepatrick_) writes, “The report noted 73% of the respondents are investing in Big Data analytics, 63% in cloud-based applications and robotics, 54% in internet-of-things (IoT) solutions, 51% in blockchain, 46% in machine learning, 40% in autonomous vehicles (AVs), 34% in the sharing economy, 33% in 3-D printing and 28% in augmented reality and drones.”[3] Despite these advances, the study concludes, “Of 350 supply chain and operations professionals surveyed, 95% believe they haven’t seen the benefits of digitization.” Why not? The study concluded there were two primary reasons: “1) ‘New technology is developing so quickly that businesses find it challenging to keep up with innovations and best practices,’ and 2) ‘organizational challenges’ prevent technology from being implemented properly, efficiently and effectively.”

Building an intelligent supply chain

Many analysts have reached the conclusion that an intelligent supply chain is required to keep in step with the times. An intelligent supply chain leverages cognitive technologies, like the Enterra Enterprise Cognitive System™ (Aila™) — a system that can Sense, Think, Act and Learn®. Cognitive platforms provide solid foundations upon which to build an intelligent supply chain and a digital enterprise. However, Deborah Abrams Kaplan (@KaplanInk) reiterates the conclusion of the DHL study that organizational challenges need to be addressed along with technology challenges. “Building a cognitive system,” she writes, “is not just about the software or tools in place, but also about the decisions made along the way.”[4] Nevertheless, Kaplan believes the benefits of an intelligent supply chain far outweigh any transformational challenges that might be encountered. “Intelligent supply chains,” she explains, “boast the ability to perform continuous predictive analytics on enormous amounts of data and use machine learning models to review historical information to plan for current and future needs.”

Jamie Daigle, a faculty member at College of Business at Texas A&M University, agrees there are numerous benefits associated with an intelligent supply chain. She explains, “A world of logistics in which artificial intelligence reduces inefficiencies, manages risk and maximizes profit is just around the corner, and the utilization of advanced AI-based supply chains will be significant. … In an era of higher supply risk, greater demands, increasing competitive intensity and larger populations than ever before, supply chain excellence depends on the organization’s ability to orchestrate a complex process that involves acquiring raw materials, converting them to finished goods and delivering them to consumers. Due to the need to have increased visibility across the end to end processes, organizations share information with supply chain partners in real time. Supply chain management (SCM) has become far more information intensive and supply chain professionals have been seeking a way to manage oftentimes unmanageable amounts of information. Artificial intelligence has been in existence for decades; however, it has been underutilized in supply chain management. AI can process unsurmountable information instantaneously, learn from its own experience, comprehend new concepts and develop efficiencies that neither one person nor company can do alone.”[5]

Summary

Simon Knowles, Chief Marketing Officer at Maine Pointe, asserts companies need to transform into digital enterprises leveraging intelligent supply chains or risk losing ground to competitors. He explains, “Warren Buffett promoted the term ‘economic moat.’ This relates to a company’s ability to maintain an advantage over its competitors (through process, technology innovation, and intellectual property) in order to protect its long-term profits and market share. With data analytics, big data, the Internet of Things, the smart factory, machine learning, predictive maintenance, and blockchain all turning from vision to reality, your competitors are building their ‘moats’ now.”[6] Patrick agrees companies not transforming are losing ground. She concludes, “It’s one thing to be aware of the latest tech trends and to understand the probable future of your industry, but it’s quite another to implement the changes necessary. If companies don’t use a top-down approach to implementing and keeping up with new technology, they’re going to fall behind.” Keeping in step with the times should be every company’s mantra in the Digital Age.

Footnotes
[1] Richard Sherman, “Supply Chain is in Throes of Transformation,” Logistics Tech Outlook, February 2018.
[2] Lora Cecere, “Building the Digital Supply Chain: Pushing the Bird from the Nest,” Supply Chain Shaman, 25 February 2018.
[3] Kate Patrick, “95% of companies don’t see full benefits of digitization,” Supply Chain Dive, 6 March 2018.
[4] Deborah Abrams Kaplan, “How to build an intelligent supply chain,” Supply Chain Dive, 27 February 2018.
[5] Jamie Daigle, “AI beneficial in managing supply chain,” Texarkana Gazette, 10 March 2018.
[6] Simon Knowles, “Digital Supply Chain: You Need to Change. But How?EBN, 5 March 2018.