People, Processes, and Technology All Required for Supply Chain Transformation

Stephen DeAngelis

April 03, 2018

Most businesses succeed when the proper balance between people, processes, and technologies is achieved. Everyday technology seems to be assuming a greater role in the business world, including in supply chain operations; but, technology alone will never achieve the kind of transformation required in the years ahead. Paul Myerson (@Paul_A_Myerson), an instructor in Management and Decision Sciences at Monmouth University, asserts, “It’s not your dad’s supply chain anymore.”[1] In fact, today’s supply chain professionals understand they are no longer dealing with links in a chain but with nodes in a network. Meyerson adds, “Companies adopting an intelligent operations strategy to manage their supply chains will be in the best position to succeed in the future — if they have the right talent.”

People: Fostering Supply Chain Talent

Felecia Stratton, editor of Inbound Logistics, notes, “The fashion supply chain is moving toward a human-centered model, which shifts from a sequenced approach of siloed operations to a flexible network of participants and partnerships that will enable agile and adaptable supply chain operations.”[2] This not just true of the fashion supply chain. Flexible networks enabling agile and adaptable value chains are necessary in every economic sector. It might seem counterintuitive that supply chains should be human-centered in the Digital Era; but, as Stratton explains:

“The human-centered supply chain benefits partners across traditional supply chain steps — from designers and material suppliers to factories and logistics partners — by focusing on relationship-building; enabling the sharing of expertise across partners; adopting collaborative approaches and shared communications; employing a networked approach to reduce costs and overall waste; and connecting partners across traditionally siloed steps to increase operational flexibility.”

Collaboration is a term you read a lot about nowadays. As I pointed out in a previous article, collaboration and visibility are fellow travelers on the road to transformation.[3] Antonia Renner (@AntoniaRenner), a Senior Solutions Marketing Manager at Informatica, asserts, “A lack of supply chain visibility and ineffective collaboration [are] often the reason[s] for poor supply chain performance. [They] often lead to bad decision making, missed market opportunities, high costs, slow time-to-market, and increased manual workloads. But more importantly, [they] frequently result in a bad customer experience.”[4] In order to avoid these pitfalls, Myerson insists companies need to implement “a holistic approach that integrates intelligent technologies with business process and industry expertise and human ingenuity to drive best-in-class decision-making, business outcomes and customer experiences.”

Processes: Automation and Optimization

I discuss people and processes before technology, because technologies are tools supporting people and processes. Bain & Company analysts, Keith Donnelly, Meghan Shehorn, and Debjit Banerjee, explain, “Investing in network optimization tools is a necessary first step to create a high-performing supply chain, but the software alone is not sufficient. Why? Network tools have become increasingly advanced, allowing companies to do sophisticated simulations, analysis and scenario planning. However, a tool is ultimately only as good as the creative ideas used to model a future supply chain. If the input is not strategic, the tool’s output is not as useful as it could be.”[5] Get your processes right and then see how technology can make them even better. As Bill Gates (@BillGates) once noted, “The first rule of any technology used in a business is that automation applied to an efficient operation will magnify the efficiency. The second is that automation applied to an inefficient operation will magnify the inefficiency.”

Technology and the Digital Supply Chain

UPS analysts note, “From advances in information availability to cutting-edge manufacturing processes to increased supply chain visibility, there’s no shortage of tools … companies can arm themselves with to stay relevant — and competitive. But improvements in one area of business can also have a cascading effect across your company, where other areas of your supply chain may also need a technological rethink.”[6] That’s why most many consultants recommend companies take a holistic view of transformation. One technology that can help companies across the board is cognitive computing. Cognitive technology can improve decision making, automate and optimize processes, and, democratize access to data (thus, breaking down harmful information silos). Cognitive technologies are part of what Myerson calls “Intelligent Operations” technology. Louis Columbus (@LouisColumbus) goes so far as to insist, “Analytics will revolutionize supply chains in 2018.”[7] He adds, “Improving forecast accuracy, optimizing transportation performance, improving product tracking & traceability and analyzing product returns are the use cases providing the greatest potential for analytics growth.” Lora Cecere (@lcecere), founder and CEO of Supply Chain Insights, believes there are five fundamental shifts in supply chain technology driving today’s transformation efforts.[8] They are:

  • Redefinition of decision-support software. “Decision support includes all forms of planning: demand, supply, revenue, manufacturing, and transportation. There is currently a lot of noise in this market. In the past few months, I have spoken to several emerging cognitive computing companies that are attempting to redefine decision-support technologies. Cognitive computing involves using self-learning systems to mine data, recognize patterns, and process language in order to mimic the way the human brain works. The inclusion of cognitive computing in decision support will make the traditional applications in the advanced planning solution markets obsolete.”
  • Disintermediation of business process outsourcing (BPO). “In the past, companies have focused on labor outsourcing and third-party solutions to reduce headcount. The result? While they have shifted costs down the value chain, they have also lost control of process integrity. To regain control, companies should eliminate BPO providers through the use of machine learning and automation. In addition, blockchain and cryptocurrencies can and should disintermediate business process outsourcing.”
  • Emergence of digital manufacturing technologies. “Technologies such as robotics, wearables, the Internet of Things, and additive (3-D) manufacturing are redefining manufacturing. These new technologies will change how manufacturers define spare-parts requirements, schedule maintenance, and conduct production planning. They have the possibility to become even more revolutionary when combined with other new technologies such as cognitive computing, blockchain, and analytics.”
  • Adoption of autonomous vehicle technologies. “Logistics is already being transformed by autonomous vehicle technology. For example, some companies are exploring how drones using machine learning can perform real-time inventory counts in warehouses, and others are considering how self-driving vehicles can be used for deliveries.”
  • Redesign of B2B transactions. “For the last two decades, we have been trying to squeeze pennies from business-to-business (B2B) transactions through hands-free processing and automation. We now have the opportunity to use blockchain to redefine and redesign these practices. For example, blockchain could be used to better track quality control and chain of custody in the cold chain, improve lineage/track-and-trace to ensure brand integrity, and redefine multiparty finance. Leaders can now start to think about how to drive true value with suppliers instead of focusing on payment concerns such as how to extend payables, increase fines and/or penalties, or use third-party outsourcing to handle payments.”

Summary

Donnelly, Shehorn, and Banerjee conclude, “A well-designed supply chain is a powerful weapon, especially in fast-moving markets. It can reduce cost, increase revenue and delight customers. But taking the bold steps to overhaul a company’s mission-critical manufacturing and distribution footprint isn’t easy. As a result, leadership teams often opt for incremental changes that fail to deliver big benefits. That’s a missed opportunity. … With technologies and markets changing at a rapid clip, the odds are good that leadership teams can deploy network optimization to unlock significant value and improve their competitive edge.” For maximum effect, companies need to find the right balance between people, processes, and technologies. These three legs of corporate success must be dealt with holistically to ensure they are aligned and mutually supportive.

Footnotes
[1] Paul Myerson, “It’s Not Your Dad’s Supply Chain Anymore,” IndustryWeek, 9 February 2018.
[2] Felecia Stratton, “The Human-Centered Supply Chain,” Inbound Logistics, 5 January 2018.
[3] Stephen DeAngelis, “Supply Chain Visibility and Collaboration: Fellow Travelers on the Path to Excellence,” Enterra Insights, 8 September 2016.
[4] Antonia Renner, “Realizing a Seamless End-to-end Information Supply Chain,” Informatica Blog, 18 August 2016.
[5] Keith Donnelly, Meghan Shehorn, and Debjit Banerjee, “Turn Your Supply Chain into a Competitive Weapon,” IndustryWeek, 5 March 2018.
[6] UPS, “The Cascade Effect: Adapting to New Supply Chain Technologies,” The Wall Street Journal, 20 April 2017.
[7] Louis Columbus, “Analytics Will Revolutionize Supply Chains In 2018,” Forbes, 15 January 2018.
[8] Lora Cecere, “Five seismic shifts in supply chain technology,” Supply Chain Quarterly, 2 February 2018.